Customers of the e-commerce sector are preferring fast shipping with competitive pricing, on account of their changing shopping patterns and expectations. This demanding delivery schedule challenges traditional logistics by creating the demand for same-day delivery, there by impelling e-commerce companies to update their business strategies. Several such companies are therefore opting for on-demand logistics services to manage the inconsistencies in shipping activities, preference of customers, and sudden need for bulk supply. Thus, the widening customer base will propel the on-demand logistics market at a CAGR of 21.1% during 2020–2030.
According to P&S Intelligence, the market stood at $9.1 billion in 2019, and it is expected to surpass $75.0 billion by 2030, on account of the rapid adoption of smartphones and penetration of the internet in emerging economies. Owing to these factors, developing countries are witnessing a surge in online shopping activities, which has led to the increasing adoption of on-demand logistics services. Moreover, the rising industrialization and urbanization rates and household income in such nations will amplify the online customer spending. The rising expenditure will ease the current logistical challenges, such as low vehicle usage rate, low profitability, and fewer bookings.
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Businesses across the world are also shifting to on-demand logistics as they are unable to enter into long-term contracts with logistics companies due to in consistencies in the shipping volume. The inconsistency can be owed to the low market demand, low production, and cost factors. Unlike traditional services, on-demand logistics services offer flexibility, as user companies are not bound by any contract, therefore can pay as per their exact requirements. Service providers either operate their own fleet or function in collaboration with a brokerage team to transport the freight.
Furthermore, online logistics companies provide on-demand transportation solutions for individual customers as well. These companies cater to all the goods movement in full-load as well as partial-load capacities at reasonable prices and convenient time. Unlike the convenient brokers offering transportation services, on-demand logistics service providers create the overall cost structure and charge based on the distance to be traveled. These services use light commercial vehicles (LCV) and medium/heavy commercial vehicles (M/HCV) to deliver goods to customers.
Globally, in 2019, North America observed the highest utilization of on-demand logistics services due to the strong presence of the transportation and logistics industry in the region. Most of the freight movement in this region, especially the U.S., is conducted by truckers. However, the escalating demand for trucking services in the logistics sector has led to driver shortages. This is, therefore, creating the need for developing more-effective logistics solutions to meet the demand–supply gap, which has eventually led to the quick penetration of on-demand logistics in the region.
In the coming years, North America and Asia-Pacific (APAC) will collectively dominate the on-demand logistics market. However, APAC is expected to be the fastest adopter of such services due to the existence of a large consumer base in India and China. Additionally, the rising customer awareness about more-convenient logistics options, growing e-commerce industry on account of the increasing usage of the internet and smartphones, and surging technological enhancements will accelerate the utilization of on-demand logistics services in APAC.
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Thus, the flexibility and cost-effectiveness of on-demand logistics services will increase their adoption in the coming years.
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