The market for linked logistics is anticipated to expand at a CAGR of 33% between 2024 and 2032. Connected logistics is a combination of interdependent communication devices, connections, and Internet of Things (IoT) technologies that translate customer-centricity into crucial logistical operations by sharing data, information, and facts with supply chain partners. The market for connected logistics is still in its infancy and can be defined as devices that logistics and IoT solution providers use to gain greater visibility within the warehouse, transportation, and related logistics processes, such as order processing, financial transactions, shipping, and dispatching & picking. It promotes more effective business decisions and vital decision-making by identifying the primary bottlenecks.
The rising cost of energy and related environmental problems, such as carbon emissions and pollution, motivate the shift from conventional transportation methods to IoT-enabled, linked logistics solutions. They remotely manage, monitor, and control supply chain activities by leveraging sensors, cloud technology, and Internet of Things connectivity. The use of IoT has improved the supply chain platform of the logistics and transportation industry. It provides complete network visibility and faster network problem detection, allowing for effective and timely decision-making. Additionally, increased supply chain awareness benefits long-term cost savings. As a result, the need for IoT-enabled solutions is growing across a variety of industrial sectors, including manufacturing, transportation, and automotive.
Multiple organizations that are trying to meet the need for faster delivery times can benefit in numerous ways from autonomous trucks and vehicles. For the delivery of goods, industries such as food and beverage, healthcare and pharmaceuticals, and manufacturing are growing their demand for connected logistics solutions. The rising demand for transportation has exacerbated concerns such as variable oil prices, substantial investments, and pollution control. Therefore, significant actors are involved in the creation of high-tech vehicles that can meet the economic and social needs of the future. The use of high-tech vehicles in supply chain and logistics leads to the enhancement of the efficiency, safety, and environmental sustainability of transportation. In addition, the increasing availability of connected drones contributes to the growing demand for high-tech vehicles.
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The standardisation of logistics may be complicated by differences in corporate practices, infrastructure, culture, and government regulations. To retain a high level of global competitiveness, the countries must also reduce their logistical costs by adopting global standards equivalent to European Union (EU) and ISO standards. Compared to the United States and the European Union, China and Korea have low logistical standardization. This is due to the lack of promotion and enforcement by the Chinese and Korean governments, as well as the absence of regional organizations that can begin and integrate multi-national logistics standardizing operations. These efforts include the development and implementation of national and international standards for logistics equipment, tools, packaging, storage, transportation, loading/unloading, and information and communications technology (ICT) that are compatible with widely adopted international logistics standards, such as ISO standards. Consequently, a lack of logistics standardization increases the expenses associated with the entire supply chain process, hindering the growth of the linked logistics sector.
By component, the market is segmented into hardware, solutions, and services. The hardware category dominated the market in 2023 and is projected to increase at the fastest CAGR throughout the forecast period. By hardware, the market is subdivided into RFID tags, sensors, communication devices, and tracking devices, among others. Due to the rising demand for asset tracking, it is anticipated that sensors will have a significant market share. Moreover, Internet of Things (IoT)-based connected sensor technology aids in preserving temperature stability, reducing food waste, and enhancing supply chain visibility.
In addition, it is anticipated that the software sector would see a substantial CAGR during the forecast period. The warehouse management software optimizes and automates a variety of warehouse processes, including inventory tracking, receiving, storage, and task planning. The fleet management software provides a wide range of vehicle management capabilities to owners of cargo ships, aircraft, trucks, and other types of international transportation. Asset tracking and management enable the surveillance of fixed assets, inventory tools, and other key physical assets. End-to-end logistics performance can be enhanced and measured through data management and analytics.
The market segment for services is anticipated to experience the greatest CAGR over the forecast period. The increasing demand for managed services in linked logistics is primarily responsible for the market's current expansion. The leading players provide consulting, integration and deployment, support and maintenance, and managed services, among other services. Consulting services aid shippers through the application of specialist and skilled solutions.
