The global third-party logistics market size accounted for USD 1.10 trillion in 2022 and it is projected to hit USD 2.43 trillion by 2032, expected to grow at a compound annual growth rate (CAGR) of 8.25% from 2023 to 2032. The U.S. third-party logistics market was valued at USD 219.4 billion in 2022.
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Accelerating growth of e-commerce and retail sector along with the introduction to new technologies in logistics such as advanced driver assistance system and adaptive cruise control system are thriving the growth of third-party logistics market. The market for third-party logistics expected to seek exponential growth in the upcoming years owing to rapidly changing global supply chain structure toward more customer-centric. This also encourages most of the companies to outsource their supply chain for focusing more towards responsiveness and adaptability.
In addition, complex documentation process and customs rules and regulations have triggered more to outsource supply chain in order to focus more towards customer satisfaction and demand fulfillment. As a result, medium and small-sized companies are also leveraging third-party logistics.
Moreover, the rise of internet and e-commerce business has accelerated the growth third-party logistics. Changing customer buying behavior and expectation has greatly influence the market and brought alluring opportunities in the market area. This has significantly increased omni-channel operations coupled with rising end-user expectation in terms of cost, convenience, choice, and control also thrive the third-party logistics market growth.
| Report Highlights | Details |
| Growth Rate from 2023 to 2032 | CAGR of 8.25% |
| Market Size in 2023 | USD 1.19 Trillion |
| Market Size by 2032 | USD 2.43 Trillion |
| Base Year | 2022 |
| Forecast Period | 2023 to 2032 |
| Segments Covered | By Service, By Transport and By End-use |
| Regional Scope | North America, Europe, Asia Pacific, Middle East & Africa, Latin America |
| Companies Mentioned | Burris Logistics, CEVA Logistics, 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 |
Retailers increasingly focus on the implementation of Omni-Channeled distribution strategies by catering the services of 3PL providers, owing to the increased popularity of online retailing. Retailers, relying on traditional brick and mortar channels, have evolved their distribution systems to address increasing consumer demands. Using their expertise, 3PL providers assist their retail partners in promptly locating and delivering products to the consumers, irrespective of the channels.
Cloud computing has garnered significant importance in the logistics and transport business by providing access to new IT technologies and real-time data accessibilities. The remote data management service helps 3PL providers in reducing their IT and overhead costs and allows easier data management scalability. Cloud computing has the potential to solve the issues of the firms that have explored avenues to minimize costs and maximize efficiencies, owing to the light of the emergence of omnichannel distribution. Many of the 3PL providers have started adopting cloud systems due to the lack of sufficient resources for large up-front software investments. The leading cloud companies are offering the option of paying as per usage. The adoption of cloud solutions also enables simplification of the logistics processes by bonding 3PLs and carriers in a streamlined manner.
3PL providers have increasingly deployed transport management systems (TMS) over the last five years. TMS helps companies in moving freight from the origin to the destination in an efficient, reliable, and cost-effective manner.
The IT capabilities of 3PL providers have become one of the most important criteria for judgment while selecting a logistics partner. Several automotive and healthcare companies have spun off their existing internal logistics departments and turned toward 3PLs for cutting down distribution costs. Automobile manufacturers catering the services of 3PL providers have managed to reduce their operational costs, considerably. 3PL providers assist in storing, distributing, and managing the inventory levels, including other additional services such as integrating procurement, processing, warehousing, marketing, and distribution.
Market Drivers
INCREASED FOCUS ON CORE BUSINESS ACTIVITIES
Catering the services of 3PL vendors also prevents companies taking recourse and splitting their in- house operations into several in-house sites, which may not be economical, resulting in 3PL vendors using the latest IT software and applications that enhance the distribution coverage and provide quality services to the customers. Omni-channel distribution has gained prominence over the last five years, primarily due to increased use of online marketing. 3PL providers assist their partners to promptly locate and deliver products to the consumers, irrespective of the channel, using their expertise.
REDUCED COST OF SHIPPING THROUGH 3PL
3PL services greatly reduce the cost of shipping, especially, for companies that engage in bulk shipments on a regular basis. With the increasing freight rates, shippers are in need of opportunities to pull out costs involved in the supply chain. 3PL providers steward progression in optimizing transportation costs by prescribing effective and prompt supply chain solutions. The growth of e- commerce and entrepreneurial ventures has stoked the demand for specialized logistics and supply chain execution capabilities. Shippers benefit from contracting of 3PL services by the reduction in logistics cost, inventory cost, and fixed costs. Globalization has resulted in outsourcing of logistics functions by several companies due to their infeasibility to manage worldwide supply chain operations. Customers desire for increased services and better visibilities at same costs. Technology plays a critical role in delivering key metrics and enhancing customer experiences. 3PLs provide improved and innovative ways to optimize the effectiveness of logistics.
