LONDON--(BUSINESS WIRE)--Technavio analysts forecast the global chemical logistics market to grow immensely at a CAGR of almost 12% during the forecast period and will post a revenue of almost USD 28.95 billion by 2020, according to their latest report.
The research study covers the present scenario and growth prospects of the global chemical logistics market for 2016-2020. To calculate the market size, the report takes into account the revenue generated by various vendors providing contract logistics services.
Countries such as China, Brazil, and India have high growth potential for the sales of chemical in APAC. In 2015, these countries accounted for a market share of more than 53% in terms of the global sales of chemicals. An increase in the demand for specialty chemical products and pesticide liquids is the major reason for this increased share.
“China was the largest contributor to the revenue to the chemical logistics market in APAC, accounting for more than 30% in APAC chemical logistics market. The other countries contributing to the growth of the market are India, South Korea, and Japan,” says Sharan Raj, a lead logistics research analyst at Technavio.
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Technavio transportation and logistics analysts highlight the following four factors that are contributing to the growth of the global chemical logistics market:
- Cost reduction through 3PL
- Increased government initiatives
- Increased acceptance of bulk containers
- Multimodal model eases transportation
Cost reduction through 3PL
Building a logistics infrastructure is a capital-extensive process, and the investment is blocked for a long time. Therefore, companies outsource their logistics services to reduce operational costs. Outsourcing logistics and other supply chain related services of their operations to third-party logistics (3PL) providers allow companies to improve the efficiency of their business by focusing on their core competencies. In addition, shippers achieve huge savings by avoiding expenses related to warehousing, vehicles, and machinery. Third-party logistics (3PL) providers also offer added value to the supply chain management needs of shippers by customizing services as per their requirements. Hence, the shipper can partly outsource the logistics needs and carry out the remaining functions in-house.
“Third-party chemical distributors are acquiring small local distributors to carry out their operations in the untapped areas of different regions. Expectations of customers as well as manufacturers are also changing as they want to work with fewer distributors while having access to a wide range of products and services,” says Sharan Raj.
Global third-party chemical distributors have numerous opportunities to expand their customer base by acquiring new value-added services and increasing the overall efficiency of the logistics and supply chain network. In the case of specialty chemicals, manufacturers are ready to pay more price to the chemical distributors who offer advanced solutions of formulation, blending, technical expertise, and certification services for their valuable products, which are governed by strict regulations.
Increased government initiatives
The governments of various countries have taken initiatives to develop roads and transport services. The governments have liberalized and financed various infrastructure projects, which will encourage the public-private partnership (PPP) model in infrastructure development with respect to logistics and transportation. The public-private partnership (PPP) model in warehouse infrastructure, warehousing facilities, and the container rail segment will propel demand for logistics service providers.
In China, the government has taken initiatives to develop roads and transport services. In its 12th Five-year Plan (2011-2015), it highlighted to invest USD 64 billion annually for the expansion of rail networks, which includes the introduction of new high-speed trains. The plan has also laid several policies to enhance the train management system (TMS) by giving more provision for inclusion in IT-related supply chain services. The government also focuses on upgrading the physical logistics infrastructure through the development of new roads and highways.
Increased acceptance of bulk containers
Chemicals are sensitive to external conditions of temperature, pressure, and moisture, and effective packaging must be ensured to reduce their potential hazards to the environment. The increased demand of the chemicals from various industries is a major growth driver in the logistics market. Shale gas, from which natural gas is extracted, is produced in high quantities in the US. This gas acts as a feedstock in the production of other chemicals.
The availability of abundant low-cost feedstock is attracting a lot of investors in the chemicals industry, which is fueling the production of myriad chemicals worldwide. This burgeoning industry has its own set of needs for packaging and transportation to the points of sale and end-markets. Mainly plastic materials are used for the storage of chemicals, such as impact copolymers and polypropylene.
Multimodal model eases transportation
Though multimodal transportation uses two or more modes for transportation of freight (chemical) from one place to another, the basic difference between intermodal and multimodal is in terms of contract. In intermodal, each mode of transportation has a different transport provider, each with its own independent contract. Whereas, in multimodal each mode has a different transport provider, but under a single contract.
Browse Related Reports:
- Global Third-Party Chemical Distribution Market 2016-2020
- Global 3PL Market 2016-2020
- Global Biopharma Cold Chain Packaging Market 2015-2019
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