Global Third Party Logistics Market

Market Analysis and Insights:

The market for third-party logistics was estimated to be worth USD 1.35 trillion in 2021, and from 2021 to 2031, it is anticipated to grow at a CAGR of 8.93%, with an expected value of USD 2.89 trillion in 2031.

The market for third-party logistics (3PL) is shaped by a multitude of factors. An important factor is the growing intricacy of supply chain analytics across various industries. As companies expand their operations globally and encounter complex logistics challenges, they opt to delegate these responsibilities to specialized 3PL service providers. Furthermore, there is a growing focus on reducing costs and enhancing operational effectiveness, which fuels the demand for 3PL services. Businesses understand the advantages of utilizing the knowledge and resources of 3PL providers to streamline their supply chains and achieve cost efficiencies. Another key driver is the surge in e-commerce. Given the rapid growth of online retail and the necessity for fast and dependable delivery, companies turn to 3PL providers to handle their logistics operations. Moreover, the global expansion of trade has heightened the need for 3PL services as firms strive to navigate the intricacies of international shipping, customs procedures, and cross-border logistics.

Finally, the integration of new technologies like automation, artificial intelligence, and blockchain is propelling the transformation of the 3PL market, enabling more effective and transparent management of supply chains. In summary, the key drivers of the 3PL market encompass the escalating intricacies of supply chain management, the drive for cost savings and operational efficiency, the growth of e-commerce, the globalization of trade, and advancements in technology.

Third-party Logistics Market Scope :

Market Definition

Third-party logistics, often abbreviated as 3PL, is the practice of entrusting logistics and supply chain management functions to a dedicated external partner. This arrangement encompasses the organization and implementation of a range of operations including transportation, storage, and delivery on behalf of the customer entity.

The domain of global supply chain management in modern times greatly benefits from the pivotal role that third-party logistics (3PL) fulfills. By availing themselves of 3PL services, businesses gain access to a range of advantages and supplementary services. An essential aspect that underscores the significance of 3PL is the opportunity it provides companies to concentrate on their core proficiencies through the delegation of logistics operations to adept service providers. These specialized entities possess the requisite know-how, infrastructure, and interconnected network essential for managing diverse facets of the supply chain such as warehousing, transportation, distribution, and inventory control, thus fostering a more efficient operational framework.

Furthermore, 3PL providers furnish businesses with agility and scalability features, facilitating adept responses to evolving market requisites and fluctuations, resulting in potential cost reductions and heightened customer contentment. Leveraging the proficiency and assets of 3PL providers allows companies to elevate supply chain transparency, diminish inaccuracies, and enhance delivery timelines, ultimately culminating in superior customer service delivery and an elevated competitive edge within the marketplace.

Key Market Segmentation:

Insights On Key Mode of Transport

Roadways

Roadways are expected to dominate the Global Third-party Logistics market. This can be attributed to their prominence as the most widely used mode of transport for logistics services, offering extensive connectivity and accessibility. Roadways provide flexibility, allowing for the transportation of goods to various destinations, both within cities and across different regions. Additionally, road transportation is readily available and cost-effective, making it a preferred choice for many businesses.

Waterways

Waterways are another important mode of transport in the Global Third-party Logistics market. Water transportation offers several advantages, such as the ability to carry large volumes of goods over long distances at a lower cost compared to other modes. It is particularly suitable for transporting heavyweight and bulky cargo. Waterways also provide access to remote areas and facilitate international trade through ports. Although water transportation may not dominate the market, its significance and utilization cannot be overlooked.

Airways

While not dominating the market, air transportation holds a vital place in the Global Third-party Logistics market. Airways are essential for time-sensitive shipments, perishable goods, and high-value products that require quick delivery. Air transportation offers rapid and efficient delivery, especially for long-distance and international shipments. Although air transport is generally more expensive than other modes, its speed and reliability make it essential for specific logistics requirements.

Railways

Railways, although a reliable mode of transport, may not dominate the Global Third-party Logistics market. Rail transport primarily excels in long-haul freight transportation, providing an efficient, fuel-efficient, and environmentally friendly option. It is particularly suitable for transporting bulk goods and commodities over vast distances. Railways offer intermodal connectivity by facilitating the transfer of goods to other modes of transportation, such as roadways or waterways. While railways play an important role, their dominance may be limited compared to other modes in the third-party logistics market.

Insights On Key Service Type

Domestic Transportation Management

Domestic Transportation Management is expected to dominate the Global Third-party Logistics market. It involves the outsourcing of domestic transportation services to third-party providers. This part is crucial for organizations seeking to optimize their domestic supply chain, enhance visibility, and gain access to a wide network of carriers. It offers benefits such as increased flexibility, reduced transportation costs, and improved customer service.

