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.
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About Technavio
Technavio
is a leading global technology research and advisory company. The
company develops over 2000 pieces of research every year, covering more
than 500 technologies across 80 countries. Technavio has about 300
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and proprietary databases. They corroborate this data with the data
obtained from various market participants and stakeholders across the
value chain, including vendors, service providers, distributors,
re-sellers, and end-users.
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