FMCG Logistics: AI and IoT Driving Industry Growth in 2025

Highlights:

• Introduction
• Technological advancements in the industry
• Strategic alliances in the sector

Fast-moving consumer goods (FMCG) is a specialized branch of the consumer goods sector that deals with products with short business cycles, fast turnover, and low durability. Since the shelf life of perishables is relatively shorter than that of other conventional products, they are continuously manufactured and sold by the companies to address the demands of their consumer base. The nature of this industry thus compels businesses to have a robust supply chain and logistics for managing their operations and streamlining their workflows smoothly. Furthermore, the growing penetration of e-commerce platforms and websites has increased the demand for agile and swift transportation. The overall growth in various end-use industries, such as food and beverages, healthcare and pharmaceuticals, cosmetics and personal care products, and consumer electronics, has expanded the scope of the FMCG sector, thereby enhancing the demand for dedicated logistics services.

Innovations in FMCG logistics accelerating sectoral growth

The advent of the e-commerce sector has led to the adoption of an omnichannel distribution approach by several leading FMCG brands. Under this decentralized model of logistics, companies have started establishing warehouses and partnering with distributors and wholesalers to ensure swift delivery of their products to the end-use customers. In recent times, several FMCG businesses have even collaborated with retailers through unified platforms to streamline their planning processes and improve the overall visibility of their logistics operations. These partnerships have also enabled firms to optimize their workforce allocation, maintain sufficient inventory levels, minimize waste, and enhance data sharing between different stakeholders of the supply chain.

Moreover, the integration of AI and machine learning in these unified digital platforms has played a key role in the growth of the FMCG logistics market. In the last few years, AI tools have been used by companies to analyze vast volumes of data related to consumer preferences, purchasing trends, financial transactions, and behavioral patterns to predict the demand for certain goods. The collected information is also used for inventory planning and warehouse management, thus assisting businesses in reducing the chances of stockouts and overstocking. The use of machine learning algorithms and IoT devices has also enabled logistics companies to effectively track their shipments and the conditions of the goods being delivered in real time. Remote monitoring and the ability to predict future issues have helped brands cut downtime, reduce repair and maintenance costs, and save time. This, in turn, has led to higher long-term profits.

M&A deals and partnership agreements creating favorable conditions for growth

The FMCG logistics industry accounted for $1,056.58 billion in 2019 and is predicted to gather a sum of $1,400.80 billion by 2027, rising at a CAGR of 4.6% during 2020-2027. The strategic alliances established by leading companies in the market have contributed to the expansion of the sector in recent times. For instance, in July 2023, Swiggy, an Indian online food delivery company, announced the acquisition of LYNK Logistics Limited, an FMCG logistics company. The deal marked the entry of Swiggy into India’s online retail market. LYNK Logistics had, over the years, earned a reputation as one of the biggest tech-driven retail distribution enterprises in India. This business move is, thus, expected to impact Swiggy’s revenue share positively in the coming period.

In September 2024, Nulogy, a technology company, issued a press release stating that it had signed a partnership agreement with Kinaxis, a Canadian supply chain management solutions provider. Under this collaboration, both firms agreed to develop cutting-edge logistics systems for FMCG and life sciences brands. Nulogy has recently developed a multi-enterprise platform for its clients, including Colgate-Palmolive, Church & Dwight, and L’Oréal. On the other hand, Kinaxis has been one of the leading companies in promoting the use of AI-powered solutions in logistical operations. As per many industry experts, this partnership is expected to widen the scope of the landscape in the near future.

In conclusion, the growth of the FMCG logistics market is attributed to the increasing dominance of the e-commerce sector across the globe. Furthermore, the partnerships among various stakeholders in consumer goods supply chains have created favorable conditions for the growth of the industry. The introduction of advanced technologies such as AI, IoT, and machine learning is predicted to boost the revenue share of the landscape in the years to come.

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