South Africa Contract Logistics Market is expected to reach US$ 2,787.43 million by 2031

Growing Expansion of Logistics Sector Bolsters South Africa Contract Logistics Market Growth

According to our latest study on "South Africa Contract Logistics Market Forecast to 2031 – Country Analysis – by Type, Services, and End User," the market was valued at US$ 1,800.71 million in 2023 and is expected to reach US$ 2,787.43 million by 2031; it is anticipated to record a CAGR of 5.6% from 2023 to 2031. Apart from growth drivers, the report covers the South Africa contract logistics market trends and their foreseeable impact during the forecast period. 

An increasing population drives the rapid growth of South Africa's supply chain & logistics industry, which is projected to reach ~2.5 billion by 2050, according to the International Monitory Fund. Additionally, the growth of e-commerce platforms and digital technologies has increased the potential to transform the transportation of goods, making it convenient to track and deliver products over long distances. South Africa is a notable emerging economy; it is also the gateway to Sub-Saharan markets. In 2023, C&D Logistics signed the Intentional Cooperation Agreement with PG South Africa. Under the agreement, C&D Logistics is anticipated to strengthen cooperation with PG South Africa on nonferrous metal mineral products. This agreement is expanding the cooperation between the two parties and contributing to the economic and trade investment and support between South Africa and China, enabling a proper supply chain of mineral products. In 2023, HRMP Logistics planned to invest US$ 0.79 million to establish a new warehouse and distribution facility in the Dube Tradeport Special Economic Zone situated in Durban. In 2023, A. P. Moller–Maersk, a global integrator of logistics, opened its first warehousing & distribution facility in Cape Town, South Africa. This facility is anticipated to strengthen the company's customer base in South Africa by connecting and streamlining its supply chains with comprehensive logistics solutions. Thus, the surge in activities in transportation and warehousing, as well as the growing consumer goods distribution network, is boosting the expansion of the logistics sector, which fuels the growth of the South Africa contract logistics market.

South Africa Contract Logistics Market Share — by Country, 2023

Source: The Insight Partners Analysis

The scope of the South Africa contract logistics market report includes country analysis. In South Africa, online retail sales were US$ 2.62 billion in 2022, which surpassed US$ 2.22 billion in 2021, propelled by the rise in demand for home deliveries. The emerging consumer preference for shopping online and changing consumer purchase patterns from physical shops to online stores and apps is a key factor supporting the growth of e-commerce facilities in South Africa. Also, there was an increase in cross-border e-commerce activities as consumers purchased products from international markets, excluding the South African market, and had items delivered locally using contract logistics services. Appeal and accessories, food and beverages, cosmetics and personal care products, medicines and drugs, books, and electronic appliances are major sourced items in South Africa using e-commerce facilities, which is bolstering the South Africa contract logistics market size. Moreover, in January 2024, there were ~45.34 million internet users in South Africa, and the country's internet penetration rate reached ~74.7% of the total population at the beginning of 2024, which was ~72.3% in 2023. The growing internet penetration and changing consumer buying habits post-COVID-19 pandemic, from physical stores to online platforms, are positively impacting the e-commerce sector in South Africa.

The growing online activities such as appeal shopping, grocery shopping, business transactions, and transactions using online portals can lead to potential threats to data security posed by cybercrimes. Hence, the rise in cybercrimes has led the government of South Africa to mandate regulations in order to safeguard user’s critical information. For instance, The Electronic Communications and Transactions Act 2002 is the prime legislation that regulates and maintains e-commerce in South Africa, which is also streamlining the proper setup for e-commerce facilities.

Contract logistics are a contributor to the overall growth of the e-commerce sector by facilitating proper warehousing; inventory management; and product packing, tracking, shipping, and distributing. In the e-commerce sector, contract logistics providers facilitate efficiency, flexibility & scalability. In addition, the logistic services provided by the companies to e-commerce businesses are primarily focused on warehousing and distribution management, as well as managing reverse logistics and aftermarket services. Contract logistics service providers are dedicated to supply chain management, which allows online stores to focus more on marketing and other business operations, which is also increasing the proliferation of contract logistics services in South Africa. Thus, the rising e-commerce business activities are bolstering the South Africa contract logistics market size.

Major stakeholders in the South Africa contract logistics market ecosystem are technology providers, contract logistics service providers, end users, and aftermarket logistics. End users of contract logistics are aerospace, e-commerce, retail, automotive, industrial, pharmaceutical, healthcare, and others. The growing demand for e-commerce services and development in the retail and industrial sectors are among the major factors fueling the South Africa contract logistics market growth. For instance, in South Africa, online retail sales were recorded to be US$ 2.62 billion in 2022, which surpassed the figure of US$ 2.22 billion in 2021, propelled by the rise in demand for home deliveries. The emerging consumer preference for shopping online and changing consumer purchase patterns, from physical shops to online stores and apps, which is anticipated to boost the growth of e-commerce facilities in South Africa in the coming years.

The South Africa contract logistics market analysis is based on type, services, and end user. Contract logistics services include the storage and movement of goods to different locations from the point of origin supplier to the intermediate, ultimately reaching end users. Based on services, outsourcing is projected to hold a significant South Africa contract logistics market share by 2030. The contract logistic service providers majorly focus on the transportation of goods by different modes and warehousing. The companies offer services to an extensive range of industries by providing innovative solutions and high value for money to their customers. The highly used outsourced services include warehousing, transportation, freight forwarding, and customs brokerage, along with several value-added services such as packaging, cross-docking, and shipment consolidation. Based on service, the market is segmented into transportation, distribution, warehousing, packaging processes and solutions, production logistics, aftermarket logistics, and others.

The South Africa contract logistics market is a moderately consolidated market with the presence of well-established and industry-recognized players as well as emerging or private players. The South Africa contract logistics market players compete with each other on various parameters such as cost, time, aftermarket services, additional services related to product delivery, shipping lead time, and number of distributors, among others. All these parameters boost the competitiveness among the market players and are anticipated to keep a prominent level of competitive rivalry among the contract logistics service providers. Cargo Carriers (Pty) Limited, DHL Group, CEVA Logistics, DB Schenker, Gulf Agency Company Ltd (GAC), DP World, United Pharmaceutical Distributors (Clicks Group), Value Logistics, DSV A/S, and the GEODIS SA Ltd are among the key players profiled in the South Africa contract logistics market report. The companies implement both organic (such as product launches, expansion, and product approvals) and inorganic (such as collaborations and partnerships) strategies to stay competitive in the market.

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