E-commerce logistics market to exceed €500bn by 2024


The global e-commerce logistics market is continuing to expand rapidly and is set to be worth more than €500 billion by 2024, according to new research from Transport Intelligence (Ti). But logistics service providers (LSPs) are unlikely to see many benefits of this growth, as retailers heap pressure onto their supply chain partners to limit costs while improving service levels at the same time, the Ti report indicates.

The report highlights an e-commerce market rapidly expanding at 16% in 2019, “but also one in which logistics costs are stubbornly high”. Analysis for the ‘Global e-commerce logistics 2020’ report examined logistics costs data from more than 20 retailers across geographies and retail sectors. The data shows that “logistics costs as a percentage of sales have essentially remained flat at 15% for much of the last decade”.

It noted: “This is despite large investments in infrastructure, technology and automation from LSPs as they seek to boost efficiency and capture more value. Significant variations in logistics costs can be found, however, with retail sector and location key determinants of overall logistics costs.”

Unsurprisingly, the Global e-commerce 2020 report does show an e-commerce logistics market that continues to expand rapidly. The global market expanded by 16% in 2019 as online sales continued to grow in more mature e-commerce markets, from the US to South Korea. Even more rapid market development was seen in countries where online retail is only now taking hold – annual growth rates in excess of 30% were recorded in several markets. Looking ahead, the market is expected to top €500 billion by 2024, the report noted.

Nick Bailey, Head of Research, at Ti, commented: “E-commerce presents quite a puzzle for logistics service providers. On the one hand its growth is phenomenal and the potential for value creation is incredibly attractive. On the other, there’s a battle to keep costs down as retailers heap pressure onto their supply chain partners to limit costs while improving service levels at the same time.

“It would have been hoped that the huge investments in infrastructure, automation and other technology seen over the decade last would be reducing costs, but that’s not happened market-wide; and costs, especially in fulfilment, have risen dramatically.”

Global e-commerce Logistics 2020 examines how the technological pressures, ever-evolving customer purchasing habits, and continued cross-border e-commerce growth are key concerns for LSPs serving the e-commerce market. As well as extensive analysis of the rapidly growing e-commerce logistics market, the report reveals how ‘Pure-play’ online retailers “are likely going to engage in online-to-offline as they seek to combine speed, convenience and physicality for its customers”. It also looks at why the rapid e-commerce growth has given rise to many tech-enabled start-ups, noting that even with “the largest LSPs being stretched to breaking point, logistics costs percentage remain effectively unchanged”.