Market Restraints
ECONOMIC DOWNTURN
Sluggish economic growths, emphasis on costs and risk containments, and inconsistent freight volumes have adversely affected the global logistics market. The recent economic tumult has critically affected the landscape of 3PL providers. Several economic factors influence the progress toward and maturity of the shipper-3PL relationships. The impact of recession on the shipper-3PL relationship has led to close scrutiny of costs along with choosing 3PL partners. Many shippers are opting for contract bids with new providers and shortening of their contract lengths to contain costs and leverage competition in the industry. Tepid economic activity has resulted in highly variable or neutral demand for outsourced logistics services. Thus, economic factors severely affect the profitability and future viability of 3PL services, negatively influencing the market growth.
Domestic Transportation Management (DTM) held majority of market share nearly 33% in the year 2022. This is mainly attributed to the surge in cross-docking services, escalating carrier rates, and rising fuel surcharge. In addition, continuous growth in the sectors such as healthcare, retail, and steady Gross Domestic Product (GDP) growth of various countries are further escalating the growth of DTM market.
Moreover, continuous growth in international trade expected to flourish the growth of the segment in the coming years. This is mainly influenced by the cross-border logistics activity and trade liberalization policies. Free trade agreement between several countries to promote their international trade aids to the growth of DTM market. For instance, Progressive Trans-Pacific Partnership (CPTPP) and the African Continental Free Trade Area (AfCFTA) are the recent examples of free international trade agreements.
Third-party logistics (3PL) market, by services, 2020–2022 (USD Billion)
| Service Type | 2020 | 2021 | 2022 |
| DCC/Freight forwarding | 96.38 | 104.42 | 113.47 |
| DTM | 289.19 | 311.05 | 335.55 |
| ITM | 287.21 | 309.19 | 333.83 |
| W&D | 184.60 | 197.30 | 211.61 |
| VALs | 31.62 | 34.83 | 38.47 |
The manufacturing segment held the majority of market revenue share of approximately 25.5% in the year 2022. This is mainly because manufacturing sector involves large number of suppliers and distributors for the procurement of raw materials and distribution of their products that makes logistics a tedious task for them. Henceforth, manufacturing sector occupy majority share in procuring third-party logistics services to save their time from supply chain maintenance and focus more towards customer satisfaction.
Roadways segment dominated the third-party logistics market in 2022 accounting for more 59% market share. Rising public-private partnerships coupled with increased emphasis on the logistics infrastructure are propelling the growth of the segment. In addition, the segment expected to exhibit accelerating growth owing to recent advancements in the vehicles along with supporting government regulations for roadways.
Airways segment estimated to forecast the fastest growth rate during the upcoming years. This is mainly attributed to the increasing necessity for fast and effective delivery system. These days, consumers are more focused towards services that are fast and cost-effective. However, COVID-19 outbreak in 2020 has significantly impacted the air freight business.
Third-party logistics (3PL) market, by Transport, 2020–2022 (USD Billion)
| Transport Type | 2020 | 2021 | 2022 |
| Roadway | 525.27 | 563.18 | 605.52 |
| Railway | 177.65 | 192.48 | 209.28 |
| Waterways | 139.81 | 150.83 | 163.31 |
| Airways | 46.28 | 50.31 | 54.83 |
North America occupied majority of revenue share of nearly 35.4% in the year 2022 and anticipated to exhibit a steady growth over the forecast period. The U.S. is leading the North America region with magnificent market share. This is mainly due to the presence of key players in the region such as XPO Logistics, Inc.,C.H. Robinson Worldwide (CHRW) Inc.,UPS Supply Chain Solutions Inc, and many others. Other than this, rising demand for cold storage in the region expected to boost the regional market growth.
The Asia Pacific anticipated exhibiting the fastest growth rate during the upcoming years. This is owing to the increasing trans-regional trade activities along with surge in manufacturing sectors in the developing and underdeveloped countries. Besides, technology advancement in the transportation and logistics sector along with introduction to advanced software for better management of supply chain in the Asia Pacific region has also created alluring opportunity for third-party logistics in this region.
Third-party logistics market is a fragmented market and players present are more focused to maintain their market position by adopting various marketing strategies. Besides, market leaders also adopting merger & acquisition strategy to increase their market share and jump their positions in the market. For example, in November 2019, Roadrunner Intermodal Services, LLC was acquired by Universal Logistics Holdings, Inc. to expand their logistics services across North America.
Some of the prominent players in the third-party logistics market include:
Segments Covered in the Report:
This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Precedence Research has segmented the global third-party logistics market report on the basis of service, transport, end-use, and region:
By Service
By Transport
By End-Use
By Geography
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