The freight transport market is estimated to be valued at USD 34.53 Bn in 2024 and is expected to reach USD 73.1 Bn by 2031, growing at a compound annual growth rate (CAGR) of 11.31% from 2024 to 2031. The market is expected to grow due to rise in trade volumes driven by growing demand from end-use industries like manufacturing, oil and gas, mining etc.

Market Driver - Growing Demand in e-commerce and Last-mile Delivery Solutions

An ever-increasing number of consumers are choosing to shop online rather than in brick-and-mortar stores. Thereby, the growth of e-commerce and the resulting demand for efficient last-mile delivery solutions has had a transformational impact on the freight transport industry in recent years.

For e-commerce companies, meeting increasingly high expectations for fast, reliable delivery has become a core competitive differentiator. It is driving massive changes in the logistics and delivery landscape. As a result, there has been significant investment and innovation focused on improving and optimizing last-mile delivery operations.

New transport companies have sprung up specifically focused on providing last-mile services to leverage new technologies like electric vehicles, consolidate parcel routes. Other innovations like self-driving vehicles, autonomous delivery drones, and automated parcel lockers also aim to make the delivery process more efficient. They enable in increasing visibility and control of the overall experience.

The growth of services like buy-online pickup-in-store also reflects efforts to balance the demands of e-commerce with the practical limitations of traditional delivery models. All of these types of developments present major opportunities for firms across the freight transport market.

Market Driver - Increasing International Trade and the Expansion of Multinational Companies

Another driver supporting growth in the freight transport market has been the ongoing expansion of international trade volumes and the increasing global reach of multinational corporations. Companies set up manufacturing operations in low-cost regions to serve worldwide markets and also pursue strategic acquisitions or partnerships abroad. Consequently, international trade lanes have proliferated tremendously.

Major shipping lines have raced to add larger vessels to their fleets to capitalize on economies of scale and meet the demands of this trade boom. Most global seaborne trade are relying on just a few dozen mega shipping companies operating vast integrated networks. Similarly, air freight and trucking capacity has expanded to support the time-critical delivery needs of end-use industries.

Overall, multinational companies act as a major catalyst propelling long-term growth across the freight transport market. Whether on land, sea, or air, innovative solutions helping manage risk and coordinate shipments across vast global transportation networks will remain in high demand.

Market Challenge - High Operational Costs in Logistics and Transportation

One of the major challenges currently faced by the freight transport market is its high operational costs associated with logistics and transportation activities. Logistics costs account for a significant portion of the total operating expenses for companies across numerous industries that rely on freight transport for distribution of goods.

Factors such as rising fuel prices, driver salaries, infrastructure maintenance charges, and equipment upgrade costs have been consistently pushing up the operational expenditures for freight carriers and third-party logistics service providers. The ongoing shortage of drivers in some countries has also led to higher wage payments in order to attract and retain talent.

The high fixed costs put pressure on profit margins, especially during periods of slow economic growth when demand is subdued. Carriers struggle to remain cost-competitive while maintaining service quality standards, which poses a major challenge for players in the freight transport market.

Unless technological innovations are leveraged and new business models adopted to enhance processes, high logistics expenses will continue to pose challenges to the profitability and growth of companies reliant on freight transport.

Market Opportunity - Adoption of Green and Sustainable Logistics Technologies

One major opportunity for the freight transport market lies in stronger adoption of green and sustainable logistics technologies. With growing environmental regulations and demand for reduced carbon footprint, freight transport companies have a strong incentive to integrate clean technologies into their operations.

Adopting electric vehicles for short-haul operations, utilizing hybrid engines, optimizing routes through fleet management systems, and implementing telemetry and IoT sensors can help lower fuel consumption and emissions. Shifting a portion of land-based freight to rail and sea transport modes that are relatively more energy-efficient compared to road transport also provides opportunities.

Investing in alternate fuels like hydrogen cells and supporting infrastructure can boost energy security of carriers in the long-run. Embracing digitization through tools such as blockchain, advanced analytics, and automation additionally allows for higher visibility and optimized resource usage.

Tapping into these sustainable technologies can help companies in the freight transport market future-proof their operations. It will also facilitate to lower costs of doing business, gain a competitive advantage, and meet ESG goals of customers - capturing an emerging market trend.

Focus on Customer Experience and Technology Adoption

Major freight carriers like UPS, FedEx, and DHL have focused on using technology to enhance customer experience in recent years. For example, UPS invested over $2 billion in technology between 2013-2017 to upgrade its logistics infrastructure and make it more efficient. FedEx similarly upgraded its tracking capabilities and delivery alerts by launching features like FedEx Delivery Manager and Signature Required options.

Consolidation through Mergers & Acquisitions

Consolidation has been a major strategy with companies acquiring regional players to expand networks. In 2017, XPO Logistics acquired Con-way for $3 billion expanding its trucking and intermodal services across North America. This purchase grew XPO's revenue by 43% from 2016-2018. Similarly, C.H. Robinson acquired Prime Distribution Services in 2018 for $225 million. This gave C.H. Robinson access to Prime's brokerage services and technology platform.

