Third party logistics (3PL) is basically the use of an outside company in order to perform the company’s product distribution and materials management functions. 3PL are the companies delivering single or multiple logistics services to a manufacturing company. Though 3PL firms do not hold the ownership of the product for distribution, however they are bound to accomplish the requested logistics activities of the purchasing company. 3PL is a significant part of today’s supply chain for small and large businesses. These firms provide services such as international & domestic transportation, inventory management, warehousing, distribution, order fulfillment, and freight consolidation. By outsourcing 3PL services, manufacturing companies are able to focus on product development, sales, and other core operations. 3PL offers immediate knowledge & expertise in the field, track on international logistics, and create cost savings.
Sinotrans Limited, DB Group, Deutsche Post AG, Geodis, and United Parcel Service, Inc. (Ups) – PROMINENT MARKET PARTICIPANTS IN THIRD PARTY LOGISTICS MARKET
Increase in demand for shipping cost reduction & more focus on timely delivery management, reduction on company’s assets & permitting focus on core business, and advantage in managing seasonal variations are projected to drive the market for third party logistics during the forecast period. However, lesser control of manufacturers on logistic service and delivery process may adversely impact the market for third party logistics in near future. Moreover, the factor such as increase in adoption and growth of e-commerce in retail sector is projected to generate remarkable growth opportunity to the industry players.
The services offered by 3PL firms add substantial value to the manufacturing companies. These firms help different companies to reduce weak points that outcomes in loss of revenue or profits and further help to assure maximal profitability. 3PL companies specialize in several logistics operations which offers network analysis, mode network optimization, warehousing, management of vendor compliance, and other logistic operations. In contrast with this, it is challenging for the core companies to gain such logistic expertise such as inventory management & storage, contract packaging, assembly needs, or shipping etc. in every business division. Thus, choosing a 3PL firm, company is basically opting for experts in logistics. This enable the company to devote their time and resources on areas of core competency & actual business instead of using it on managing logistic operations. Along with this, the company doesn’t need to spend on building their own warehouse facility, to hire additional labor, and installing several new technology by opting for 3PL which reduces company’s cost significantly.
The Third Party Logistics market operates in a highly fragmented and competitive marketplace. As leading companies in this market continue to broaden its addressable market, by expanding its current offerings, diversifying its client base, all the prominent players face an increasing level of competition. Several companies in the market are developing new products in order to maintain their position in the market and provide efficient products to their customers. For instance, in 2020, UPS opened a new US$ 1.5 million logistics facility in Nankan, Taoyua, Taiwan. This facility will increase UPS’s total storage capacity by more than 30% in Taiwan
The key companies profiled in the Third Party Logistics market include SINOTRANS Limited, DB Group, Deutsche Post AG, Geodis, United Parcel Service, Inc. (Ups), XPO Logistics, Inc, Kuehne + Nagel International AG, C.H. Robinson Worldwide, Inc., DSV A/S, and Nippon Express Co., Ltd. Several other players are also functioning in the market worldwide, contributing significant revenue shares year on year.
Most of the market initiatives were observed in Asia Pacific, which have high potential of Third Party Logistics providers. A few of the important market initiatives and product developments from the industry are mentioned below:
|2020||XPO Logistics, Inc. signed a long-term partnership agreement with Mercedes-Benz Parts Logistics. This agreement will the allow the company to manage parts distribution in the UK with an integrated and digitally managed transportation network||APAC|
|2020||GEODIS announced commercial partnership with Hellmann to expand its operations in France-Germany area. This partnership will allow GEODIS to strengthen its transport supply of distribution & Express services in Northern Germany.||APAC|
|2020||DB Schenker expanded its activities near cargo centre at Luxembourg Airport. It is one of the largest airport in Europe. This new 7,000 m² logistics centre help the company to link its European and global network. The new distribution centre is expected to generate more than 100 jobs.||APAC|
|2020||Porsche Cars Canada selected DB Schenker for operating its Ontario (New Mississauga) parts distribution centre. This new facility is expected to handle about 2, 82,000 orders in its first year of operation.||North America|