Regarding the mode of transportation in 2023, highways dominated the market. It is anticipated to have the greatest CAGR during the period of forecast. This is due to the growing demand for road-based transportation to transfer retail goods across long distances, particularly for last-mile delivery. In addition, this mode of transportation has a large carrying capacity, making it an attractive logistics choice. Increasing efforts by governments worldwide to promote road travel also contribute to the rise of this market category.
For instance, the government of India has created a national logistics program to increase corporate efficiency and reduce transportation costs. As part of this scheme, the government is constructing a highway network from the port area to the most remote section of the country in an effort to cut fuel usage, the most expensive aspect of freight transportation. During the forecast period, it is predicted that the railway segment would expand at a high CAGR. This form of transportation has the intrinsic benefit of reducing frictional resistance, allowing wagons and carriages to move heavier weights. Increasing government efforts to improve rail freight transit are also expected to help the expansion of this sector. The United States Department of Transportation, for instance, has begun the Rail Program. The government plans to quadruple the number of freight rail routes under this plan.
By industrial vertical, the market is segmented as follows: retail & e-commerce, automotive, aerospace & military, healthcare, energy, electronics & semiconductors, and others. The retail and e-commerce sector dominated the market in 2023. The retail business employs connected logistics technologies to meet expanding company demands. Connected logistics increase reliability through IoT solutions, which aligns with the objectives of the retail and e-commerce sectors.
During the projected period, it is anticipated that the automotive sector would represent a sizable percentage of the market. Connected logistics systems for the automobile industry generate real-time infographics based on the location of the vehicle, the condition of the cargo, and the conduct of the driver. Automobile industry leaders offer specialized solutions in their respective niches. For instance, Alibaba Cloud provides vehicle manufacturers and goods owners with strong automotive management and monitoring solutions to promote accurate and efficient vehicle monitoring.
North America led the global market in 2023. The expansion of the region can be attributed to the region's highly developed rail and road infrastructure. Moreover, the presence of key industry players enables the region to be the largest contributor to global market revenue over the forecast period. Modern infrastructure expedites the adoption of cutting-edge technologies. As a result of the development of new technologies, the increase in working capital, and the rapid growth of the e-commerce business, it is estimated that the United States will continue its preeminence over the projected time.
During the projected period, the Asia-Pacific region is estimated to exhibit the greatest CAGR. It is projected that Asia-Pacific would experience faster economic growth than other regions and will act as the logistical hub for all investment and expansion. In addition, greater technological advancements in transportation and expanding investment in megacity projects are expected to contribute to regional growth during the forecast period. The expansion of the target market is fueled by the rapid growth of the region's e-commerce and manufacturing sectors. China and India are the major markets in the region.
Due to the presence of multiple global and regional companies, the market for connected logistics is both highly competitive and fragmented. Market leaders include Intel Corporation, Infosys Limited, and SAP SE, among others. To remain competitive and increase their market share, each of the market's leading firms is focusing on new product development. For instance, Cisco Systems Inc. offers solutions for a variety of modes of transportation, including air, train, and road. The company offers connected maritime solutions such as Cisco IE 2000 and 3000 series switches. For safer and more efficient transportation, market leaders are investing heavily in research and development to integrate new technology into linked logistics. In order to acquire a competitive edge, organizations work with their rivals and end-users and develop partnerships.
In February 2023, Oracle and RHI Magnesita, for example, signed a deal in which RHI Magnesita selected Oracle's fusion cloud transportation management. This arrangement will assist RHI Magnesita in unifying its whole transport management system, cutting costs, and optimizing service levels as a result. In September 2020, SAP SE strengthened its partner ecosystem by extending links with Project44, ClearMetal, and Shippeo. Through these partnerships, licensed members of the SAP Logistics Business Network have access to the anticipated arrival time, exact location, and status updates for road and ocean carrier transports. On the global connected logistics market, Intel Corporation, Infosys Limited, Cisco System, Inc., HCL Technology Limited, IBM Corporation, SAP SE, ORBOCMM, Freightgate, Inc., Honeywell International, Inc., NEC Corporation, and Honeywell International, Inc. are among the most significant players.
