Third-party Logistics (3PL) Market Value to Hit $2.8 Billion by 2031, Growing CAGR 8.8%

According to Mohnish Khisty, Lead Analyst, Automotive & Transportation at Allied Market Research, the global third-party logistics (3PL) market is estimated to grow at a CAGR of 8.8% from 2022 to 2031, owing to increased working capital and globalization, rise in outsourcing of major transportation & logistics services, and growing e-commerce penetration.

Rise in trading activities due to globalization, increase in focus of manufacturers and retailers on core competencies, and development of the e-commerce industry coupled with progress in reverse logistics operations fuel the growth of the global third-party logistics (3PL) market. On the other hand, lack of control of manufacturers on logistics service impedes the growth to some extent. However, increase in use of IT solutions & software and reduction in cost cutting and lead time due to adoption of multi-modal system are expected to create multiple opportunities in the industry.

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The world 3PL market is further poised to witness significant growth during the forecast period, owing to increase in the development of the e-commerce industry and rise in trade activities around the globe, and inclination of manufacturers and & retailers toward enhancing their core competencies for enhanced profitability. Moreover, varied government rules and regulations in different countries make manufacturers uneasy, which increases the demand for 3PL expertise companies to deal with them.

In addition, heavy investment in port, railways, and roadways infrastructure development is expected to fuel the growth of the third-party logistics market in the UK. For instance, in March 2020, the UK government declared a five-year plan to spend $888 (€733) billion on infrastructure developments, including telecommunications, roads, and railways. A total of approx. $36 (£27) billion toward the improvement of roadways with more than 50 projects is expected to complete by 2023.

Moreover, transportation and logistics provider companies are improving and upgrading their services to provide offer reliability, service levels, and improve efficiency. For instance, in September 2019, FedEx Corporation collaborated with Wing Aviation LLC, an Alphabet company, to launch a first-of-its-kind drone delivery service in Christiansburg, Virginia. The pilot program is projected to demonstrate the benefits of drone delivery to communities by exploring methods to enhance last-mile delivery service, improve access to healthcare products, and create a new avenue of growth for local businesses.

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Furthermore, third-party logistics service providers open and invest in the incorporation of new warehouses for storage and distribution of goods. For instance, in February 2022, DSV expanded its warehousing capacity by constructing additional warehouses in Limburg. These warehouses offered additional cross-dock, storage, and offices for the customers and employees of the road and solutions divisions, as well as the joint shared service center.

Also, the demand for economical transportation facilities for the movement of bulk goods is expected to boost the growth of the market. Moreover, surge in penetration of completely automated warehousing distribution systems is extremely less, which is expected to provide a remarkable growth opportunity for the key players operating in the third-party logistics market.

Covid-19 Scenario:

1. Important supply chains in the logistics and transportation industry were hampered, as a consequence of the coronavirus outbreak, though differently across air, freight, and sea sectors. In addition, logistics firms, which are involved in the movement, storage, and flow of goods, have been directly affected by the COVID-19 pandemic. The supply chain disturbance created by the COVID-19 pandemic negatively impacted competitiveness, economic growth, and jobs lost in the logistics industry.

2. Although some industries struggled during the pandemic, some thrived such as healthcare & pharmaceuticals, e-commerce, and the daily essentials goods industry, which affected the logistics industry positively during the COVID-19 outbreak globally.

3. In India, manufacturing activity opened, resulting in increased demand for logistics services, particularly after June 2022. India reported a strong recovery in FY2021, with a growth of 9% sequentially in Q4 FY2021. This rapid digital transformation encompassed a diverse spectrum from healthcare to manufacturing to logistics, which in turn propels the third-party logistics (3PL) market.

4. Also, in the post-covid era, the market observed rising activity from new and emerging players. The number of startups that accept funding is growing constantly. Technology plays a significant role in the third-party logistics industry with the rise in the e-commerce industry. Autonomous vehicles, automated parcel lockers, and drone delivery have become vital technologies developing in the market.

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The research provides detailed segmentation of the global third-party logistics (3PL) market based on the mode of transport, service type, industry, and region. The report discusses segments and their sub-segments in detail with the help of tables and figures. Market players and investors can strategize according to the highest revenue-generating and fastest-growing segments mentioned in the report.

Based on service type, the domestic transportation management segment held the highest share in 2021, accounting for more than two-thirds of the global third-party logistics (3PL) market, and is expected to continue its leadership status during the forecast period. However, the dedicated contract carriage (DCC) segment is expected to register the highest CAGR of 12.2% from 2022 to 2031.

Based on industry, the technological segment accounted for the highest share in 2021, holding more than two-thirds of the global third-party logistics (3PL) market, and is expected to continue its leadership status during the forecast period. However, the healthcare segment is estimated to grow at the highest CAGR of 11.3% during the forecast period.

Based on the mode of transport, the roadways segment held the highest share in 2021, accounting for more than two-thirds of the global third-party logistics (3PL) market, and is expected to continue its leadership status during the forecast period. However, the airways segment is expected to register the highest CAGR of 9.9% from 2022 to 2031.

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Based on region, Asia-Pacific held the largest share in 2021, contributing to nearly half of the global third-party logistics (3PL) market share, and is projected to maintain its dominant share in terms of revenue in 2031. However, Europe is estimated to manifest the fastest CAGR of 10.7% during the forecast period.

Leading market players of the global third-party logistics (3PL) market analyzed in the research include A.P. Moller - Maersk, C.H. Robinson Worldwide, Inc., DB Schenker, DHL International GmbH, DSV, FedEx Corporation, GEODIS, Kuehne+Nagel Inc., UPS, and XPO Logistics Inc.

The report provides a detailed analysis of these key players in the global third-party logistics (3PL) market. These players have adopted different strategies such as new product launches, collaborations, expansion, joint ventures, agreements, and others to increase their market share and maintain dominant shares in different regions. The report is valuable in highlighting business performance, operating segments, product portfolio, and strategic moves of market players to showcase the competitive scenario.

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