Logistics Business Outsourcing Market Anticipated to Attain $2.1 trillion By 2032, at 5.7% CAGR

The global Logistics Business Outsourcing Market was valued at $1.3 trillion in 2022, and is projected to reach $2.1 trillion by 2032, growing at a CAGR of 5.7% from 2023 to 2032. Logistics business outsourcing market occurs when a company engages the services of a third-party provider to oversee different aspects of its supply chain operations. These providers, commonly referred to as 3PLs, are capable of managing tasks such as warehousing, inventory control, fulfillment services, shipping, freight forwarding, and reverse logistics.

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As supply chains become more complex due to global trade, multi-modal transportation, and evolving customer demands, businesses seek specialized expertise to manage their logistics operations efficiently. Outsourcing logistics functions such as transportation management, warehousing, and distribution allows companies to focus on core competencies while leveraging third-party logistics providers (3PLs) to streamline supply chain operations. Furthermore, cost reduction and operational efficiency are significant drivers of logistics outsourcing. By partnering with 3PLs, businesses can benefit from economies of scale, shared resources, and optimized transportation networks, resulting in lower overall logistics costs. Outsourcing also helps avoid large capital investments in warehousing facilities, transportation fleets, and technology infrastructure.

The key players profiled in this report include

inexia (sncf group)
UNITED PARCEL SERVICE OF AMERICA, INC.
XPO Logistics, Inc.
DHL International GmbH
Kuehne + Nagel International AG
FedEx Corporation
Deutsche Bahn AG
Nippon Express Co., Ltd.
DSV A/S
A.P. Moller - Maersk

The report provides a detailed analysis of these key players in the global logistics business outsourcing market. These players have adopted different strategies such as expansion and product launch 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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High need for new aircraft, upgrading the existing aircraft, and a significant increase in aviation aftermarket logistics are expected to contribute to the increase in demand for the aerospace logistics sourcing market. For instance, according to Airbus, an aviation company, about 870 new aircrafts are projected to be required over the next two decades, driving aerospace companies to reconfigure their supply chains to handle demand of logistics business outsourcing industry.

Logistics business outsourcing industry that involves receiving stock shipments, storing and monitoring warehouse inventory, and selecting and packaging orders for shipment to customers. The majority of 3PL warehouses cater to multiple clients, fulfilling orders for various e-commerce companies.

On the basis of end user, the pharmaceuticals segment held the highest market share in 2022, accounting for more than one-fourth of the global logistics business outsourcing market revenue. This is attributed to pharmaceuticals often requiring precise temperature control throughout the supply chain to preserve product integrity and efficacy. Specialized logistics providers offer temperature-controlled storage, transportation, and distribution services (e.g., cold chain logistics) to ensure the safe and effective delivery of pharmaceutical products, including vaccines, biologics, and specialty medicines.

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The transformation of the global supply chain to prioritize customer-centric approaches allows companies to delegate their supply chain activities, enabling a greater focus on adaptability and responsiveness. In addition, the intricate international documentation procedures and customs regulations necessitate expertise in managing complex supply chain activities. Consequently, even small and medium-sized businesses have turned to 3PL services. The emergence of e-commerce and the digital revolution, often referred to as "The Amazon Effect," has altered consumer expectations and purchasing patterns. Consumers now demand unparalleled convenience, cost-effectiveness, control, and a wide array of choices.

The key advantage of employing a logistics business outsourcing market share for managing logistics tasks such as packaging, warehousing, fulfillment, and distribution is the realization of cost savings. This includes the avoidance of expenses associated with maintaining a warehouse and the personnel required for monitoring supply chain operations. A 3PL service delivers improved performance in tasks such as shipping and possesses a more seamless capability to scale its operations. It exhibits enhanced performance in tasks such as shipping and possesses a simple and reliable ability to expand its operations.

On the basis of mode of transport, the ocean carriers segment held the highest market share in 2022, accounting for around two-fifths of the global logistics business outsourcing market revenue. This is attributed to ocean freight accounting for a substantial portion of global trade volume, especially for transporting goods across continents. As international trade continues to grow, businesses rely heavily on ocean carriers to facilitate the movement of goods between major trading regions.

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The demand for reliable, speedy, and free shipping services in omni-channel operations has led companies to adopt a new business model, offering cost-effective and on-demand delivery services. In response to the significant changes and challenges posed by e-commerce, 3PL companies have made various adjustments in their supply chain management. There is a shift in focus from long-haul delivery to just-in-time delivery, and suppliers have moved from multiple storage facilities to a consolidated warehouse location. Companies have invested in smaller trucks and vans capable of supporting shorter and more frequent deliveries to meet the growth in demand for last-mile delivery.

Increase in penetration of Internet of things (IoT) in the logistics sector enables freight companies and consumers to direct access to the company network via the internet. The logistics infrastructure is constantly upgraded to meet the need. Increase in use of artificial intelligence (AI), machine learning, radio-frequency identification (RFID), and Bluetooth coupled with other newly introduced technologies, such as drone delivery and driverless vehicles, is being witnessed in logistics services.

Regional Analysis:

On the basis of region, North America held the highest market share in terms of revenue in 2022, accounting for more than two-fifths of the logistics business outsourcing market revenue. This is attributed to North America, particularly the U.S. and Canada, comprising the world's largest and most diverse economies. The region is home to a wide range of industries, including manufacturing, retail, healthcare, technology, automotive, and consumer goods, all of which rely on efficient logistics and supply chain solutions. The size and diversity of the North American economy drive the demand for outsourced logistics services. However, Asia-Pacific is expected to witness the fastest CAGR of 7.14% from 2023 to 2032. This is attributed to Asia-Pacific being home to some of the world's fastest-growing economies, including China, India, Japan, South Korea, and Southeast Asian countries. The region's economic growth has driven increased industrialization, urbanization, and consumption, resulting in rising demand for efficient logistics and supply chain services.

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