Logistics Outlook 2025
1. Introduction
2024 was a year marked by economic uncertainties, including significant elections in the USA and Indonesia, and escalating conflicts in Europe and the Middle East. Despite ongoing economic uncertainty in Europe and the USA, which impacts the global economy, it is essential to look forward to 2025 from a logistics and supply chain perspective. Four logistics and supply chain trends will be particularly important for 2025:
- De-industrialisation of Europe benefiting Asia and the Middle East
- Investment in digitalisation and automation within the logistics industry
- The need for end-to-end halal supply chains for brand owners
- The greening of urban logistics
The sections below will discuss these four trends in more detail.
2. De-industrialisation of Europe Benefiting Asia and the Middle East
The European Union (EU) has been a significant producer of agri-food and various industrial and consumer products for the world. However, stringent climate change-related laws and regulations implemented by the EU in Brussels are expected to impact agriculture production and the manufacturing industry in Europe. These regulations will force farming and manufacturing to reduce production, with many farmers and manufacturers being incentivised to move operations out of Europe.
Asia and the Middle East are poised to benefit from this shift, strengthening their industrial clusters to offset the reduction in agriculture production and manufacturing in Europe. As Asia and the Middle East are also committed to improve cleaner manufacturing practices and increase the use green energy sources, there are opportunities for a new generation of industrial and logistics zones developed in Asia and the Middle East where sustainability is addressed by design: linking supply chains to other ecological fitting supply chains and clusters that increase the business value chain significantly.
These changes will also shift logistics gravity further to Asia and the Middle East, weakening Europe’s significance as logistics hubs. Consequently, Asia and the Middle East will become critical production and logistics hubs, dominating international trade flows.
3. Investment in Digitalisation and Automation
The logistics industry has historically lagged in digitalisation and automation compared to other industries. This is especially true in Asia and the Middle East, where logistics operations have heavily relied on cheap labour and paper-based documentation flows. However, the industry will catch up in 2025 and beyond, by introducing new-generation distribution centres equipped with automated pallet warehouses and robotics, improving efficiency through process standardisation and automation, hereby significantly reducing manpower in warehouse operations.
Digitalisation will replace paper-based documentation flows, increasing logistics service efficiency and facilitating better tracking and tracing of goods flows. Important drivers for digitalisation in logistics and supply chain management include artificial intelligence and machine learning. In 2025, we will see an increased adoption of advanced demand forecasting, inventory management, and route optimisation, significantly improving logistics and supply chain performance as well as risk management. Investment in digitalisation and automation will allow developing countries to reduce logistics costs and lead-times.
4. Need for End-to-End Halal Supply Chains for Brand Owners
Halal supply chain management is an emerging requirement for halal food, cosmetics, and pharmaceutical supply chains. Since 17 October 2024, Indonesia has mandated halal certification for food production and their supply chain partners, extending from source to point of consumer purchase: retail, café, catering, restaurant, and e-commerce. By 17 October 2026, this law will extend to the cosmetics and pharmaceutical industry and their supply chain. Other Muslim-majority countries are expected to follow Indonesia’s example in the coming years.
Leading food brand owners, including producers and restaurant chains, have already implemented halal supply chain management. Halal assurance is implemented from source to point of consumer purchase, protecting halal integrity for Muslim consumers and corporate reputation in Muslim countries. In addition to halal-certified warehouses and transport, seaports and airports will increasingly implement halal-compliant terminal operations to provide proper identification of halal cargo, segregation of halal cargo from non-halal cargo, and dedicated halal inspection areas.
5. Urban Logistics is Going Green
There is both international and national political pressure to green urban cities toward zero-emission freight logistics and last-mile delivery. Local governments should promote urban logistics initiatives by bringing the right stakeholders together and creating incentives, acting as a pull factor to collaborate in urban logistics projects. Cleaner vehicles are essential for city deliveries, preferably using bio-gas, bio-diesel, hydrogen, or electricity. In many developing countries however, a necessary first step is to ban old diesel trucks from entering urban areas.
Logistics service providers will play a crucial role in consolidating and efficiently managing urban freight flows, while governments must foster an environment conducive to collaboration and innovation. By focusing on the largest freight flows such as construction, HORECA (hotel, restaurant, and café/catering), and waste, and by promoting cleaner vehicle technologies and urban consolidation centres, cities can make significant strides towards greener logistics. The future of urban logistics lies in our ability to collaborate, innovate, and continuously improve, setting the stage for a greener and more sustainable urban environment.
Conclusion
2025 will be an exciting year for logistics in Asia and the Middle East, further increasing their dominance as production and logistics hubs. Major investments in the logistics industry and modernising logistics operations through digitalisation and automation are expected. While there will be a significant reduction in unqualified, cheap physical labour, there will be a high demand for well-educated logistics talents to support the industry’s migration from traditional storage and transportation activities to more advanced logistics services supported by technology.
As brand owners implement end-to-end halal supply chains to better serve Muslim markets, the logistics industry has opportunities to support brand owners in organising their halal supply chains. Besides asset-heavy halal logistics solutions like halal transportation, storage, and terminal operations, there is a need for more advanced halal logistics services like halal 3PL and 4PL solutions.
There is both international and national pressure to green urban logistics. Urban logistics requires collaboration with local governments and competing logistics service providers. Logistics service providers that foster a collaborative mindset and invest in green logistics will find numerous opportunities in facilitating urban logistics.
I wish you a great logistics year ahead and look forward to meeting you at one of the LogiSYM symposia in 2025.
About the Author
Dr Marco Tieman
Chief Executive Officer
LBB International
Dr. Marco Tieman is the CEO of LBB International, a supply chain strategy consultancy and research firm, advising companies and governments on supply chain analysis, supply chain design, and market research. He is the organising chairman of LogiSYM Indonesia and Malaysia. He is also an Adjunct Professor with Saito University College in Malaysia and a Senior Fellow with IPMI International Business School in Indonesia. He is the author of ‘Halal Business Management: A Guide to Achieving Halal Excellence’.
This article was published on 21 January 2025 in the LogiSYM Magazine