M&A In The Global Transportation and Logistics Industry

The global transportation and logistics market was valued at $1.149 trillion in 2023 and is forecast to grow at a compound annual growth rate (CAGR) of 5.1% to reach a value of $1.71 trillion by 2031. 

MARKET SEGMENTATION

By service type:

• Warehouse services
• Transportation
• Inventory management
• Administration & supplies

Inventory management is the fastest growing segment, with a projected CAGR of 6.12% through 2029 due to rapid tech advancements that will drive opportunities for market growth. These advancements include RFID technology for real-time inventory and tracking and the growing adoption of artificial intelligence (AI) and machine learning for inventory management.

The transportation segment is the second fastest-growing segment thanks to the adoption of anti-theft GPS systems, blockchain technology, and the use of sensors to determine cargo space sizes.

By end use:

• Automobiles
• Machinery
• Apparel and footwear
• Pharmaceutical products
• Retail
• Aircraft
• Ships and railways
• Electronics
• Petrochemicals
• Agriculture
• Building materials
• Others

Petrochemicals is a leading segment as there is an increase in demand for green warehouses, which is driving the growth in the space. The “others” segment holds the second most prominent position in the market because it includes so many commonly used materials (plastics, wood, paper, metals, and glass), and there is growing demand from several industries around the world during a time of such increasing industrialization and urbanization in developing countries.

TRANSPORTATION AND LOGISTICS TRENDS FOR 2025

Hyper-local Supply Chains

In the next few years, we can expect to see companies reduce the footprint of their supply chains, making them more local. This new era of logistics was spurred by the COVID-19 pandemic’s disruptions to supply chains. Companies no longer want to risk being caught off guard by such a massive problem. They aim to build resilience in the wake of any global disruption while also appeasing the growing consumer demand for same-day delivery. The global same-day delivery market is on pace to reach a value of  $20.36 billion by 2027.

Sustainability

There is a growing shift towards sustainability in the logistics industry. Next-generation connectivity is being implemented to improve decision-making and help companies balance human and machine interaction for maximum efficiency. More major companies are making climate pledges regarding carbon emissions goals and making more investments in battery-powered locomotives. There is also more adoption of alternative fuels like hydrogen, liquefied gas, and synthetic fuels in sea and air transport to curb pollution and emissions, as well as technologies on ships that lower greenhouse gas emissions through energy-efficient propulsion systems and streamlined hull designs. Electric vehicles also offer a more sustainable way to transport goods and are being used more frequently in public transportation.

Autonomous Vehicles

Autonomous vehicles that are equipped with sensors, LIDAR, and automated safety features to drive on roadways without a driver are becoming more common, although there are still some safety concerns regarding the consistent reliability of the technology. Driverless trucks are also becoming more popular in the trucking industry, helping to address the driver shortage problem while increasing efficiency. Additionally, delivery drones are becoming more popular as they are able to reach remote locations to deliver various much-needed items, such as medical supplies and food, which can be critical to helping the sick, elderly, or anyone in emergency response situations.

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Artificial Intelligence

AI is being used in the transportation sector to increase efficiency by predicting traffic flow delays, detecting objects for driverless vehicles, and improving road safety with machine learning that analyzes driver behavior to recognize if a driver is drowsy or falling asleep. AI also expedites the delivery of goods through route optimization of freight operations, which digitally matches supply and demand. Further, AI is being utilized to reduce traffic congestion and accidents, provide real-time tracking and theft detection systems, and improve commuter experiences on public transportation through enhanced scheduling and passenger flow analysis.

Internet of Things (IoT)

Embedded sensors in IoT are being used to collect data from transport vehicles, which track their condition and performance. IoT devices are also being utilized to improve traffic congestion systems by predicting and redirecting vehicles to better routes, speeding up delivery, and cutting down congestion, which wastes less energy. In addition, IoT devices are being used in vehicles to monitor fuel levels, driver safety, and vehicle health.

Smart Shipping

The shipping industry always faces natural hazards as well as human errors. Smart shipping is now being used to mitigate these risks through automated operations that safeguard workers and improve fuel efficiency through shipping performance insights.

Another way this automated tech is being used is through advanced digital sensors to help ships navigate more accurately based on speed and water flow. This reduces labor costs and errors while integrating with port operations and global supply chains, improving the global logistics flow.

Blockchain

Blockchain technology is being used to improve visibility in the transportation space by allowing for real-time asset tracking and precise operational planning. Because blockchain uses a decentralized structure, there is more transparency and less transaction fraud. Smart contracts on blockchain streamline the exchange of goods and protect payments while efficiently integrating documents. Also, companies can use blockchain’s decentralized and unchangeable ledgers for secure tracking.

Transportation Management Systems (TMS)

Companies use TMS more frequently to automate workflows and optimize assets, which are critically helpful solutions for freight management, regardless of size, mode, or route. These systems allow for the real-time tracking of drivers, goods, and inventory, boosting visibility in the supply chain and addressing wasteful practices. The ability to gather data insights and analytics is also crucial to eliminating unnecessary expenses. Fleet Management Systems (FMS) is a form of software that is becoming more widely implemented for remote monitoring and control of fleet vehicles, which improves delivery results.

Last-mile Logistics

Also known as last-mile delivery, this technology incorporates all operations needed to transport goods to consumers. Online delivery services are continually evolving, and now, last-mile delivery solutions are being used to get items to customers in the fastest way possible. This process includes real-time shipment tracking via advanced analytics and GPS, autonomous drones, and robots.

BY REGION

The Asia-Pacific region has dominated the market share in recent years and has shown the highest growth rate. There is a growing middle-class population in India and South Korea, which is driving the need for more transportation and logistics services. Additionally, China’s rising political tensions with other countries have led more companies to invest in other nations, such as the Philippines, Malaysia, Thailand, and Singapore. However, China still dominates the market in this region due to its significant level of exports to Europe and North America.

North America is the second-most dominant region in the industry. Growth in this region is due to the growing demand for green logistics to deal with environmental concerns. There is also ongoing expansion in e-commerce in the United States and Canada.

Europe has shown significant growth in the transportation and logistics market and is focused on improving its position through the early adoption of AI technology.

M&A

It is abundantly clear that technological advances have become highly sought-after in the global transportation and logistics industry. Small and medium-sized companies are now looking to double down on their investments in these technologies in 2025. The major players in the market, both in transportation and logistics, are looking for ways to upgrade their technological innovation capabilities to maintain their strong positions in the market, digitizing supply chain systems and adding ways to track logistics, especially with cloud-based TMS that allows for automation, eliminates manual tasks, streamlines processes, and cuts added IT expenses. These systems can be implemented and accessed from anywhere worldwide, making them more in demand than ever.

The warehousing and fulfillment segment has recently seen a great deal of e-commerce-driven transformation. In the long term, M&A deals in this area are expected to increase as business leaders focus heavily on strategically placed operations to leverage scale benefits while integrating new technologies network-wide. We can expect there to be a high level of interest in platforms that serve certain specific sectors with distinctive needs regarding handling and environmental concerns. Areas where smaller companies can continue to do well by offering high-touch customer service are also expected to see ongoing interest.

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