Focus on Specialized Services

While some focus on general transportation, others have found success in niche service offerings. For example, J.B. Hunt saw a 40% revenue rise from 2013-2018 by focusing on time-critical less-than-truckload shipping.

Insights, By Mode of Transport: Convenience and Cost-Effectiveness Drives Roadways Dominance

In terms of mode of transport, roadways segment is expected to hold 45.6% share of the freight transport market in 2024. This is due to its convenience and cost-effectiveness for shorter-distance cargo transportation needs. Road freight transport's door-to-door delivery abilities allow for goods to be transported directly from the shipper's location to the recipient's location with minimal intermediate handling.

Additionally, road carriers utilize diverse vehicle types so they can accommodate a wide range of cargo dimensions and weights. The widespread road infrastructure across countries further facilitates point-to-point cargo delivery by road almost anywhere. When factoring in fuel and labor costs as well, road freight usually proves the most economical solution for domestic transportation of shipments under 500 miles.

However, capacity constraints on major highways during peak traffic hours can potentially cause road shipments to fall behind schedule. Congestion-related delays raise transportation costs as detours are required. Still, for its unmatched accessibility and competitive pricing on shorter hauls, road transport dominates the inland freight transport market.

Insights, By Service: Transportation Value Proposition Drives Highest Market Share

In terms of service, transportation segment accounts for 61.3% share of the freight transport market in 2024, due to the indispensable value it provides to shippers and consignees.

Whether shipping raw materials to factories, components between manufacturing plants, or final products to retail warehouses and customers, reliable transportation is paramount. Transportation suppliers offer scheduled pick-ups and deliveries with visibility into cargo status. Their large conveyances like trucks, trains, vessels and aircraft efficiently consolidate loads from multiple customers heading in the same direction.

Emerging technologies further augment traditional transport capabilities. GPS and telematics provide real-time location tracking for enhanced supply chain coordination and incident response. Blockchain backed smart contracts now automate documentation processing and payments.

While value-added services play important supporting roles, basic cargo movement will remain the single largest revenue stream within freight logistics. This will continue to drive an important trend in the freight transport market.

Insights, By End-user Industry: Manufacturing Relies Heavily on Freight for Raw Material Transport

In terms of end-user industry, manufacturing industry contributes the highest share of the freight transport market due to its dependence on inbound and outbound cargo movement. Assembling finished goods requires factories to source a variety of raw materials, components and parts from different geographies based on availability and pricing. Mineral extraction sites, agricultural farms and component makers may all be domestic or global suppliers feeding into manufacturing hubs.

Sudden delays or changes can negatively impact manufacturing throughputs and capacity utilization levels. Freight providers delivering tightly synchronized inter-plant shipments also aid centralized procurement and outbound distribution efficiencies across multi-location plants within companies.

Global market access boosts sales revenues and profitability. Coastal or inland port access becomes important location selection criteria for industries like automotive which ship heavy cargo loads overseas. Logistics costs are also a major competitive differentiator, with optimum distribution strategies vital for pricing manufactured goods competitively in various import markets.

Overall, manufacturing industry demonstrates the highest propensity to outsource freight transport requirements due to internal priorities of focusing on core production competencies.

• The rise of third-party logistics (3PL) providers is reshaping the freight transport market, as companies outsource logistics functions to focus on core competencies.
• Asia-Pacific is emerging as a significant freight transport market due to rapid industrialization, urbanization, and the expansion of e-commerce in countries like China and India.
• The integration of blockchain technology in supply chain management is enhancing transparency and traceability across logistics operations.
• The COVID-19 pandemic accelerated the adoption of automation and contactless technologies in warehousing and freight transport services to ensure safety and efficiency.

The major players operating in the freight transport market include DHL Supply Chain & Global Forwarding, Kuehne + Nagel International AG, DB Schenker, UPS Supply Chain Solutions, FedEx Corporation, C.H. Robinson Worldwide, Inc., DSV Panalpina A/S, XPO Logistics, Inc., Nippon Express Co., Ltd., and J.B. Hunt Transport Services, Inc.

• In May 2023, FedEx announced the addition of electric vehicles (EVs) to its freight transport in Malaysia, marking a significant step toward its goal of achieving carbon-neutral operations by 2040.
• In March 2023, DHL announced significant expansions in its logistics operations in Singapore. This includes the establishment of a new state-of-the-art facility designed to enhance its capacity in the Asia-Pacific region. The expansion aims to streamline logistics operations, reduce transit times, and improve service quality for customers.

• By Mode of Transport
  • Roadways
  • Railways
  • Airways
  • Waterways
• By Service
  • Transportation
  • Warehousing
  • Value-added Services
• By End-User Industry
  • Manufacturing
  • Retail
  • Healthcare
  • Automotive
  • Aerospace and Defense
  • Others