FMCG Logistics Market Registering a CAGR of 4.6% | Growth Opportunities in a Rapidly Changing World

FMCG logistics is essential for the fast and efficient movement of consumer goods that are in high demand and often have a short shelf life. The role of FMCG logistics service providers spans across key services like material handling, packaging, transportation, inventory management, security, and warehousing, all of which can be scaled to adapt to the dynamics of customer demands and market conditions. These services enable FMCG companies to ensure quick and reliable delivery from production to the end consumer.

The industry has seen significant growth with the rise of the direct-to-consumer (DTC) model, where consumers can order products online directly from FMCG companies. This model has led to increased demand for sophisticated logistics solutions that can handle the intricacies of direct home deliveries. Furthermore, globalization has expanded trade activities, making it challenging for manufacturers and retailers to track inventory and shipments effectively. This increased complexity in supply chains is driving demand for advanced FMCG logistics solutions.

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Additionally, expanding international markets has become a crucial growth factor, as FMCG companies increasingly look to deliver their products worldwide, necessitating efficient, reliable, and fast logistics support. Together, these factors point to a robust growth trajectory for the FMCG logistics market.

COVID-19 impact analysis

1. The food & beverages segment of the FMCG logistics market was slightly affected due to the lockdown and lack of transportation services globally.
Attributed to COVID-19 pandemic, important supply chains in the logistics and transportation industry are hampered, though differently across air, freight, and sea sectors. In addition, logistics firms, which are involved in the movement, storage, and flow of goods, have been directly affected by the COVID-19 pandemic.

2. As an integral part of value chains, both within and across international borders, logistics firms facilitate trade & commerce and help businesses get their products to customers. Therefore, the supply chain disturbance created by COVID-19 is expected to impact the competitiveness, economic growth, and jobs lost in the logistics industry.

3. The impact of COVID-19 has been widely visible across all the logistics-dependent mode of transport around the world. Although there are some industries that are struggling due to the pandemic, some are thriving, such as healthcare & pharmaceuticals, e-commerce, and daily essentials goods industry, which are expected to affect the logistics industry positively during the COVID-19 outbreak globally.

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Drivers, restraints, and opportunities-

Growing penetration of e-commerce in the FMCG industry, changing lifestyles & consumer habits, surge in disposable income, rise in tech-driven logistics services, and growing adoption of IoT-enabled connected devices fuel the FMCG logistics market. On the other hand, poor infrastructure, higher logistics costs, and lack of control of manufacturers and retailers on logistics services impede the growth to some extent. However, emergence of last mile deliveries coupled with logistics automation is expected to create multiple opportunities in the industry.

Based on mode of transportation, the roadways segment accounted for around two-fifths of the global FMCG logistics market share in 2019, and is expected to lead the trail by the end of 2027. Roadways logistics transportation entails low capital investment as compared to other modes of transportation such as rail and air transportation systems. This leads to the establishment of new companies, thereby propelling the segment growth. The waterways segment, on the other hand, would garner the fastest CAGR of 5.90% throughout the forecast period, owing to the increasing popularity of containerization and rise in number of new ports.

Based on product type, the food & beverages segment contributed to more than four-fifths of the global FMCG logistics market revenue in 2019, and is anticipated to rule the roost by 2027. Increase in working population and the trend of healthy eating have made way for packaged food and enabled restaurants to grow their business. This factor drives the segment growth. Simultaneously, the personal care segment would manifest the fastest CAGR of 5.10% during the forecast period.

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Based on region, Asia-Pacific, followed by North America, held the highest share in 2019, garnering nearly half of the global FMCG logistics market. The same region would also portray the fastest CAGR of 5.10% from 2020 to 2027. This is attributed to the booming e-commerce industry in emerging economies. Moreover, increased adoption of outsourced logistics services in the region drives market growth.

Key players in the industry-

C.H. Robinson Worldwide, Inc.
Deutsche Post AG (DHL Group)
A.P. Moller - Maersk
DSV (DSV Panalpina)
FedEx
Geodis
Kuehne+Nagel
DB SCHENKER (Deutsche Bahn Group (DB Group))
United Parcel Service, Inc. (UPS)
XPO Logistics, Inc.

The FMCG logistics market encompasses a range of logistics services, including third-party (3PL), fourth-party (4PL), inbound, outbound, reverse, green, and military logistics, among others. These services ensure the efficient and effective transportation and storage of goods. Currently, FMCG logistics solutions are widely utilized across various functions such as warehousing, procurement, supply chain management, material handling, inbound and outbound transportation, packaging, and inventory management.

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