The green logistics market is estimated to be valued at USD 1.54 Tn in 2024 and is expected to reach USD 2.7 Tn by 2031, growing at a compound annual growth rate (CAGR) of 8.35% from 2024 to 2031. The green logistics market is driven by the increasing awareness about environmental protection and initiatives by governments worldwide to reduce carbon emissions.

Market Driver - Governments Enforcing Strict Regulations to Reduce Carbon Emissions

With growing environmental concerns, governments are increasingly working towards curbing carbon emissions and implementing stringent policies to promote more sustainable practices. Many countries have now set mandatory emission reduction targets and timelines to transition to eco-friendlier solutions.

Following the Paris Agreement as well, several governments have established carbon pricing initiatives using emissions trading systems and carbon taxes. This sends a strong signal that the costs of carbon will continue rising in future, driving the green logistics market.

Many countries in Asia, Americas, and Africa are likewise devising environmental protection laws with mandatory renewable portfolio standards and fleet modernization plans. For green logistics service providers with international operations, it is becoming imperative to build sustainability considerations into core strategies and transition to greener business models.

With governments firmly committed to driving decarbonization across industries, green logistics market will gain further momentum.

Market Driver - Increasing Demand for Sustainable Products and Acceptance of Eco-Friendly Practices

Environmental consciousness among consumers and corporations has been growing tremendously in recent years. More customers now want to purchase products with lesser negative impacts and are supportive of companies taking climate actions very seriously. This rising consumer demand also extends to logistics and expectations around greener delivery solutions.

Retail giants and manufacturers have also set science-based emissions reduction targets to transition their supply chains. In addition, younger demographic cohorts especially have very high sustainability orientations. Environmental issues are among their top concerns and they wish to see organizations contributing solutions.

Businesses recognize the need to align with shifting social values to attract and retain the talent of tomorrow. Those failing to move quickly on sustainability may lose out on future workforce as well as face disfavor from conscious investors. Thereby, adopting green strategies provides an avenue to gain competitive advantages to green logistics market players.

Market Challenge - Initial Investment for Green Technologies and Infrastructure

One of the major challenges faced by the green logistics market is the high initial investment required for transitioning to green technologies and building necessary supporting infrastructure. Adopting renewable energy sources like solar and wind for powering logistics operations and transportation requires setting up generation facilities which have a substantial capital cost.

Developing electric vehicle fleets demands investment in EVs as well as building charging stations at regular intervals on transportation routes. Modifying existing warehouses and distribution centers to make them more energy and resource efficient through measures like LED lighting, HVAC system upgrades, and waste management solutions needs significant capital spending upfront.

The costs of procuring new green technologies can be a barrier for logistics companies and transportation providers to switch to sustainable practices, particularly smaller businesses with limited financial resources. High initial expenses posed challenges to large-scale adoption of clean technologies in the green logistics market.

Market Opportunity - Innovations in Renewable Energy and Electric Vehicles

The growing focus on innovations in renewable energy and electric vehicles presents vast opportunities for the expansion of the green logistics market. Technological advancement has made renewable energy sources like solar and wind more efficient and cost-effective compared to traditional fuels.

Furthermore, rapid product development is occurring in the electric vehicle industry. Major automakers are launching new models of commercial electric trucks and vans for cargo transportation. The driving range of EVs is also enhancing continuously, alleviating range anxiety issues.

Also, startups are developing electric cargo bikes and delivery robots to revolutionize last-mile delivery. These innovations are expected to make clean transportation solutions more viable for logistics operations. They will help reduce costs in the long run and drive higher adoption of emission-free vehicles. The innovation trend will therefore propel tremendous growth in the green logistics market.

One of the most successful strategies adopted was investment in electric vehicles and equipment. DHL for example invested €500 million in electric vehicles between 2020-2022, purchasing over 5,000 electric vans and trucks. This allowed them to reduce their carbon footprint significantly.

Adopting automation and latest technologies was another dominant strategy. Automated sorting systems, route optimization software, telematics etc. helped improve efficiency while reducing fuel and time wastage. Deutsche Post DHL implemented intelligent transport management software in 2020 that reduced truck journeys by 100 million km per year.

Collaborating with shippers focusing on sustainability was a key strategy for third party logistics providers like XPO Logistics. Through partnerships with companies having emission reduction targets, XPO helped cut supply chain carbon footprints and promote their green credentials.

Promoting multimodal shipments and shifting freight from road to rail helped lower emissions. In 2018, over 25% of FedEx's shipments in Europe utilized multiple transport modes like road-rail combinations.

Insights, By Mode of Transportation: Efficient Last Mile Delivery Boosts Roadways' Dominance

In terms of mode of transportation, roadways segment is expected to account for 45.7% share of the green logistics market in 2024. This is due to its ubiquitous presence and flexibility for last mile delivery. Road transportation remains the backbone for delivery of goods across both long and short distances.

Moreover, road transport is highly customizable for delivery of diverse product types. Vehicles ranging from small vans to large trucks can be deployed based on shipment size and urgency. As sustainability and customer experience become priorities, efficient last mile delivery will continue propelling the lead of road transportation in the green logistics market.

