What happened and what happens next?
The year 2024 was like any other year in global logistics aside from the fact that it was densely packed with more challenges, more complexities and more uncertainty. One thing for certain is as we look ahead to 2025, not only will there be more of the same as we brace for the new(er) normal, but our industry has never been better equipped to survive and, if we’re smart, thrive over the next three quarters and beyond.
In this Industry Trends article, we’ll take a brief look back at the year that was, revisit and chronicle some of the advancements that we need to use in 2025 and talk through the challenges that have shaped our global logistics landscape, and what to do as a result.
Surveying the 2024 logistics landscape we’ve left behind
Let’s start by looking at scope as a way of understanding the dimensions of the global logistics landscape. Depending on which source you favour, the global logistics market value in 2022 was around $8.6 trillion. Our Asia Pacific region (35%) still led the industry market share ahead of North American logistics (24%) and China (26.1%). Looking ahead, the 2027 estimates land at around $12.6 trillion or a compound annual growth rate (CAGR) of somewhere between 6.2% and 7.2%. Now dollar values vary, and to a lesser extent so does CAGR, but all sources broadly agree that growth is fast-approaching and here’s why:
- Online retail – while this category only accounts for circa 25% of our industry, it’s enormous, over-indexing growth has created the exponential increase in demand and expectation of on-time, in-full delivery at a pace never experienced.
- Demand for efficiencies – this is the natural and expected knock-on effect of online retail growth. Yes, everyone is looking to be more efficient however, in the case of our industry, the need to recognise this demand as an imperative is central to our survival. In this case, efficiencies pertain to “last mile delivery” and warehousing.
- Skyrocketing customer expectations – is our industry a victim of its own success? Yes, we have embraced technology such as autonomous vehicles and drones, we’ve factored in and utilised larger autonomous warehouses as well. All these initiatives have heightened customer expectations of hyper-efficient, fast delivery of service – it’s the new normal.
Speaking of technology, AI, IoT, robotics, GPS tracking and route optimisation along with just-in-time inventory management have helped perpetuate the cycle of increased efficiency, followed rapidly by increased customer expectations. It’s a vicious but exciting cycle, and for the progressive supply chain management teams, that just keeps accelerating.
Finally, from a global perspective, 2024 beset our industries with difficulties erupting from conflicts in the Middle East and Ukraine; North American and Australian ports embroiled in industrial action, predictably this contributed to unforeseen spikes in costs (labour), risk profiles unexpectedly erupting like geysers, and shipping routes with their well-documented issues didn’t make things any easier. If we told you in January 2024 that this was the year you are going to have, you’d be forgiven for saying, “I’m out!” But we’re all here and we’re wondering…
What will 2025 look like and what do we need to do to thrive
At the heart of that question lies another question: what do our consumers/clients/customers want from us and what are our options in terms of fulfilling the market’s demands.
We’ve already talked about the environment of heightened expectations in which we all work. Within that paradigm there are at least 4 challenges.
- Finding answers to the complex question around decentralisation – as energy procurement options increase, for example smaller scale plants and solutions finding their way into rural and offshore locations, logistical demands will increase significantly.
- Costs will increase in line with (or even ahead of) increased demands on logistics assets and services.
- Strategy, planning and oversight requirements increase with the need for enhanced visibility across processes and corresponding controls.
- The continued pursuit and optimisation of low-carbon solutions at every point of the supply chain are required to meet net-zero targets.
The solutions are a mix of technology, optimised ways of working and cooperation with government bodies, the companies we work with and logistics providers. What does this look like?
With the previously mentioned risks in play at any given time, it’s more important than ever to invest and engage in trend analysis and predictive tools. As mentioned in previous Industry Trends articles, a willing reliance on AI to capture and sort the oceans of data will now be essential.
In as much as it is possible and practical, EVs and biofuels will complement the renewable energy mix as we watch out for unexpected tariff potholes along the road to December 2025.
The more things change the more they stay the same
With all this change, happily a few familiar key components will consistently increase consumer satisfaction ratings. In short, against the backdrop of change and accelerating expectations, a single point of contact, specialised service and expertise, and greater flexibility will always catch the eye of consumers that want choice, order fulfilment and reliability first, last and always.
And as always, these predictions and extrapolations are based on our collective experience and the ironclad recommendation is to know your market, serve your customers reliably and place a premium on continuous improvement.
