According to a recent report published by Allied Market Research, titled, “ 3PL (Third-party Logistics) Market by Mode of Transport, Service Type and Industry: Opportunity Analysis and Industry Forecast, 2020–2027,”the global 3PL market was valued at $1,027.71 billion in 2019, and is projected to reach $1,789.94 billion by 2027, registering a CAGR of 7.1% from 2020 to 2027.
At present, Asia-Pacific dominates the market, followed by North America, Europe, and LAMEA. China dominated the Asia-Pacific 3PL market in 2019, whereas Mexico is expected to grow at a significant growth rate in North America during the forecast period.
3PL is an outsourced activity related to the management of flow of goods in a company’s supply chain and delivery of products from manufacturer to the consumer on time. These services go beyond logistics and include value-addition to the entire process from procurement of goods to the distribution of furnished products to the customers establishing an effective and efficient supply chain. 3PL services are used by retailers and manufacturers to focus on their respective core competencies by outsourcing secondary services. Moreover, advanced IT solutions like such as EDI (electronic data interchange (EDI), and VMI (vendor managed inventory (VMI) etc. is enhancing supplementing the growth of the global 3PL market. The world 3PL market is further poised to witness significant growth during the forecast period, owing to increase in the development of the e-commerce industry and along with rise in trade activities around the globe, and inclination of manufacturers and & retailers toward enhancing their core competencies for enhance profitability. Moreover, varied government rules and regulations in different countries make manufacturers uneasy, which is increasing the demand of for 3PL expertise companies to deal with them. However, factors like such as lack of control on outsourced activities and risk to reputation or business due to inefficiency of 3PL services provide is hampering hamper the growth of this the 3PL (third-party logistics) market.
Transportation and logistics provider companies are improving and upgrading their services to provide offer reliability, service levels, and improve efficiency. For instance, on in October 2018, UPS, a global transportation and logistics services provider, opened its fourth largest global and second largest U.S.-based network package operating facility. Such facilities serve the Chicago Area Consolidation Hub (CACH) ground facility, which is incorporated for railway cargos. Third-party logistics service providers are adopting latest IT solutions, such as warehouse management system (WMS) and transport management system (TMS), to provide innovative delivery solutions to first-party companies. For instance, in September 2018, NEXT Future Transportation, Inc., a fully integrated logistics solution, introduced automated ground vehicle and e-Shuttlesin, an on-road transportation vehicle, to operate on public roadways to provide autonomous parcel delivery solutions. Leading third-party logistics companies are forming entering joint venture to operate across various regions using waterways transport operations. For instance, in July 2018, Dutch port services provider, LBH Group and German 3PL Rhenus Group entered into a joint venture to operate across Europe using inland waterway transport operations.
Leading transportation service companies are taking initiatives to accelerate interest of companies to adopt dedicated contract carriage. For instance, Penske Corporation, a logistics service provider, introduced a guide to simplify the process for first-party companies to evaluate dedicated contract carriage services. Third-party logistics giants are acquiring other logistics service providers to expand their businesses and market shares. For instance, in October 2018, a leading provider of transportation services and logistics technology, Transplace Inc. acquired domestic intermodal business of Yusen Logistics, a logistics service provider based in America. This acquisition is expected to provide Transplace Inc. a significantly larger domestic transportation business.
Factors such as increase in trading activities due to globalization and increase in focus of manufacturers and retailers on core competencies fuel the growth of the 3PL market. In addition, development of the e-commerce industry and increase in reverse logistics operations boost the market growth. However, risk to goodwill of manufacturers hinders the growth of the 3PL market. In addition, reduction in control of manufacturers on logistics servicerestricts the growth of the market. On the contrary, use of IT solutions & software, cost cutting, and lead time reduction due to adoption of multi-modal systemare anticipated to provide growth opportunities for the 3PL market.
Key Findings Of The Study
On the basis of mode of transport, the airways segmentis anticipated to exhibit remarkable growth rate during the forecast period.
The dedicated Contract Carriage (DCC)segment is expected to depict lucrative growth rate during the forecast period.
The LAMEA region is anticipated to grow at the highest CAGR in the near future.
In 2019, Asia-Pacific contributed the highest market revenue, followed by North America, Europe, and LAMEA.
The key players analyzed in this report are C.H. Robinson Worldwide, Inc., DB Schenker, DHL International GMBH, FedEx Corporation, KUEHNE+NAGEL Inc., Maersk, Nippon Express, Panalpina World Transport Ltd., Union Pacific Railroad, United Parcel Service, and others.