Third Party Logistics (3PL) Market Outlook, 2028

A third-party logistics (3PL) is a partner or service that helps manufacturers, particularly online retailers, to contract out their distribution and logistics-related work. Specialized services including inventory management, cross-docking, door-to-door delivery, and product packaging are offered by a third-party logistics company. As a result, businesses are better able to serve their customers, maintain scalability, reduce the risk of product damage, grow their businesses and enter new markets, and finish their core business processes. Moreover, the paradigm of third-party logistics facilitates increased asset utilization and asset sharing partnerships, hence augmenting demand and bolstering the expansion of the 3PL industry. Dedicated contract carriage (DCC), domestic and international transportation management, and other transportation modes and service types are among the commercially available forms of third-party logistics at the moment. The goal of third-party logistics is to maximize operational efficiency and boost profitability, which is driving the trend toward larger operations and an expanded information base. The strategic nature of the connections between shippers and outside logistics companies has improved. To deliver data-driven solutions, 3PL companies around the world are growing their workforce size, improving organizational abilities, diversifying their service offerings, acquiring new technology, and extending their geographic reach. Furthermore, the 3PL market is growing due to the expansion of the automotive industry, advancements in technology, increased last-mile connection, and an increase in cross-border trade activities. For instance, to strengthen the nation's logistics industry, the Indian government introduced the Multi-Modal Logistics Parks Policy (MMLPs). Concurrently, the Union Minister of Commerce and Industry declared that by 2025, $500 billion would be invested in the logistics industry. Additionally, the government introduced the National Logistics Portal, which links buyers, logistics service providers, and pertinent government entities to function as a transactional e-marketplace.

According to the research report, “Global Third-Party Logistics (3PL) Market Outlook, 2028” the market is anticipated to cross USD 1600 Billion by 2028, increasing from USD 1150.46 Billion in 2022. The market is expected to grow with 6.66% CAGR by 2023-28. In the near future, the market for third-party logistics is anticipated to increase steadily as more businesses come to understand the benefits of outsourcing their supply chain management. The report's authors claim that the widespread use of cutting-edge technologies like blockchain and artificial intelligence (AI) to boost the effectiveness and economy of 3PL operations is proof of this. In order to improve their supply chain operations and track shipments more effectively, businesses are also spending more in digital solutions including order management, fleet, and warehouse management systems. Additionally, 3PL companies are integrating a number of software-based solutions into their business processes to cut expenses and operational time while also decreasing inefficiencies. Additionally, by lowering the need for employee training, the use of speech recognition software in warehouse management system communications will assist inventory records and order turnaround times. In addition, when cloud-based technology becomes more widely used by 3PL organizations, they will be able to better meet seasonal trends by identifying the need for client access. Companies that provide one or more logistical services to a manufacturing industry are known as 3PLs. Even though 3PL companies do not own the product they are distributing, they are nonetheless required to carry out the purchasing company's stated logistics tasks. Today's supply chains for both small and large organizations heavily rely on 3PL. These companies offer services such freight consolidation, order fulfillment, inventory management, warehousing, distribution, and both domestic and international transportation. Manufacturing organizations can concentrate on core operations such as sales and product development by outsourcing their 3PL services. 3PL provides cost savings, tracks on international logistics, and instantaneous information & skills in the field. The market for third-party logistics is expected to be driven during the forecast period by factors such as an increase in demand for shipping cost reduction and a greater emphasis on timely delivery management, a decrease in a company's assets that allows for a concentrate on core business, and an advantage in managing seasonal changes.

Sports products retailer Net World Sports has launched a third-party logistics service. The business was just listed among the fastest-growing in the United Kingdom. It relocated earlier this year to a new 411,000-square-foot headquarters on the Wrexham Industrial Estate in order to safeguard its future in the city. Despite the company's rapid expansion, the new £25 million complex, of which the 380,000 square foot warehouse is a part, is currently barely half occupied. As a result, a warehouse and fulfilment service was added to the company's most recent venture, Net World 3PL. Through hiring more staff, implementing new technology, and fortifying an already strong courier network, the company has been able to boost the efficiency of picking and packing orders as a result of the transfer. Net World Sports currently occupies more than half of the warehouse despite having a significant inventory, which offers a chance to assist other ambitious businesses. Because of this, Net World Sports has expanded the range of services it offers and, through its newest venture, Net World 3PL, is now delivering agile warehousing and fulfilment services. Net World 3PL will offer a comprehensive solution to meet the storage and distribution needs of different types of enterprises.

