Third-party Logistics (3PL) Market Overview:
The global third-party logistics (3PL) market was valued at $869 billion in 2017, and is projected to reach $1,513 billion by 2025, registering a CAGR of 7.1% from 2018 to 2025. In 2017, the Asia-Pacific region garnered the highest share in the global 3PL market.
3 PL is the function by which a manufacturer outsources activities related to logistics and distribution. A 3 PL company can provide specialized services such as inventory management, cross-docking, door-to-door delivery, and packaging of products. The market for 3 PL service is expected to witness significant growth, due to development of the e-commerce industry. Moreover, the demand for this service is expected to escalate in the near future, due to increase in focus of manufacturers and retailers on their core business (known as core competencies) and subcontracting activities, such as logistics where they have less expertise. Thus, increase in competition has diverted the focus of manufacturers to promote respective specializations in production and distribution.
Furthermore, rise in globalization has aided in setting up a worldwide network of manufacturing activities. To maintain it efficiently, the demand of 3 PL companies is expected to rise. Moreover, the scope of 3 PL services is anticipated to increase during the forecast period, as productivity gains in supply chain in terms of cost and reliability can be derived with the help of managerial and information technology expertise provided by 3 PL companies. In addition, development of the e-commerce industry and increase in reverse logistics operations drive the growth of the market for 3 PL services. However, loss of direct control on the logistics service and potential loss of reputation are the most critical factors that restrict the growth of this market.
Some of the key players operating in the 3 PL market include DHL, United Parcel Service, FedEx Corporation, Maersk Logistics, DB Schenker, Kuehne+Nagel Inc., NYK logistics, Panalpina World Transport Ltd., Union Pacific Corporation, and BNSF Railway Company.
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Top Impacting Factors
Increase in trading activities due to globalization
Dynamic market conditions and improvement in global economy are the key factors driving globalization. Owing to rise in globalization, various activities related to trade are also witnessing increase. Hence, it is becoming difficult for manufactures or retailers to keep track of these activities in an efficient manner. This factor is expected to drive the market for 3 PL companies. Moreover, development of the overseas market is a key factor that fuels the growth of the 3 PL market. 3PL services are becoming extremely vital for price-sensitive customers who require a wider choice of high-quality products with timely delivery. Thus, by adopting 3PL services, manufacturer is able to perform expertise operations.
Increase in focus of manufacturers and retailers on core competencies
Increase in focus of retailers and manufacturers on their core business and sub-contracting activities such as logistics, where they have less expertise, has been witnessed in the market. The goal here is to promote the respective specialization in production and distribution. 3 PL companies can make better use of transportation assets by balancing the needs of multiple client shippers across transportation and distribution functions, which will result in economies of scale. Off shoring and outsourcing result in longer and more complex supply chains. Management of this type of supply chain is extremely difficult for manufactures; therefore, need of 3 PL service provider is expected to increase in the upcoming years.
3 PL model provides greater asset utilization and asset sharing alliances, which is increasing its demand.
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Risk to goodwill of manufacturer
A 3 PL service provider is responsible for one of the most important and critical function of the business. Their mistake will directly affect the manufacturer’s reputation and relation with the customers. If a 3 PL service provider does not deliver the order on time, then it leads to decrease in creditability of the manufacturing company, thereby degrading the level of trust of consumer on the company. This factor is expected to restrain the growth of 3 PL market.
Reduction in control of manufacturers on logistics service
By using 3 PL service, a manufacturing company has to rely on the reliability, competency, and honesty of service providers. In this scenario, manufacturer has to rely on 3PL provider, which results into lack of direct control. In addition, manufacturer is not able to monitor the operations at warehouse, which is a serious threat to the quality of products. This is how reduction in control of manufacturers on logistics service is hindering the growth of 3PL market.
Key Benefits for Third-party Logistics (3PL) Market:
This study comprises the analytical depiction of the global 3PL market analysis along with the current trends and future estimations to depict the imminent investment pockets.
The overall market potential is determined to understand the profitable trends to gain a stronger foothold.
The report presents information related to the key drivers, restraints, and opportunities of the global 3 PL market with a detailed impact analyses.
The current market is quantitatively analyzed from 2017 to 2025 to benchmark the financial competency.
Porter’s five forces analysis illustrates the potency of the buyers and suppliers in the industry.
Third-party Logistics (3PL) Key Market Segments:
By Mode of Transport
By Service Type
Dedicated Contract Carriage (DCC)
Domestic Transportation Management
International Transportation Management
Warehousing & Distribution
Rest of Europe
Rest of Asia-Pacific