Dedicated Contract Carriage (DCC)

Dedicated Contract Carriage (DCC) is another important part of the Global Third-party Logistics market. DCC refers to outsourcing transportation to a third-party provider that operates dedicated vehicles for an organization's exclusive use. This is set to grow due to its ability to improve efficiency, reduce costs, and provide dedicated resources tailored to a company's specific needs.

International Transportation Management

International Transportation Management is a key part within the Global Third-party Logistics market. It revolves around the outsourcing of international transportation services to third-party providers. This part addresses the complexities of cross-border logistics, including customs regulations, documentation, and global transportation networks. It enables businesses to expand their global reach, enhance supply chain visibility, and reduce international shipping costs.

Warehousing and Transportation

Warehousing and Transportation is another significant part of the Global Third-party Logistics market. It involves outsourcing warehousing and transportation functions to third-party providers. This part offers businesses access to modern warehousing facilities, skilled personnel, advanced technologies, and optimized transportation networks. It helps organizations streamline their supply chain operations, minimize inventory costs, improve order fulfillment, and enhance customer satisfaction.

Insights On Key Industry

Technological

The technology is poised to dominate the global third-party logistics market. These companies require logistics support for the transportation, warehousing, and distribution of technological equipment, components, and devices. Third-party logistics providers specializing in the technological sector offer expertise in handling delicate and high-value products, ensuring their safe and efficient delivery.

Retailing

The retailing part is gaining importance as technology companies increasingly outsource their logistics operations. This can be attributed to the growing e-commerce sector, which relies heavily on efficient logistics services for timely delivery of goods to customers. With the rise of online shopping, the demand for third-party logistics providers in the retail industry has increased significantly. These providers offer services such as warehousing, inventory management, order fulfillment, and last-mile delivery, enabling retailers to streamline their operations and meet customer expectations in a highly competitive market.

Automotive

The automotive part is a significant part of the global third-party logistics market. This industry requires reliable logistics services for the transportation of vehicles, spare parts, and other automotive components. Third-party logistics providers play a crucial role in managing complex supply chains, providing just-in-time delivery, and ensuring the effective distribution of automotive products to dealerships and end customers.

Elements

The elements part, which includes industries such as chemicals, oil, and gas, is a significant part of the global third-party logistics market. These industries require specialized logistics services to handle hazardous materials, comply with safety regulations, and ensure the timely delivery of products. Third-party logistics providers in this part offer expertise in handling and transporting dangerous goods, managing storage facilities, and providing value-added services such as packaging and labeling.

Food and Beverages

The food and beverages part is an essential part of the global third-party logistics market. This industry relies on efficient and reliable logistics services to ensure the timely delivery of perishable goods with strict temperature control requirements. Third-party logistics providers specializing in the food and beverages sector offer cold chain management, temperature-controlled warehousing, and customs clearance services to meet the unique demands of this industry.

Healthcare

The healthcare part is a significant part of the global third-party logistics market due to the increasing need for safe and compliant transportation of pharmaceuticals, medical devices, and healthcare products. This industry demands specialized logistics services that ensure regulatory compliance, temperature control, and the proper handling of sensitive and high-value goods. Third-party logistics providers in the healthcare sector offer secure transportation, specialized storage facilities, and value-added services such as kitting and labeling to meet the specific requirements of the healthcare industry.

Insights on Regional Analysis:

Europe: 

Europe is expected to dominate the global third-party logistics market due to its well-developed transportation network, high internet penetration, and a flourishing e-commerce sector. The region's focus on sustainable logistics solutions and stringent regulations regarding efficiency and environmental impact further drive the demand for third-party logistics services. The growth of industries like retail, pharmaceuticals, and automotive also contributes to the dominance for third-party logistics services in Europe.

North America:

North America holds significant potential in the third-party logistics market due to the region's well-established infrastructure, advanced technology adoption, and robust e-commerce industry. The rising demand for efficient supply chain solutions, increasing cross-border trade, and favorable government support further contribute to the region's growth in the market.

Asia Pacific: 

Asia Pacific is a rapidly growing market for third-party logistics, driven by the booming e-commerce industry in countries like China and India. The region's large consumer base, rapid urbanization, and rising disposable incomes are fueling the demand for efficient logistics services. Additionally, government initiatives to strengthen transportation infrastructure and streamline cross-border trade are attracting major players to invest in the region's logistics market.

