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Which Areas Globally Are Prioritising and Investing in Logistics?

By Ian | Feb, 21, 2024 | Blog

Introduction 

The logistics industry is the backbone of any economy, facilitating supply for consumers and businesses alike to keep things moving consistently. 

In 2022, the global logistics industry was valued at $10.41 trillion but look ahead just four years from now and its value is expected to skyrocket to $14.08 trillion[1]. So, where is this investment and added value coming from? 

We’ll discuss the continued growth of the industry, which regions are prioritising investment in logistics and which ones aren’t, to put together a more detailed picture of what logistics might look like in the future. 

Growth of the logistics industry  

By 2028, the value of the global logistics industry is expected to have nearly tripled in just 10 years[2], showcasing remarkable growth despite the many barriers the sector has encountered in recent times. 

From Covid-19 overhauling the consumer marketplace to the Russian invasion of Ukraine disrupting supply chains across the world, the path to growth has been a tumultuous one for the logistics industry, yet it continues to thrive. 

Whilst the impacts of these major world events continue to rage on, there is wide felt optimism about what is to come. 

Why growth is key for logistics 

Without growth, there is only stagnation, and in an ever evolving marketplace, standing still can spell disaster. Growth is a key facet of an effective logistics industry, so it’s more important than ever to cast our eyes ahead and focus on what growth can bring. 

One of the most pressing challenges and opportunities for logistics today is the rapid advancement of Artificial Intelligence and technology. With applications including automatic cargo loading, warehouse management, enhanced route mapping, and even driverless vehicles, investing in new technology is crucial for the long term success of our industry. 

Turning our attention to the customer themselves, their needs are evolving and to meet these needs, so too must our industry. 

There has never been more competition for their commerce than today, with countless businesses providing excellent products and services across the world. With ‘what’ they need already covered, the logistics industry must look at ‘how’ they need it. 

One of the most widely recognised evolving demands is the need for rapid delivery. As next-day delivery becomes more commonplace in the marketplace, 99% of retailers have now stated their intention to offer same day delivery by 2025[3]. Without adequate investment and growth, the industry wouldn’t be able to consistently support these enhanced measures, leading to customer dissatisfaction and missed revenue. 

From consumer products to lifesaving medical supplies, the logistics industry is the core of almost every industry and should be treated as such. By focusing on growth, continual improvement and meeting evolving customer needs, the logistics industry can deliver great service and reap the rewards of a satisfied marketplace. 

Which areas are investing in logistics? 

With so much opportunity flooding the logistics industry, many nations and regions around the world have prioritised logistics investment in the coming years.  

The Asia-Pacific logistics industry has identified the need for increased investment owing to the dramatic increase in e-commerce initially caused by the Covid-19 pandemic. With plans to reinforce the region’s supply chains in order to meet today’s expanded requirements, the Asia-Pacific region is one to keep an eye on in years to come. 

The North American logistics industry is also undergoing significant investment and development. With analysts predicting a notable surge in growth for the North America contract logistics market, the United States is investing substantially to advance infrastructure and industrialisation, implement digital transformation efforts, and optimise cost efficiency.  

One of the most notable regions currently investing in logistics, amongst other things, is the Middle East. This isn’t without its controversies, as many see the region’s staggering investment as a strategic move to rebrand.

For others, the investment is a shrewd business decision and one which will provide much-needed improvement to trade in the area. For example, Saudi Arabia is reported to be investing more than $133 billion into its logistics infrastructure and freight management, which will open up new trade pathways through the Red Sea and throughout Africa.  

Some areas, such as the Middle East, are investing in logistics with the goal of becoming a global logistics powerhouse, whereas others are solely focused on facilitating for the people and businesses in their region.  

Whatever the reason, increased investment in logistics is a good thing across the board, with more resources available to reach the industry’s full potential. 

Which areas are not investing in logistics?  

Whilst many areas have moved logistics investment to the top of their list, there are some regions which have not, for a range of reasons. 

One of the most notable regions currently lacking in logistics investment is Latin America. According to the World Bank, whilst regions such as East Asia invests eight percent of its GDP in infrastructure, Latin America invests just three percent[4]. 

It has been widely reported that Latin America is not meeting the developmental or competitive needs of the area, with some countries in particular falling excessively short. For example, Brazil and Mexico spend less than one percent of their GDP on logistics, whilst Argentina spends around five percent[5] 

As a developing region, Latin America still hosts around 20 million homes without access to drinking water and is severely lacking on rail infrastructure, meaning investment could be more valuable here than to many other regions.  

Unfortunately, Latin America’s potential supporting partners are also withdrawing their resource allocation. As a major world power regularly involved in collaboration with other nations, China has been supporting Chile in its infrastructure efforts, but due to China’s recent economic slowdown, the available support has dwindled.  

Whilst the United States attempts to support Latin American countries with the ‘Build Back Better World’ global infrastructure investment initiative, this is still very much an active battle in the pursuit of fair provision for all.

Conclusion 

The benefits of a reinforced, renewed logistics industry are clear to see – but that doesn’t mean it is possible for every region. 

Whilst some nations fight for the global logistics crown, others are simply fighting to survive.  

As the investment in logistics continues to increase with each passing year, we are likely to see wholesale improvements across the board, whether it’s for increased accessibility of goods and services, or more stable infrastructure for a better quality of life.  

 

 

 

[1] Size of the logistics industry worldwide 2018-2028, Statista Research Department, 2023

[2] Size of the logistics industry worldwide 2018-2028, Statista Research Department, 2023 

[3] Consumers want ultrafast delivery – and they want it today, SupplyChainDive, 2023

[4] Latin America must prioritize infrastructure to spur economic growth, Wilson Center, 2023

[5] Latin America must prioritize infrastructure to spur economic growth, Wilson Center, 2023