Third-party Logistics Market Value To Grows At USD 1.19 Trn In 2023

Published Date : 22 May 2023

The global third-party logistics market value is growing at USD 1.19 trillion in 2023 and is expected to attain around USD 2.43 trillion by 2032, growing at a CAGR of 8.25% throughout the projection period 2023 to 2032.

Market Overview:

As online customers of all ages gravitated to e-commerce for simplicity, convenience, and safety during the pandemic, there has been a 77.6% growth in e-commerce since February 2020. Third-party logistics (3PL) suppliers have to demonstrate agility, adaptability, and flexibility to an unprecedented degree in order to meet these logistical and fulfillment expectations. In the post-pandemic world of 2021 and beyond, executives must contend with a brittle supply chain, a more demanding client base, and a significant market share for B2B e-commerce.

These services are provided to companies across a range of industries, including retail, manufacturing, food and beverage, medical and pharmaceutical, automotive, and more, by providers in the worldwide third-party logistics industry. The purpose of 3PL is to enhance customer satisfaction while streamlining supply chain processes and cutting expenses. Companies wishing to simplify their operations might choose 3PL providers since they can tailor their services to each client's unique requirements.

Regional Analysis:

In 2022, North America is predicted to hold the highest market share, accounting for 35.4% of the overall share. The United States is probably going to contribute the most to the growth of the sector. A significant element boosting the industry in the area is probably the rising need for cold storage. Additionally, the industry in the area may benefit from the presence of significant companies. Expeditors International of Washington, Inc., C.H. Robinson Worldwide (CHRW) Inc., and UPS supply chain solutions Inc. are a few of the well-known businesses in the area.

The Asia-Pacific (APAC) region accounted for the bulk of the worldwide 3PL market in 2019. India's 3PL market remains promising within this area, supported by recent tax reforms, changes in consumer behavior, such as a preference for online shopping, as well as other industry and governmental activities to increase capacity and infrastructure.

According to reports, the fast-moving consumer goods (FMCG), manufacturing, retail, and e-commerce industries, which require specialized logistics support and sophisticated solutions for better management of their supply chain processes, are likely to be the sectors driving growth in India's 3PL market.

Third-party Logistics Market Report Scope:

Report Coverage Details
Market Revenue in 2023 USD 1.19 Trillion
Projected Forecast Revenue in 2032 USD 2.43 Trillion
Growth Rate from 2023 to 2032 CAGR of 8.25%
Largest Market North America
Base Year 2022
Forecast Period 2023 to 2032
Regions Covered North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa

Competitive Landscape:

The third-party logistics market is fragmented, and the businesses already operating there are more concerned with retaining their market share through the use of various marketing techniques. In addition, industry leaders are using a merger and acquisition strategy to boost their market shares and positions.

Some of the prominent players in the third-party logistics market include:

  • Burris Logistics
  • CEVA Logistics
  • C.H. Robinson Worldwide (CHRW) Inc.
  • DB Schenker Logistics
  • FedEx Corporation
  • BDP International
  • UPS Supply Chain Solutions, Inc.
  • Kuehne + Nagel International AG
  • J.B. Hunt Transport Services, Inc.
  • Nippon Express Co., Ltd.
  • XPO Logistics, Inc

Market Dynamics:

Market Drivers: Rise in globalization results in the growth rate

Globalization-related growth in trade activity has raised the demand for effective supply chain management since there has been a large global increase in trade activities. As a result, there has been a commensurate rise in the demand for 3PL services, which aid companies in streamlining their supply chain processes and effectively managing the movement of goods.

Manufacturers and retailers are putting more emphasis on their core capabilities and outsourcing non-essential tasks like logistics to 3PL providers in the third-party logistics industry. Manufacturers and retailers are putting more emphasis on their core skills. This enables them to concentrate on their primary company operations and raise their level of competitiveness. 

