Third-Party Logistics Market

Global Third-Party Logistics Market Size & Growth (2022 - 2027)

The global Third-Party Logistics (3PL) market was worth US$ xx million in 2020, and it is determined to reach a valuation of US$ xx million, registering an annual expansion rate (CAGR) of xx% between 2021 and 2026.

In logistics and supply chain management, third-party logistics (3PL or TPL) is the use of third-party business by a company to outsource components of distribution, warehousing, and fulfillment services. Third-party logistics service providers are specialized in the integrated operation of transportation and warehousing services, which can be customized according to the needs of consumers according to market conditions and can meet the demand for goods and requirements delivery service. 3PL is the ability of manufacturers to outsource activities related to logistics and distribution. 3PL company can provide professional services such as cross docking, door to door delivery, inventory management, product packaging.

Market Growth

The growth of the global Third-Party Logistics (3PL) market encourages several companies to outsource their logistics activities to external providers due to the growing trend towards globalization.

Market Drivers

The Third-Party Logistics (3PL) market is expected to grow significantly with the development of the e-commerce industry. Furthermore, the demand for this service is expected to increase in the near future as manufacturers and retailers increase their interest in their core business and outsourcing activities, such as logistics, which lack experience. Dynamic market conditions and an improving world economy are key drivers of globalization. An increase in various trade-related activities has been observed due to increased globalization. Therefore, it is difficult for manufacturers or retailers to track these activities efficiently, and Third-Party Logistics (3PL) companies help these manufacturers to track and control these activities. Also, the development of foreign markets is an important factor driving the growth of the 3PL industry. Third-Party Logistics (3PL) services are becoming very important to price-conscious customers who need to choose more and more quality products that are delivered in a timely manner. Therefore, increased business activity due to globalization promotes the growth of the Third-Party Logistics (3PL) market. As competition intensified, the focus of manufacturers shifted to facilitate their respective specializations in production and distribution. Increasing working capital and globalization lead to the demand for efficient inventory management services. Besides, the restructuring of offline business models continues to provide dynamic growth for the industry. As a result of large-scale globalization, increased world business activity becomes a strong driving force for market development. The Third-Party Logistics (3PL) market is driven by the demands of manufacturers and retailers who feel important and rather want to believe in other parts of their core competencies. This leads to a general increase in e-commerce business and has an impact on the market.

The use of digital technologies to digitize processes is foreseen to drive market growth during the outlook period. To remain competitive and raise consumer expectations for on-time and accurate delivery, more e-commerce retailers are outsourcing the mission-critical components of distribution and fulfillment operations to Third-Party Logistics (3PL) partners. Due to the rapid growth of e-commerce, there is a growing demand for 3PL services around the world. The constant growth of e-commerce is fundamentally changing the third-party logistics (3PL) environment. Factors such as increased business activity due to globalization and increased concentration of manufacturers and retailers in core competencies are driving the growth of the Third-Party Logistics (3PL) market. In addition, the development of the e-commerce industry and the increase of reverse logistics operations will promote market growth. The use of IT solutions and software, cost reduction and lead time reduction due to the introduction of multimodal systems are expected to provide growth opportunities for the Third-Party Logistics (3PL) market. Increasing demand for effective inventory management and the adoption of new technologies to improve supply chain efficiency are other factors that are estimated to drive the growth of the target market. Rapidly growing cross-border business activity is one of the key factors expected to drive global market growth. The growing popularity of IoT-based services and automation of logistics services are several factors that create profitable opportunities for global Third-Party Logistics (3PL) business growth.

Market Restraints

The reluctance of companies and organizations to depend on independent companies to establish their logistics operations can hamper market growth. Risks to the manufacturer's goodwill hinder the growth of the Third-Party Logistics (3PL) market. Additionally, a decrease in manufacturers' control over logistics services limits market growth.

GLOBAL THIRD-PARTY LOGISTICS MARKET REPORT COVERAGE:

Market Segmentation

This global market research report is segmented and sub-segmented into the following categories:

Global Third-Party Logistics Market – By Mode of Transport:

• Railways
• Waterways
• Roadways
• Airways

The roadways sector dominated the Third-Party Logistics (3PL) market in 2020 with a value of more than $490 billion. The growth of the public-private partnership model and the emphasis on logistics infrastructure are estimated to drive highway growth during the foreseen period. In addition, various government initiatives are driving the growth of the trucking sector.

Global Third-Party Logistics Market – By Services:

• Warehousing
• Domestic Transportation
• International Transportation
• Inventory Management

The National Transportation Management (DTM) segment had the largest market share in 2020 with around 32%. DTM services are performed with a freight forwarder that covers shipment origin to destination.

Global Third-Party Logistics Market – By End User:

• Healthcare
• Retail
• Automotive
• Consumer Goods

The retail sector is determined to show the highest growth rates during the conjecture period. Logistics is the backbone of the modern retail industry and plays an important role in same-day delivery and fulfillment functions. Dedicated logistics and e-commerce services paved the way for midsize companies to enter the third-party logistics market, helping retail companies expand their operations and products in semi-urban areas.

Impact of COVID-19 on the Third-Party Logistics (3PL) market

The coronavirus pandemic has disrupted the activities and supply chain in several industries, including third-party logistics market. The impact of the pandemic on the transport, especially exports and imports, has caused a loss in terms of demand. The industry faces many problems mainly due to production unit closures and logistic restrictions. The third-party logistics market is estimated to resume with the relaxing lockdown conditions in the following days.

Regional Analysis

The Asia Pacific Third Party Logistics (3PL) market is supposed to register significant growth due to the rapid growth of the e-commerce industry. Also, economic growth in developing countries such as India and China is another factor that is expected to drive the growth of the target market. In addition, increased investments by government authorities in roads, railways, and air to develop all infrastructure for efficient transportation is a factor expected to support revenue growth in the region's target markets.

North America is expected to occupy a significant portion of the Third-Party Logistics (3PL) market, which is due to the growing demand for logistics software. Additionally, increased investments to improve routing and visibility are other factors expected to drive demand for third-party logistics services. In addition, the growing demand for supply chains and customized transportation services for the organized movement of goods is a factor driving the growth of the target market. Additionally, increasing product tracking requirements coupled with the growing need for cold chains are some additional factors driving target market growth in the region.

Top Leading Company

Major players in the Third-Party Logistics (3PL) market include DB Schenker, C.H. Robinson Worldwide, Inc., FedEx Corporation, DHL International GMBH, Maersk, KUEHNE + NAGEL Inc., Panalpina World Transport Ltd., Nippon Express, United Parcel Service, Union Pacific Railroad, etc.