3PL Market Trends, Growth And Share to 2020

Third Party Logistics (3PL) Market Size By Service (Domestic Transportation Management, Dedicated Contract Carriage, International Transportation Management, Software, Warehousing & Distribution), Competitive Analysis & Forecast To 2020

Industry Overview:

Global Third Party Logistics (3PL) market size is estimated to reach over USD 925.31 billion by 2020, growing at over 4% from 2014 to 2020. Reduced cost of shipping coupled with increasing focus on core business activities is predictable to spur demand growth during the next few years. With increasing freight rates, shippers are in need for opportunities to pull costs out of 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 demand for specialized logistics and supply chain execution capabilities.

S/W was valued USD 17 billion in 2013 and is likely to attain USD 26 billion by 2020, growing at CAGR of over 6% during the forecast period. Outsourcing product fulfillment operations offers several benefits of an entire logistics set-up which include warehousing, order processing equipment, computer and software systems, without the fixed overheads.

Firms having less in-house resources to handle logistics can manage high order volume more economically by outsourcing their logistics. Leading vendors use latest IT software and applications which enhances the distribution coverage and provides quality service to the customers. Omni-channel distribution has gained prominence over the last five years, primarily due to increased use of online marketing.

Sluggish economic growth, emphasis on cost and risk containment, and inconsistent freight volumes has adversely affected the global 3PL market size. Due to economic decline, shippers concentrated their outsourcing requirements to a few close suppliers; resulting in a number of ceasing operations.

Tepid economic activity has resulted in highly variable or neutral demand for outsourced logistics services. Thus, economic factors severely impact the profitability and future viability of key manufacturers, which may negatively impact 3PL market growth.

Service Overview:

ITM market size was valued USD 240 billion in 2013, and was the prime service segment. It is liable to witness substantial gains, with forecast of over USD 305 billion. DTM was expected to exceed over USD 315 billion by 2020. It involves freight brokerage and value-added transportation management services, which is likely to mature over the forecast period.

W&D accounted for over 22% of the industry revenue in 2013. It includes long-term contract warehousing or distribution center operations with several value-additions. Refrigerated grocery and pharmaceutical applications comprise the foremost growth areas for value-added warehousing services.

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Regional Overview:

Asia Pacific 3PL market was valued over USD 225 billion in 2013 and is expected to reach USD 320 billion by 2020 at a CAGR of 5% over the coming few years. Europe was anticipated to attain USD 190 billion by 2020, with gains estimated of over 2.5% from 2014 to 2020.

Europe’s growth prospects have subsided due to the negative impact of the Eurozone crisis, however, rebound in demand from life science and automotive industries are expected to drive the rejuvenation of the demand growth.

North America 3PL market was valued over USD 190 billion in 2014 and is likely to reach USD 245 billion by 2020. The region is expected to observe high growth owing to steadily reducing transportation and labor costs in the U.S. and Mexico coupled with technological innovation in logistics software in the U.S.

Competitive Market Share:

The global 3PL market share is moderately competitive, with top participants accounting majority demand in 2013. C.H. Robinson provides sourcing, transportation and consulting services to companies of all sizes, thereby offering them significant competitive advantage.

It helps companies to gain full visibility across orders and costs by using integrated technology to gather data. The company leverages the expertise of skilled logistics employees for solving transportation problems with the help of detailed analysis of industry conditions.

Other major companies include UPS Supply Chain Solutions, Kuehne + Nagel, Expeditors International of Washington, J.B. Hunt (JBI, DCS & ICS) and Deutsche Post DHL (Exel) among others.