Market Restraints: Conventional warehouse management techniques have not changed much

Every 3PL executive who is aware of the sales growth must interact with customers who use the software throughout the campus of warehousing to get a competitive edge. Recognizing strategies to deal with the complexity of supply chains gives a chance to increase effectiveness as well. Warehouse operations try to meet rising demand, labor concerns, and a variety of other restrictions in the post-pandemic age. Conflicts still arise as a result of silos in the majority of distribution operations, and traditional warehouse management systems (WMS) have fundamental constraints as a result of little meaningful change. These issues exacerbate today's new concerns.

Market Opportunities: Growing economic prospects and diverse company structures

In the logistics sector, growing economic prospects and diverse company structures foster a highly competitive business climate. As a consequence, efficient businesses leave the market for 3PL services and new ones emerge. The majority of 3PL suppliers saw their overall income increase significantly in 2021. Throughout the year, some of the top companies providing 3PL services globally included Kuehne + Nagel, DHL Supply Chain & Global Forwarding, DSV, and DB Schenker. The top three 3PL companies in the United States that year were C.H. Robinson, Expeditors, and UPS Supply Chain Solutions. Market-dominant corporations might rapidly lose their position due to fierce competition. For instance, between 2006 and 2017, revenue generation for the Swiss business Kuehne + Nagel fluctuated, mostly as a result of intense competition.

Report Highlights of the Third-party Logistics Market:

Freight brokerage accounts for 84% of sector revenues, and managed transportation for 16% under non-asset-based domestic transportation management (DTM). In order to satisfy shipper demand in 2021, DTM 3PLs struggled to acquire carrier capacity, just like their ITM counterparts. Strong demand and fluctuating motor carrier capacity swiftly boosted spot market prices, squeezing sector gross margins to 14.2% from 16.1% in pre-pandemic 2019; year-over-year gross revenue climbed by 52.4% to $139 billion and net revenue by 50.2% to $19.8 billion.

In 2021, the Value-Added Warehousing and Distribution (3PL) category performed exceptionally well. Gross sales rose by 17% to $54.6 billion, while net sales rose by 15.2% to $41.1 billion. With annual growth of 24% from 2017 to 2021, VAWD 3PLs will continue to be one of the fastest-growing domestic 3PL subsegments. Most VAWD 3PLs have fully stocked warehouses and have contributed to some extent to the explosive expansion of e-commerce fulfillment.

The Dedicated Contract Carriage (DCC) 3PL category, which is heavily reliant on assets, completed the 2021 growth narrative with slower growth. Net sales grew by 14.7% to $23 billion while gross revenue jumped by 15.3% to $23.1 billion. DCC's expansion is constrained by each provider's capacity to draw drivers and make capital investments in equipment, unlike its non-asset DTM siblings. In general, 3PLs with freight brokerages that could handle "overflow" business from DCC operations did well.

Recent Development:

  • 14 July 2022, Milwaukee, Wisconsin - A Roaring 2021: Demand Leads 3PLs to the Greatest Growth and M&A Year on Record - Current Third-Party Logistics Industry Findings and Forecasts for 2022, published by Armstrong & Associates, Inc. Shipping companies resorted to Third-Party Logistics Providers (3PLs) to boost stocks and prevent product stock-outs in 2021 as a result of high consumer demand, ongoing supply chain bottlenecks, and limited carrier capacity.
  • Sept 2022: SUN Mobility, a supplier of battery-swapping services and energy infrastructure for electric vehicles (EVs), teamed up with AI LOGISTIX, a start-up specializing in locating and resolving logistics and supply chain difficulties, to become India's last-mile delivery partner. The Bengaluru-based start-up leverages SUN Mobility's energy services as a customer of Alchemy Mobility LLP, a green mobility service provider for last-mile delivery companies. By March 2023, the two businesses want to have deployed 500 loaders and electric two-wheelers (E2Ws) as part of their partnership. Around 100 new vehicles will be added to the fleet each month.

Market Segmentation:

By Service

  • Domestic Transportation Management (DTM)
  • International Transportation Management (ITM)
  • Dedicated Contract Carriage (DCC)/ Freight forwarding
  • Value-Added Logistics Services (VALs)
  • Warehousing & Distribution (W&D)

By Transport

  • Railways
  • Roadways
  • Airways
  • Waterways

By End-Use

  • Retail
  • Manufacturing
  • Automotive
  • Healthcare
  • Others

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