South Africa Contract Logistics Market Outlook, Trends by 2031

The South Africa contract logistics market was valued at US$ 1,800.71 million in 2023 and is projected to reach US$ 2,787.43 million by 2031; the market is expected to register a CAGR of 5.6% during 2023–2031.

Analyst Perspective:

Major stakeholders in the South Africa contract logistics market ecosystem are technology providers, contract logistics service providers, end users, and aftermarket logistics. In contract logistics, the entire supply chain management constitutes many substantial aspects, such as mode of transportation, parcel picking and shipping process, warehouse management, and packaging infrastructures. Supply chain management further includes software such as contract management system, transportation management system (TMS), and warehouse management system (WMS). All different software required for managing diverse business functions is integrated with a common single platform for obtaining contract logistics services. DHL Group; DSV A/S; DB Schenker; DP World; Gulf Agency Company Ltd; CEVA Logistics; United Pharmaceutical Distributors (Clicks Group); GEODIS SA; Cargo Carriers Pty Ltd; and Value Logistics are among the major South Africa contract logistics market players. The companies are focusing on contract logistics services to cater to the requirements of end use industries such as aerospace, e-commerce, retail, automotive, industrial, pharmaceutical, healthcare, etc. The majority of the companies have been focusing on expanding their service range in remote locations and focusing on adopting green logistics to remain competitive in the market. For instance, in 2023, the contract logistics arm of DHL Group introduced DHL Supply Chain's Green Transport Policy, which became a part of the company's investment in decarbonized transport solutions. The continuous development and innovation in logistic services such as transportation, warehousing, distribution, packaging and processing, production logistics, and aftermarket services are anticipated to boost the South Africa contract logistics market growth.

Market Overview:

Contract logistics offer a wide range of services, from production to distribution and aftermarket services. The companies operating in the South Africa contract logistics market provide standardized warehousing, transport, and other value-added services to form a customized supply chain solution. For instance, the contract logistics services comprise planning, production activities, sourcing, packaging, aftermarket services, repairs, etc. Major contract logistics companies offer standardized solutions with the help of leading supply chain providers to meet the customer's expectations. The trend of outsourcing logistics and demand for value-added logistics services are expected to grow from 2023 to 2031. Moreover, the demand for supply chain services is expected to witness substantial growth in South Africa during the same period.

Gauteng province is one of the major hubs in South Africa for financial, transport, and manufacturing industries. This province is expected to become one of the most lucrative markets for contract logistics players, owing to the huge concentration of large industries. The Gauteng province accounts for approximately one-third of the GDP of South Africa. The Northern Cape and Northwest provinces are the other industrialized provinces of the South African economy. While mining and agriculture are the major sectors in the Northern Cape, mining is the largest industrial sector in the Northwest province. Gold, uranium, platinum, and diamonds are the prime minerals that are mined in the Northwest province. Durban, which lies in the KwaZulu Natal province, and Pretoria from the Gauteng province, are among the highly industrialized cities in South Africa. Cape Town, Johannesburg, and Pretoria are other important industrial hubs in the country, bolstering the South Africa contract logistics market share in global logistics market.

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South Africa Contract Logistics Market: Strategic Insights

Market Size Value in	US$ 1,800.71 million in 2023
Market Size Value by	US$ 2,787.43 million by 2031
Growth rate	CAGR of 5.6% from 2023 to 2031
Forecast Period	2023-2031
Base Year	2023

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Market Driver:

Positive Outlook of Manufacturing Sector Fuels South Africa Contract Logistics Market Growth