Asia-Pacific Third-Party Logistics market is expected to exhibit prominent market growth during the forecast period attributed to the arising opportunity for third-party logistics providers to expand trans-regional trade corridors and ports.

The growing trans-regional trade corridors and gateways are expected to create a huge opportunity for the 3PL providers. The concentration of manufacturing and sourcing in China has led to the strategic shift of technology, pharmaceuticals, and the automotive sector in other countries. Such a shift is expected to propel market growth in countries, including India, South Korea, Japan, and Vietnam. The ongoing development of logistics infrastructure and increasing emphasis on transportation practices in emerging countries are expected to propel market growth. For instance, the National Highways Authority of India (NHAI) and the National Highways Development Project (NHDP) have taken several initiatives for highway development. Under the Logistics Efficiency Enhancement Program (LEEP) set by the Government of India, the Ministry of Road Transport & Highways (MoRTH) is developing multi-modal logistics parks. The Vietnam government proposed Vietnam Sea Transport Development Plan, a vision to 2030 to escalate the maritime freight transportation. Under this plan, the government planned to invest in developing the deep-water port, transit port, and international gateway ports. 3PL companies provide additional services such as door-to-door services, cross-docking, packaging, and inventory management, which are essential for efficient e-commerce operations. There has also been a growing shift towards client-facing technology to increase customer involvement in tracking and instant decision-making, creating strong demand for third-party logistics across the e-commerce sector in the region.

Based on the mode of transportation, the roadways segment dominated the market in 2022 and the airways mode of transport is projected to be the faster-growing segment during the forecast period, 2023-28.

Transportation is one of the most important services comprised in the 3PL operations. Efficient transportation is physically moving supplies in relatively safe manner on right time, in right condition, and in a cost effective manner. The role of transport is the movement of goods from the point of manufacturer or storage to the point of use or the distribution points to end use. The selection criteria of mode of transport are depends on the physical characteristics of goods and supplies. In certain situations, environmental factors such as destruction of roads and railways may have a considerable impact on the mode of selection. The factors considered in mode of selection would be speed which the mode exhibits, flexibility that the mode offers, and comparative unit cost. The need for roadways as a mode of transport in 3PL industries has been witnessed to increase considerably owing to improvement of road infrastructure and increase in cross border trades between landlocked countries across the globe. Moreover, 3PL service providers adopt the latest IT solutions such as WMS and transport management systems (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 an automated ground vehicle and e-shuttles in on-road vehicles to operate on public roadways to provide autonomous parcel delivery solutions. However, the recent coronavirus outbreak has put a restriction on the global air freight trade resulting in a massive drop in the air uplift capacity, thereby increasing the carrier rates. Some companies, such as CEVA Logistics, have started the medical relief cargo charters for emergency shipments, such as PPE kits, facial masks, gloves, hands sanitizers, disposable gowns, respirators, ventilators, and other COVID-19 relief equipment and supplies.

Based on the services, Domestic Transportation Management (DTM) held majority of market share in the year 2022, mainly attributed to the surge in cross-docking services, escalating carrier rates, and rising fuel surcharge.

Domestic transportation management is expected to capture major market share of the global 3PL revenue share in the coming years. This includes planning, scheduling, tracking, and monitoring shipments from the point of origin to the destination. It also involves managing other logistics processes such as warehousing, inventory management, and order fulfillment. Further, the report finds, the emergence of autonomous vehicles and drones has made it possible to transport goods more efficiently, which has also increased the adoption of domestic transportation management services. This, coupled with government initiatives to improve the transportation infrastructure across various countries, is expected to drive the growth of the global third-party logistics market during the forecast period. For instance, in May 2020, Rhenus Group acquired the logistics group LOXX, which specializes in general cargo, less-than-truckload (LTL), and full truckload (FTL) business segments to improve the LTL and domestic transportation capabilities of the company in Germany. DTM services are performed in conjunction with freight brokers, which deal with shipment origin to their destination. The increasing trade movement among the unloading docks to a warehouse, escalating carrier rates, a surge in cross-docking services, and rising fuel surcharge are driving the growth of the DTM segment. The growing consumer demand in sectors, such as retail, and healthcare, and the steady GDP growth of various countries is further aiding the segment growth. The continued growth in global economic activities and a rise in the e-commerce sector have led to a rise in demand for international transportation management services.

