According to the new research report published by The Insight Partners, titled “Third Party Logistics Market - Global Analysis and Forecast to 2025”, The global third party logistics market is expected to grow at a CAGR of 13.5% during the forecast period 2018 – 2025, to account to US$1,240 Bn by 2025.

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.

Key findings of the study:

  • Asia-Pacific is anticipated to account the largest third party logistics market share.
  • Based on the transport, the roadways segment is projected to dominate the third party logistics market.
  • Domestic transportation garnered the second largest share in the third party logistics market by services in 2017.
  • Retail garnered the second largest share in the third party logistics market by end-user in 2017.
  • Based on the customer, the large enterprises segment is projected to dominate the 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.

Geographically, the market is currently dominated by Asia-Pacific and Europe, however the market is expected to be in favor of North America, which is anticipated to witness remarkable growth rate owing to the increase in demand for service integration, data management, and inclination of manufacturers towards more flexible solutions.

Third party logistic (3PL) firms have diversified resource network which help core companies to expand quickly and efficiently in a cost-effective manner. Depending on the needs of core companies, 3PL possess the capability to scale labor, space, and transportation needs irrespective of the fluctuation in inventory. 3PL firms deliver adequate resources and flexibility in services even in case of seasonal inventory or new product release. Many of the businesses experience seasonal fluctuation in customer demand and it is essential to handle such swings in business in order to maintain efficiency in operations. 3PL helps seasonal businesses to benefit from smoother transition between market lows and highs with utilizing more warehouse space and logistic resources. 3PL service providers manage company’s warehousing, distribution, and fulfillment services that helps company’s resources to manage seasonal swings.

The overall third party logistics market is very much fragmented with top ten players. Some of the major players having significant market share are Deutsche Post DHL Group, Kuehne + Nagel International AG, Nippon Express Co., Ltd., DB Schenker, and C.H. Robinson.

 

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