Latin America: 

Latin America is experiencing steady growth in the third-party logistics market due to the increasing adoption of e-commerce, rising consumer expectations for faster deliveries, and a shift towards outsourcing logistics services. Despite logistical challenges, such as infrastructure limitations and complex regulatory environments, the region offers significant opportunities for logistics providers to offer end-to-end supply chain solutions and cater to the evolving customer needs.

Middle East & Africa: 

The Middle East & Africa region is witnessing significant growth in the third-party logistics market, driven by infrastructure development, rising international trade, and expanding e-commerce activities. Governments in the region are investing heavily in logistics infrastructure, such as ports and freight hubs, to attract foreign investments and facilitate seamless cross-border trade. The increasing demand for customized logistics solutions and the emergence of free trade zones further contribute to the market's growth in this region.

Company Profiles:

The primary participants in the international Third-party Logistics sector act as intermediaries connecting producers and sellers, offering services related to logistics like shipping, storage, and inventory control. Their significant function involves optimizing the supply chain and guaranteeing effective product delivery.

Prominent entities in the third-party logistics sector encompass C.H. Robinson Worldwide Inc., DHL International GmbH, FedEx Corporation, Nippon Express Co., Ltd., DB Schenker, UPS Supply Chain Solutions, Kuehne + Nagel International AG, XPO Logistics Inc., J.B. Hunt Transport Services, and Expeditors International of Washington Inc. These organizations are recognized for their extensive experience and operations in diverse logistics domains such as transportation, warehousing, freight forwarding, and supply chain management on a global scale. Catering to a broad spectrum of industries including automotive, retail, healthcare, and e-commerce, these leading players have solidified their positions as frontrunners in the third-party logistics industry by delivering effective and dependable solutions to address the evolving needs of businesses internationally.

COVID-19 Impact and Market Status:

The global third-party logistics sector has been significantly affected by the repercussions of the Covid-19 pandemic, leading to supply chain upheavals and a decline in the need for logistics services.

The global third-party logistics (3PL) market has been significantly affected by the COVID-19 pandemic. The imposition of lockdowns and travel constraints on a worldwide scale has disrupted global supply chains, resulting in a decrease in trade and manufacturing activities. Consequently, the demand for 3PL services has diminished as the volume of goods in need of transportation and distribution has declined. Additionally, international travel restrictions have posed challenges for logistics providers in effectively managing cross-border operations. Nevertheless, alongside the difficulties faced, the pandemic has opened up new prospects within the 3PL market. The surge in online shopping and e-commerce activities as a response to social distancing measures has escalated the requirement for efficient logistics and delivery services. This shift has prompted 3PL providers to concentrate more on last-mile delivery and e-fulfillment services. In response to evolving market dynamics, many 3PL companies have diversified their offerings, including services like temperature-controlled transportation for vaccines and medical supplies. In sum, the impact of the COVID-19 pandemic on the third-party logistics market has been a blend of setbacks in some areas and growth opportunities in others.

Latest Trends and Innovation:

- In April 2020, C.H. Robinson announced the acquisition of Prime Distribution Services, a leading provider of retail consolidation services. This acquisition aimed to expand C.H. Robinson's capabilities in the retail consolidation market

- XPO Logistics completed the sale of its European supply chain business to French firm Norbert Dentressangle in October 2015. The acquisition allowed Norbert Dentressangle to strengthen its position in the European third-party logistics market.

- In June 2019, Kuehne + Nagel successfully acquired Quick International Courier, a leading time-critical transport and logistics provider. This acquisition enhanced Kuehne + Nagel's capabilities in the healthcare and pharma logistics sectors.

- In February 2021, J.B. Hunt Transport Services announced the acquisition of non-asset based transportation logistics provider Mass Movement. This acquisition aimed to enhance J.B. Hunt's capabilities in the final-mile delivery market.

- FedEx Corporation acquired GENCO Distribution System in January 2015 to strengthen its position in the reverse logistics and aftermarket services market.

- DHL Supply Chain, a division of Deutsche Post DHL Group, announced the acquisition of specialized e-commerce fulfillment provider Mieloo & Alexander in November 2020. This acquisition aimed to enhance DHL's e-commerce fulfillment capabilities.

- Xpress Global Systems, a division of U.S. Xpress Enterprises, acquired American Red Ball World Wide Movers, a household goods logistics provider, in May 2021. This acquisition aimed to expand Xpress Global Systems' presence in the household goods transportation and logistics market.

- Expeditors International of Washington, Inc. announced the acquisition of Fleet Logistics' Digital Platform in September 2020. This acquisition aimed to strengthen Expeditors' digital capabilities in managing transportation and logistics.