On the basis of end users, e-commerce segment is projected to achieve more than 9% CAGR during the forecast period owing to exponential rate of internet penetration.

The "Move to 4.0" program was introduced in 2020 with the goal of assisting Europe's manufacturing companies in changing or diversifying their operations through new business models and cutting-edge technologies. It is projected that the manufacturing sector's notable expansion will propel the third-party logistics market during the projected decade. Nonetheless, another driver propelling the rise of the third-party logistics market revenue is the e-commerce industry's expansion brought about by small traders' usage of online platforms. The e-commerce industry is forecast to grow at a quick pace, and new technologies as well as the expansion of transport logistics infrastructure in the Middle East and Asia are predicted to have a major impact on market growth. Shippers are concentrating on outsourcing the transportation function in order to improve their efficiency and save costs. Globalization and rising working capital create a need for effective inventory management services. Furthermore, the industry continues to see dynamic expansion as a result of the reorganization of the brick and mortar business model. Companies can outsource their supply chain operations to concentrate on flexibility and responsiveness as a result of the evolving global supply chain, which is becoming more customer-centric. Aside from that, handling the intricate supply chain activity requires knowledge of the unstable international paperwork method and customs laws and regulations. Small and medium-sized enterprises are therefore also making use of 3PL services. The rise of online shopping and the digital phenomena known as "The Amazon Effect" have altered consumer expectations and purchasing habits. End users want simplicity, affordability, control, and choice at never-before-seen levels.

Market Drivers

• E-commerce Boom: The rapid growth of e-commerce is a significant driver for the 3PL market. As consumers increasingly turn to online shopping, there is a growing need for efficient and reliable supply chain and logistics solutions to fulfill orders, manage inventory, and provide last-mile delivery. 3PL providers play a vital role in helping e-commerce companies streamline their operations, reduce delivery times, and meet customer expectations for fast, reliable shipping.
• Globalization: The expansion of businesses into global markets is another major driver for the 3PL industry. As companies seek to tap into international markets, they require expertise in navigating complex international trade regulations, customs procedures, and diverse supply chain networks. 3PL providers offer specialized knowledge and resources to help businesses expand their global reach while minimizing the challenges associated with cross-border logistics.

Market Challenges

• Supply Chain Disruptions: One of the key challenges in the 3PL market is the increasing frequency and severity of supply chain disruptions. These disruptions can stem from various sources, including natural disasters, geopolitical conflicts, and, as seen recently, global health crises. Such disruptions can lead to delays, increased costs, and a need for quick adaptations. 3PL providers need to develop resilient supply chain strategies to mitigate these risks and ensure continuity of operations.
• Technological Integration: The integration of technology and data-sharing between 3PL providers and their clients can be a significant challenge. Often, clients have their systems and data management protocols, and bridging the gap between various systems can be complex. Ensuring seamless data exchange is crucial for optimizing supply chain efficiency and visibility. This requires investments in compatible technologies and robust data management practices.

Market Trends

• Sustainability and Green Logistics: A major trend in the 3PL industry is a growing emphasis on sustainability and eco-friendly logistics practices. Companies are increasingly concerned about their environmental impact, and 3PL providers are responding by adopting greener transportation options, optimizing routes to reduce emissions, and implementing sustainable warehousing practices. Sustainability is not only a trend but also a competitive advantage as environmentally responsible operations become more attractive to clients and consumers.
• Digitalization and Automation: The 3PL market is witnessing a significant trend toward digitalization and automation. Advanced technologies such as artificial intelligence, machine learning, and the Internet of Things are being integrated into logistics operations. These technologies enable real-time tracking, predictive analytics, and automation of routine tasks, leading to more efficient and cost-effective supply chain management. 3PL providers are increasingly leveraging these innovations to enhance their services and improve client satisfaction.