Manufacturing has been identified in the National Development Plan (NDP) of South Africa as a sector that significantly contributes to creating new job opportunities and GDP growth. The manufacturing sector in South Africa, which contributes approximately ~14% to the country's GDP, is still trying to regain pre-pandemic levels. As various obstacles such as the COVID-19 pandemic, economic instability, and natural calamities have disrupted the industry's development over the past few years, many efforts by the private and public sectors to revitalize and improve manufacturing operations across the country demonstrate an encouraging outlook for small- and medium-sized companies. The agro-processing, metal & mining, textile, consumer electronics, steel processing, automotive, and paper & pulp sectors primarily comprise the manufacturing sector. As per Statistics South Africa, the agriculture sector increased by 4.2%, contributing 0.1% to the GDP in Q2 2023. The agriculture sector in South Africa is enormously diverse compared to other countries in sub-Saharan Africa. This is owing to the country's climate that varies from sub-tropical on the east coast, dry in the Karoo, and Mediterranean on the west. The major crop produced in South Africa is grain, which includes maize, barley, oats, wheat, and sorghum. These contribute more than ~30% to the total agricultural produce. Cost-effective & quality machinery and technology are a major requirement for farming communities to combat droughts, reduce high investment costs, and overcome electricity restraints.

South Africa is one of the leading producers of vanadium, platinum group metals, ferrochrome, vermiculite, alumino-silicates, zirconium, manganese ore, titanium minerals, and antimony, coal, gold, iron ore, silicon metal, ferro-silicon, and fluorspar. The 5th South Africa Investment Conference 2023 identified the core investment opportunities in the mining sector of South Africa under the theme of "Mining: A New Partnership for Growth." Diversified investment opportunities, environment sustainable development, as well as combating the challenges posed by unstable power outages were major highlights of the conference. In South Africa, with the rise in foreign direct investment and trade, the automotive industry's growth strategies are being adopted, which are highly integrated into the global automotive environment. Under the South African Automotive Masterplan (SAAM) 2021–2035, the target is to produce 1.4 million vehicles per annum in South Africa by 2035, which is anticipated to substantially improve the country's position in global vehicle production ranking. The Automotive Production Development Program (APDP) substituted the export-driven Motor Industry Development Program in 2013 with the objective of boosting local production of automotive components while balancing the incentives for OEMs to manufacture light commercial vehicles and passenger cars in the country for the local and international markets. Further, the supply chain of spare parts, raw materials, and components is highly dependent on logistic services. Transporting, warehousing, and distributing required for expanding customer base leads to increased demand for proper contract logistics services. Thus, the positive outlook of the manufacturing sector bolsters the South Africa contract logistics market size.

Segmental Analysis:

The South Africa contract logistics market analysis is carried out on the basis of the following segments: type, services, and end user. By type, the market is bifurcated into outsourcing and insourcing. The transportation managers strive to maintain a perfect balance between cost control, keeping a check on the shipping operations, and maintaining a safe working environment for the human personnel. With the required analysis and strategy formulation, the selection of the best method that supports the overall transportation function is extremely critical. The business size, complexity of the shipping operations, control of the operations, specialization, and stakeholder confidence influence the selection of the logistics type. Furthermore, the outsourcing segment is anticipated to hold a significant South Africa contract logistics market share during the forecast period.

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Regional Analysis:

The scope of the South Africa contract logistics market report encompasses South Africa. A combination of various micro as well as macroeconomic factors influences the functioning of the market in South Africa. The age and population demographics and disposable incomes of individuals, coupled with literacy rates in the country, constitute the microeconomic factors that contribute to the growing South Africa contract logistics market size. Key opportunities in the market are the increase in adoption of sustainable solutions, and integration of technology, which enhances efficiency in the logistics sector. The political uncertainty in the country has hit the economy of the country adversely. There are three trends expected to shape the future of the South Africa contract logistics market such as logistics digitization; the rise in B2B logistics companies; and the implementation of artificial intelligence (AI), cloud-based software, and process automation with an increase in investments toward infrastructure development.

South Africa has an extensive network of ports, airports, railways, and roads that create jobs and significant economic activity across the country. On a global scale, South Africa is a major player in international trade. With our strategic location, well-developed ports, and well-established trade routes, South Africa has become a significant trade hub worldwide. According to Global Edge, South Africa gets 33.44% of its GDP from exports and 31.46% from its imports. Challenges that might negatively impact the demand for contract logistics in the coming years include a lack of storage infrastructure, volatile fuel prices, and security concerns.

Key Player Analysis:

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 report includes growth prospects in light of current South Africa contract logistics market trends and driving factors influencing the growth of the South Africa contract logistics market.

Recent Developments:

A few recent developments by the South Africa contract logistics market players, as per their press releases, are listed below: