UK Contract Logistics Market (2025-2035) Outlook and Forecast
The UK Contract Logistics market plays a pivotal role in the nation’s supply chain landscape, offering tailored transportation, warehousing, and value-added services for enterprises across diverse industries. Contract logistics involves outsourcing logistics and supply chain management functions to third-party experts, allowing client organizations to gain operational efficiency, optimize costs, and leverage advanced technology. This model's flexibility is critical in responding to fluctuating demand, regulatory shifts, and the ever-evolving requirements of retail, manufacturing, healthcare, automotive, and F&B sectors. In 2025, the UK market is witnessing strong demand for integrated logistics solutions, driven by digital transformation, surging e-commerce activity, and increased focus on sustainability. Key players remain competitive by investing in automation, AI-powered systems, and green logistics. With resilience and agility as prime concerns, contract logistics providers are embracing cloud platforms, robotics, and IoT for enhanced tracking and customer service. As regulatory requirements tighten and end-user expectations rise, contract logistics remains a core enabler of business growth in the UK.
Latest Market Dynamics
Key Drivers
E-commerce Expansion: With continued growth of online retail, especially post-pandemic, there is a surging demand for sophisticated last-mile delivery and fulfillment solutions. For example, DHL Supply Chain recently scaled up its dedicated UK e-commerce fulfillment centers to support rapid delivery and seasonal demand spikes.
Technological Advancements: Advanced warehouse automation and data-driven logistics platforms are transforming the industry. XPO Logistics, for example, has rolled out robotics-enabled fulfillment centers across the UK, enhancing operational efficiency and accuracy.
Key Trends
Green Logistics and Decarbonization: Sustainability is a growing focus, with logistics players adopting low-emission vehicles and eco-friendly warehousing. DB Schenker introduced a fleet of electric delivery vehicles in the UK to align with clients’ carbon-neutral targets.
Integration of Artificial Intelligence: AI-driven analytics and predictive supply chain visibility are on the rise. Kuehne + Nagel has deployed AI-powered inventory management tools for major UK manufacturers, reducing stockouts and excess inventory.
Key Opportunities
Value-Added Services: Rising demand for bespoke packaging, inventory optimization, and returns management presents new growth opportunities. GXO Logistics expanded its value-added offerings in the UK by launching custom kitting and reverse logistics programs for leading retailers.
Healthcare and Pharma Logistics: Increased focus on temperature-sensitive, regulated supply chains opens doors for contract logistics providers. CEVA Logistics recently secured new contracts for pharmaceutical distribution, investing in GDP-compliant storage facilities.
Key Challenges
Labor Availability and Skills Shortage: Recruiting and retaining skilled warehouse and driver personnel remain a persistent issue. Wincanton faced higher labor costs in 2024, addressing it through new employee upskilling programs and automated material handling systems.
Supply Chain Disruption Risks: Geopolitical uncertainties and Brexit-related trade complexities create volatility. DSV responded by enhancing scenario planning tools to ensure agility in cross-border operations.
Key Restraints
High Initial Investments: Implementation of warehouse automation and digital platforms requires significant capital, which can restrain smaller providers. Agility Logistics cited high upfront technology costs as a limiting factor to quick scalability in the UK.
Stringent Regulations: Compliance with evolving safety and environmental standards can impact timelines and costs. UPS Supply Chain Solutions reported elongated project cycles due to new customs documentation requirements in 2025.
In 2025, the UK contract logistics market is dominated by Transportation, which constitutes 38% of the overall market. Warehousing & Distribution follows closely at 32%, propelled by e-commerce and just-in-time inventory trends. Value-Added Services comprise 18%, reflecting growing client needs for packaging and bespoke solutions, while Inventory Management and Freight Forwarding collectively account for the remaining 12%. The trend towards integrated logistics and the evolution of consumer demand patterns highlight the expansion of holistic supply chain solutions. This distribution underlines the market’s focus on operational efficiency, advanced warehousing, and end-to-end service capabilities across all key sectors.
UK Contract Logistics Market Share by Applications, 2025
Retail remains the leading application segment in the UK contract logistics market for 2025, contributing 29% share. Manufacturing follows at 24%, driven by increasing adoption of outsourced logistics for efficiency. Healthcare logistics holds a 16% share, reflecting post-pandemic emphasis on resilience and compliance. Automotive and Food & Beverage each secure 12% and 11% shares, respectively, highlighting their reliance on well-orchestrated supply chains. Technology-related logistics represents 8%, as high-tech goods require specialized handling and fast turnaround. The strong foothold of retail and manufacturing is a testament to their volume requirements and complex distribution needs.
UK Contract Logistics Market Revenue (USD Million), 2020-2035
The UK contract logistics market is projected to grow steadily from 2020 to 2035, reflecting robust demand for comprehensive supply chain solutions. In 2025, the market is estimated at 21,700 Million USD, with a forecasted CAGR of 5.3% over the forecast period. This growth is attributed to surging e-commerce, continuous technological advancements, and rising uptake of value-added and bespoke logistics offerings. The revenue curve captures the increasing complexity and integration of logistics services as businesses strive for agility and resilience amid evolving consumer and regulatory expectations. This expansion is expected to generate significant investments in infrastructure, automation, and digital platforms.
UK Contract Logistics Market Year-on-Year Growth (%), 2020-2035
Year-on-year growth of the UK contract logistics market from 2020 to 2035 remains positive, with minor fluctuations reflecting external disruptions and industry adjustments. In 2025, the market YOY growth rate stands at 6.9%, propelled by the scaling of e-commerce and tech-driven innovations. YOY rates are expected to stabilize around 5.3% to 6% for the remainder of the forecast period. This consistency underscores the sector’s adaptability and the value creation enabled by investments in automation, digitalization, and green logistics, despite ongoing regulatory and cost challenges.
UK Contract Logistics Market Share by Regions, 2025
In 2025, England leads the UK contract logistics market, accounting for 77% of the total share due to its high-density population and concentration of distribution centers. Scotland follows at 12%, Northern Ireland at 6%, and Wales at 5%. The dominance of England emphasizes its strategic importance as the primary logistics hub, while Scotland and Northern Ireland benefit from growing investments in cross-border and regional supply chains. Wales’s share is driven by increased infrastructure focus on sustainable logistics solutions and connectivity improvements. Regional diversity in contract logistics underscores varied demand profiles and strategic expansion.
Top players command a significant share of the UK contract logistics market in 2025. DHL Supply Chain leads with 22%, followed by XPO Logistics (16%), Kuehne + Nagel (13%), and Wincanton (10%). CEVA Logistics and DB Schenker collectively hold 15%. Other prominent players, including DSV, GXO Logistics, and Yusen Logistics, make up the remaining 24%. Market leadership is maintained by continual investments in automation, sustainability, and tailored value-added services. The distribution of market share reflects healthy competition and sector consolidation, with nimble providers and technology-focused firms rising rapidly.
Retailers remain the dominant buyers of contract logistics in the UK, accounting for 34% of demand in 2025. Manufacturers, including automotive and industrial firms, follow closely at 28%. The healthcare sector contributes 14% share, while food & beverage players account for 12%. The remaining 12% is represented by technology firms and other sectors. The robust presence of retail and manufacturing highlights the complexity and size of their supply chain requirements. The healthcare and F&B segments’ growth further signals the importance of compliance and specialized handling in contract logistics services.
Study Coverage
Metrics
Details
Years
2020-2035
Base Year
2025
Market Size
21700
Regions
England, Scotland, Wales, Northern Ireland
Segments
By Type, By Application, By Distribution Channels, By Technology, By Organization Size
June 2024: DHL Supply Chain unveiled a fully automated e-commerce fulfillment center in Midlands, supported by robotics and AI-powered inventory tracking.
July 2024: XPO Logistics expanded its healthcare logistics service in England, announcing compliance with updated NHS medical device handling protocols.
August 2024: Kuehne + Nagel signed a strategic partnership with a major UK electronics retailer to deploy AI-based fleet management and real-time delivery analytics.
August 2024: CEVA Logistics launched a temperature-controlled pharmaceutical distribution hub in Manchester, accelerating its medical supply chain capabilities.
September 2024: Wincanton announced a pilot program for electric heavy goods vehicles in collaboration with a major UK supermarket, targeting emission reduction targets.
Frequently Asked Questions
About the Author
Lena
Senior Research Consultant
Lena is a Senior Research Consultant specializing in market research, industry analysis, and business consulting across Logistics. Lena brings a commercially grounded perspective to sectors shaped by changing demand, innovation, and competitive dynamics, helping turn complex market trends into clear strategic insights for business decision-makers. With 10+ years of experience across research, analytics, and strategic advisory roles, Lena has helped organizations translate data into actionable growth strategies.
