According to a new market research report, the connected logistics market is expected to grow from $5 billion in 2015 to $20.5 billion by 2020.

That works out to a compound annual growth rate (CAGR) of over 32 percent.

Connected logistics refers to the impact of connectivity from the internet of things (IoT) on logistics and its related fields of transportation and warehousing.

Connected logistics solutions are helping logistics companies monitor inventory, track theft and loss, and manage warehouses and assets more effectively. “The demand for this market is being driven by internet ubiquity across the world and the declining costs of Internet of Things components such as sensors and RFID,” says the report, published by MarketsandMarkets, a research company in Pune, India.

Big data and analytics platforms are other factors which the report considers an important driver of the IoT market.

“The connected logistics market is expected to flourish in the coming years owing to the increasing usage of mobile applications along with rapid proliferation of embedded sensor technology, wearables, and applications,” says the report. “Niche players such as ThingWorx and SecureRF are developing software platforms for efficient logistics processes. Apart from these, many others have emerged and are expected to evolve in the coming time.”

The connected logistics solutions have had a substantial impact on the logistics operations, according to the report. The market conditions for adopting IoT in logistics are now conducive because of the rise in mobile computing, affordable sensor technology, 4G and 5G networks, and advanced big data analytics. “These factors are enabling the adoption of IoT at an accelerated rate,” says the report. “There is also a pull from technologically advanced clients to provide IoT-based solutions for their logistics operations. One major example of connected logistics is using pallet or item-level tagging using low-cost, miniature devices such as RFID in inventory management systems in huge warehouses.”

The report discusses the connected logistics impact on roadways, railways, airways, and seaways in North America, Europe, Asia-Pacific, the Middle East, Africa, and Latin America.