The Third Party Logistics (3PL) Market is expected to grow at a CAGR of 5% over the forecast period from 2016 to 2024. Third party logistics (3PL) can be defined as a person whole receives, holds or transports a consumer product in the ordinary course of business but does not take title to the product. Third party logistics providers are courier companies, freight providers and other companies offering subcontracted logistics and transport services.
Continued growth in global economy and increased supply chain management has led to significant growth in the market. Increase in outsourcing of strategic, customer facing and IT intensive logistics activates has further fuelled the growth.
Market consists of intensely competitive industries such as computers, automotive, retail and electronics were margins are pretty low. However, more industries looking for complete logistics support are emerging across various verticals.
The Volume of cross border trade has increased vastly, with extra regional trade strongly outpacing intra-regional trade in many regions. Advanced Global trade management led the market growth that enabled companies to optimize, automate, and monitor cross-border transactions by layering trade data and millstones over the physical flow of goods. Advance approach for additional complexities, referencing a more complete set of variables to optimize decisions at each node within supply chain are anticipated to be growth drivers over forecast period.
Economic uncertainties, cost pressure and absence of government storage infrastructure continue to dampen growth and innovation in third party logistics. Fast-growing economies, burgeoning middle class, an abundance of low-cost labour and commitment to improve infrastructure and remove barriers to trade are factors global third party logistics providers are investing currently.
A smart growth transportation strategy for effective & efficient logistics model which includes multiple routes & types of transportation is expected to drive the market within the forecasted period. Optimization of Omni-channel distribution and flexible distribution strategies is further expected to create opportunities in the market.
The market is segmented on the basis of service and region.
On the basis of service, market is further segmented into domestic transportation management (DTM), dedicated transport carriage, international transport management, software, warehousing and Distribution. Domestic transport management is a significant segment in third party logistics services which includes freight brokerage and value added transportation management services. International Transportation management (ITM) is the leading segment and is anticipated to witness substantial gains owing to increase in cross-border logistics.
On the basis of region, Asia pacific leads the market with revenue share of about 35% and is expected to grow further owing to increasing adoption of distribution & warehousing facilities in Singapore, Thailand, India and Indonesia. China, owing to currency devaluation is growing uncertainty to the regional market. Hesitant to outsource more than basic transportation and slow pace of economic growth is hampering regional market in Japan.
In Europe, euro zone crisis is expected to hamper growth owing to economic uncertainties in the region. U.S markets are expected to witness steady growth over global demand of electronic products. Advent of e-commerce market along with entrepreneurial ventures is expected to fuel the industry growth of logistics and supply chain execution capabilities.
To enhance customer engagement, third party logistic providers marketed over social media. Green logistics has been adopted by major service provider to address environmental concern.
Markets are no longer growing fast enough to sustain multiple service providers, only handful of the players are expected to outgrow in domestic and global market. Global leading service providers include UPS, FedEx and DHL having global presence. Other Third party logistic providers include Exel plc, Kuehne & Nagel international, Schenker, P&O Nedlloyd, TPG/TNG, Nippon express and NYK logistics.
Research Support Specialist, USA