- Ceva Logistics, a subsidiary of CMA CGM, completed the acquisition of CMA CGM Log in January 2019. This acquisition aimed to strengthen Ceva's position in the maritime container logistics sector.

- In March 2021, Maersk invested in India-based digital logistics platform BlackBuck, enhancing its capabilities in the digital freight marketplace.

- Yusen Logistics acquired Tibbett Logistics in September 2019, expanding its contract logistics and warehousing services in the UK and European markets.

- GEODIS, a global supply chain operator, announced the acquisition of French logistics provider PEKAES in November 2020, further expanding its network and capabilities in Europe.

- Agility Logistics acquired New Zealand-based logistics provider TIL Limited in September 2020, strengthening its presence in the Oceanic region.

- In July 2021, XPO Logistics announced the spin-off of its logistics to form two separate companies: XPO Logistics and GXO Logistics. This strategic move aimed to enhance both companies' focus on their respective markets.

Significant Growth Factors:

The expansion drivers of the Third-party Logistics Market comprise the escalating trend of globalization, the surge in e-commerce, and the demand for cost-efficient and effective supply chain management solutions.

The growth of the third-party logistics (3PL) sector has been propelled by several key drivers. One essential factor is the increasing trend towards globalization in trade and cross-border activities. As businesses venture into new markets, they necessitate efficient supply chain management solutions to streamline the movement of products and services. 3PL providers specialize in overseeing intricate logistics networks, empowering companies to enhance their operations and cut down on expenses. Another catalyst for growth is the surge of e-commerce. The rapid expansion of online retail has generated a need for dependable and scalable logistics services to manage order fulfillment and delivery. 3PL providers deliver tailored solutions to address the distinct needs of e-commerce enterprises, ensuring smooth order processing, inventory control, and last-mile delivery. Moreover, the mounting emphasis on sustainability and environmental stewardship has prompted companies to delegate their logistics functions to 3PL providers. These providers employ cutting-edge technologies and tactics to minimize transport distances, optimize routes, and diminish carbon emissions. Lastly, the adoption of innovative technologies like artificial intelligence, the Internet of Things, and blockchain has revolutionized the landscape of the 3PL market. These technologies enable instant tracking and monitoring of shipments, bolster supply chain visibility, and guarantee transparency and traceability. To summarize, the notable growth drivers fueling the expansion of the third-party logistics industry encompass globalization, the proliferation of e-commerce, sustainability considerations, and the incorporation of emerging technologies.

Restraining Factors:

The third-party logistics industry encounters obstacles stemming from the escalating intricacy of supply chain networks and the mounting expenses associated with transportation and storage solutions.

The global 3PL market is experiencing rapid growth, yet it faces challenges impeding its further advancement. Predominantly, the high costs linked with outsourcing logistics to 3PL firms pose a significant concern for organizations. Some may find it economically unsound to engage third parties over in-house management of logistics functions. Furthermore, the diminished oversight and transparency of supply chain activities present a notable barrier for firms evaluating 3PL services. This lack of control can hinder the swift and efficient resolution of issues, potentially impacting customer satisfaction and overall business performance. Entrusting such a critical aspect of operations to external entities also raises apprehensions regarding security and data privacy.

Another inhibiting factor is the geographic constraints encountered when businesses seek to expand into new regions. Diverse logistics regulations and infrastructure complexities in varying countries can present obstacles when coordinating with multiple 3PL providers. Additionally, the potential risks of disruptions, such as natural calamities and geopolitical tensions, must be thoroughly assessed to ensure operational continuity.

Nevertheless, despite these obstacles, the 3PL market offers several advantages. Diligent research and meticulous selection of 3PL providers can mitigate concerns related to expenses, control, security, and international expansion. By engaging in strategic planning and fostering effective collaboration, companies can harness the expertise and resources of 3PL partners to enhance supply chain efficiency, elevate customer service standards, and ultimately drive business growth and prosperity.

Key Segments of the Third-party Logistics Market

Logistics Mode Overview

• Railways
• Roadways
• Waterways
• Airways

Service Type Overview

• Dedicated Contract Carriage (DCC)
• Domestic Transportation Management
• International Transportation Management
• Warehousing and Transportation
• Others

Industry Overview

• Technological
• Automotive
• Retailing
• Elements
• Food and Beverages
• Healthcare
• Others

Regional Overview

North America

• US
• Canada
• Mexico

Europe

• Germany
• France
• U.K
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• Rest of Asia Pacific

Middle East and Africa

• Saudi Arabia
• UAE
• Rest of Middle East and Africa

Latin America

• Brazil
• Argentina
• Rest of Latin America