Covid-19 Impacts

Lockdowns, factory closures, and restrictions on movement caused delays and shortages. 3PL providers faced challenges in adapting to these disruptions, often needing to find alternative suppliers, routes, and transportation methods. This led to a heightened demand for agile and flexible 3PL services to navigate the rapidly changing supply chain landscape. With more people shopping online due to lockdowns and safety concerns, e-commerce experienced a significant surge in demand. This created a corresponding surge in demand for 3PL providers to manage warehousing, order fulfilment, and last-mile delivery services. 3PL companies had to quickly scale up their e-commerce capabilities to meet this increased demand. Companies needed to balance the risk of overstocking with the risk of running out of critical supplies. 3PL providers played a crucial role in helping clients adapt their inventory strategies, offering dynamic solutions for managing and distributing goods to meet fluctuating demand. The pandemic brought heightened focus on safety and health in the workplace. 3PL providers had to implement rigorous safety protocols in their warehouses and transportation operations to protect their employees and ensure business continuity. This often involved additional costs for personal protective equipment, social distancing measures, and sanitization. Some industries, such as healthcare and essential goods, saw an increased need for 3PL services during the pandemic, while others, like travel and hospitality, saw a decreased demand. 3PL providers had to adjust their service offerings and capacities in response to these shifts.

Competitive Landscape

The global 3PL market is highly competitive, with a large number of players operating in the market. The competition in the market is primarily driven by factors such as price, quality of service, innovation, and customer service. Key players in the market are continuously striving to enhance their market position by implementing various strategies, such as expanding their global presence, entering into strategic partnerships, and investing in research and development activities. Some of the leading players in the global third-party logistics market include Dalsey, Hillblom and Lynn (DHL), FedEx Corporation, CH Robinson, Nippon Express , kerry logistics network limited, Expeditors International, Maersk Logistics, DB Schenker, UPS Supply Chain Solutions, Kuehne + Nagel, De Sammensluttede Vognmænd (DSV), CMA CGM SA, Sinotrans Logistics company, J.B. Hunt Transport Services, Inc. , The Rhenus Group , Geodis, Gati Express & Supply Chain Private Limited, Echo Global Logistics, Mahindra Logistics and XPO Inc.

Key Developments

• In March 2023, KKR revealed that Hitachi Transport System Ltd. had been purchased. Through the special purpose company HTSK Co., Ltd. ("HTSK"), which holds all of the voting shares of HTS, and the HTSK Holdings Co., Ltd., KKR holds the shares of HTS.
• In February 2023, CMA CGM and La Poste Group arrived at an agreement to build a deeper working partnership between their respective subsidiaries, CEVA Logistics and GeoPost.
• In February 2022, DB Schenker and Infor established a strategic relationship via which Infor Nexus technology will be used by Schenker's Logistics Service Provider (LSP) division to provide customers with a full solution.
• Dec 2022: SEKO Logistics established its first robotics partnership, with plans to "scale up" warehouse operations with GreyOrange's Ranger Assist Bots. SEKO will deploy 15 bots in one of its Milton Keynes, UK, during the first stage of the plan. Another 35 robots will be installed early next year. The logistics company intends to expand the bot initiative beyond the UK next year, with the Netherlands as the first location.
• In May 2022, DHL group announced to add 44 electric trucks in its DHL fright to reduce the carbon footprint and to get the zero-emission norm in the European Union.
• In May 2022, Zyngo EV Mobility Pvt. Ltd. announced to increase its active fleet size to deploy over 18,000 electric vehicles, which shall consist of around 60% EVs 2Ws and 40% EV 3Ws, for last-mile deliveries across India by the end of the current fiscal, i.e. FY 2022-23.

Considered in this report:

• Geography: Global
• Historic year: 2017
• Base year: 2022
• Estimated year: 2023
• Forecast year: 2028

Aspects covered in this report:

• Global Third-Party Logistics (3PL) market Outlook with its value and forecast along with its segments
• Region & Country-wise Third-Party Logistics (3PL) market analysis
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

Regions & Countries covered in the report

• North America (United States, Canada, Mexico)
• Europe (Germany, United Kingdom, France, Spain, Italy, Russia)
• Asia-Pacific (China, Japan, India, Australia, South Korea)
• South America (Brazil, Argentina, Colombia)
• Middle-East & Africa (UAE, Saudi Arabia, South Africa)

By Mode of Transport:

• Roadways
• Railways
• Waterways
• Airways

By Services:

• Domestic Transportation Management (DTM)
• International transportation management (ITM)
• Dedicated contract carriage (DCC)
• Warehousing & Distribution (W&D)
• Value-Added Logistics By Services (VAS)

By End User:

• Manufacturing
• Healthcare
• Retailing
• Food & Groceries
• Automotive
• E-commerce
• Technological
• Others

Intended audience:

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organisations related to the Third-Party Logistics (3PL) industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.