Various pilot projects demonstrate the viability of electric vehicles for ensuring last mile reach within cities. Subsidies and falling battery prices may accelerate their wider adoption going forward. This drives the growth of green road logistics solutions.

Insights, By Type: Reverse Logistics Management Reduces Waste

In terms of type, reverse logistics is projected to hold 30.7% share of the green logistics market in 2024. Reverse logistics services are high in demand due to the rising recirculation of returned or excess goods. As online purchases increase, so do product returns which hold value if properly managed through reverse logistics.

Additionally, stringent regulations in multiple jurisdictions now mandate proper treatment of electronic and hazardous wastes. Advanced reverse logistics plays a vital role in effectively handling the disposal and recycling of such wastes to comply with legal standards.

Sophisticated reverse logistics involve core activities like selection of appropriate recovery channels, sale of refurbished goods, material recycling, and regulated waste disposal. Growing sustainability concerns and a push for circular business models mean reverse green logistics assume greater importance going forward to reduce resource wastage.

Insights, By Application: Manufacturing Leads Green Logistics Adoption

In terms of application, manufacturing segment contributes the highest share in the green logistics market, as factories display increased focus on sustainable supply chains. End-to-end visibility and optimization of material and component flows form the core of green logistics initiatives in manufacturing.

Further, minimizing transportation’s carbon footprint holds relevance as manufacturers rely on extensive inbound and outbound freight movements. Investments in clean vehicles, route optimization and modal shifts to low-carbon transport go a long way in advancing factories’ sustainability mandates.

Sectors like automotive and electronics manufacturing see large-scale pilots of environment-conscious logistics solutions within their supply networks. Consumer goods majors invest in reverse logistics infrastructure to boost recycling efforts. As pressure to lower emissions and adopt purpose-driven targets rises, manufacturing leads the shift towards mainstreaming green logistics approaches.

• Asia-Pacific is the dominant region in the green logistics market, driven by government policies promoting renewable energy and sustainable development.
• In North America, food waste contributes significantly to the waste stream. The logistics sector is addressing this through sustainable practices, such as local sourcing and greener transportation methods.
• Japan's Commitment to EVs: Japanese automakers lead in developing efficient and aesthetically pleasing electric vehicles, aligning with trends in the global green logistics market.
• India's ULIP Program: The Indian government’s Unified Logistics Interface Platform (ULIP) is a strategic initiative to reduce emissions in the logistics sector by encouraging collaboration and innovation in green practices.
• The use of electric vehicles in logistics is expected to grow by 25% annually over the next five years. Renewable green logistics facilities powered by renewable energy sources have increased by 30% since 2020. Companies implementing green logistics have reported a 20% reduction in operational waste.

The major players operating in the green logistics market include FedEx Corporation, Deutsche Post DHL Group, United Parcel Service of America, Inc. (UPS), GEODIS, DSV, CEVA Logistics, Bolloré SE, YUSEN LOGISTICS CO., LTD., Agility Public Warehousing Company K.S.C.P., XPO Logistics, Inc., Kuehne + Nagel International AG, DB Schenker, C.H. Robinson Worldwide, Inc., Nippon Express Co., Ltd., and Panalpina World Transport Ltd.

• In December 2023, Yusen Logistics announced its commitment to reducing CO2 emissions by 45% by 2030, using fiscal year 2022 as the baseline. This initiative specifically targets Scope 1 and 2 emissions, aiming to enhance sustainability efforts and address climate change. The company plans to expand its focus to include Scope 3 emissions in the future​.
• In October 2023, UPS announced its agreement to acquire Happy Returns from PayPal. This acquisition aims to enhance UPS's reverse logistics services, providing customers with a streamlined return process. It will allow UPS to expand its returns footprint, combining Happy Returns' technology and established drop-off points with UPS's existing logistics capabilities, creating a more efficient and sustainable supply chain​.
• In July 2023, FedEx announced a partnership with a leading biofuel supplier to utilize sustainable aviation fuel (SAF) for its aircraft. This initiative is expected to reduce aviation emissions by up to 20%, contributing significantly to FedEx's sustainability goals and enhancing its eco-friendly operations. Additionally, this move is intended to set a higher standard for industry practices in sustainable aviation
• In March 2023, DHL announced a significant step in its sustainability efforts by adding 100 electric delivery vans to its fleet in the U.S. This initiative aims to enhance their green logistics capabilities and reduce carbon emissions by 15% annually. The new vans are part of DHL's broader commitment to electrify its delivery fleet, with a target of having 60% of its last-mile vehicles powered by electricity by 2030.

• By Mode of Transportation
  • Roadways
  • Railways
  • Waterways
  • Airways
• By Type
  • Reverse Logistics
  • Waste Management
  • Sustainable Packaging
  • Green Warehousing
• By Application
  • Manufacturing
  • Healthcare
  • Automotive
  • Banking and Financial Services
  • Retail and E-Commerce
  • Others