Third-Party Logistics Market - Industry Dynamics, Market Size, And Opportunity Forecast To 2031

Global Third-Party Logistics Market was valued at US$ 1,112.6 Bn in 2022 and is estimated to reach US$ 2,349.2 Bn by 2031. The market is registering a growth at a CAGR of 8.7% during the forecast period 2023-2031. 

Third-Party Logistics (3PL) is an essential and rapidly growing business sector that offers a wide range of services to help companies manage their transportation, warehousing and distribution needs. 3PL provides critical business solutions by taking on the practical tasks that many companies would rather not do themselves. These third-party services can include inventory management, order fulfillment, transportation management, warehousing, reverse logistics, parcel delivery, and other related services. 

Providers in the global third-party logistics market offer these services to businesses in a variety of industries, such as retail, manufacturing, food and beverage, medical and pharmaceutical, automotive, and more. The goal of 3PL is to optimize supply chain operations and reduce costs, while increasing customer satisfaction. 3PL providers are also able to customize services to meet the specific needs of each customer, making them a great choice for companies looking to streamline their operations.

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Market Dynamics

• Increase in trade activities due to globalization: The rise in globalization has led to a significant increase in trade activities across the world, which has increased the need for efficient supply chain management. This has led to a corresponding increase in the demand for 3PL services, which help businesses streamline their supply chain operations and manage the transportation of goods efficiently.
• Rising focus of manufacturers and retailers on core competencies: Manufacturers and retailers are increasingly focused on their core competencies and are outsourcing non-core functions such as logistics to 3PL providers in the third-party logistics market. This allows them to focus on their core business activities and improve their competitiveness.
• Need for efficient worldwide network of manufacturing activities: The rise in globalization has also led to the setting up of a worldwide network of manufacturing activities. To maintain this network efficiently, the demand for 3PL services is expected to rise, as they provide the necessary support and expertise in managing the supply chain.
• Demand from price-sensitive customers for high-quality products with timely delivery: 3PL services are becoming increasingly important for price-sensitive customers who require a wider choice of high-quality products with timely delivery. 3PL providers offer a cost-effective solution for businesses looking to meet these demands.
• Greater asset utilization and asset sharing alliances through 3PL services: The 3PL model provides greater asset utilization and asset sharing alliances, which are increasing its demand in the third-party logistics market. This helps businesses save on costs and improves their competitiveness.
• Emerging opportunity in the market: Pooled warehousing: Pooled warehousing is an emerging opportunity in the third-party logistics market. This model allows businesses to share warehousing space and resources, reducing costs and improving their competitiveness.

However, there are some challenges associated with the use of 3PL services. One such challenge is the issue of over dependency, which arises when businesses contract with 3PL providers. This dependency puts the client company in a vulnerable position and can lead to uncomfortable situations.

Segmental Analysis 

By Mode of Transport 

In 2022, the roadways segment dominated the mode of transport market with the highest market share (44%) and is expected to maintain its dominance in the forecast period. The growth of this segment is being driven by various government initiatives, such as the recent regulations imposed by the Federal Motor Carrier Safety Administration. 

These regulations permit the use of cameras as an alternative to rearview mirrors, improving safety for truck drivers. The global third-party logistics market indicate that the road transportation industry is poised for significant growth, driven by increasing demand for efficient and cost-effective transportation solutions. As a result, various market players are investing in developing advanced technologies and expanding their logistics network, further fueling the growth of the roadways segment.

By Services 

The global third-party logistics market is segmented into Dedicated Contract Carriage (DCC), Domestic Transportation Management (DTM), International Transportation Management, Warehousing & Transportation, and others. In 2022, the DTM segment holds the largest share in the market, with reports indicating its continued growth in the forecast period. The growth of the DTM segment can be attributed to various factors, such as the increasing trade movement from unloading docks to warehouses, rising carrier rates, a surge in cross-docking services, and an increase in fuel surcharges. These trends have prompted market players to focus on expanding their DTM services, leading to increased competitiveness in the market. 

Additionally, the growing e-commerce sector, advancements in transportation technology, and changing consumer preferences for faster and more efficient delivery services have created new opportunities for market growth. Market reports predict that the global third-party logistics market will continue to experience substantial growth in the coming years, driven by these and other factors.

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By End User 

The technological segment is the largest end-user segment (26.8%) of the third-party logistics market in 2022, and is expected to register the highest compound annual growth rate (CAGR) during the forecast period 2022-2027. The introduction of mobile technology is revolutionizing the 3PL industry, with many companies adopting the use of mobile devices and apps to improve their operational agility and efficiency. The increasing demand for real-time tracking and monitoring of shipments, as well as the need for instant access to information, is driving the adoption of mobile technology in the third-party logistics market.

The Market reports indicate that the integration of mobile technology with other digital tools, such as big data analytics and artificial intelligence, is leading to significant advancements in the third-party logistics market. This, in turn, is driving the demand for advanced logistics services, such as predictive analytics and automation, further propelling the growth of the technological segment. Market players are investing in research and development to stay ahead of the competition and offer innovative solutions to their customers, which is expected to drive the growth of the market in the coming years.

Regional Analysis 

The global third-party logistics (3PL) market is segmented into five major regions: North America, Europe, Asia-Pacific, South America, and Middle East & Africa.

North America: North America is one of the largest markets for 3PL services, with the U.S. being the largest contributor. The region is characterized by a well-developed transportation infrastructure, an established e-commerce sector, and a highly educated workforce, making it an attractive market for 3PL providers. Market reports indicate that the growing demand for efficient and cost-effective logistics solutions, along with the increasing adoption of digital technologies, is driving the growth of the third-party logistics market in North America.

Europe is also a significant market for 3PL services, with Germany, the UK, and France being the key contributors. The region is characterized by a well-established transportation network, a large number of small and medium-sized enterprises, and a mature e-commerce sector. These factors, combined with the increasing demand for more efficient logistics solutions, are driving the growth of the third-party logistics market in Europe.

The Asia-Pacific region is the largest (38.8% share) and fastest-growing third party logistics market, with China, Japan, and India being the key contributors. The region is characterized by a rapidly growing e-commerce sector, a large number of small and medium-sized enterprises, and a rapidly expanding transportation infrastructure. These factors, combined with the increasing demand for efficient and cost-effective logistics solutions, are driving the growth of the third-party logistics market in the Asia-Pacific region.

Competitive Landscape

The global third-party logistics market is highly competitive, with a presence of numerous international and regional players. Key players in the market include DHL International GmbH, Kuehne+Nagel Inc., DB Schenker, Nippon Express, and FedEx Corporation.

• DHL International GmbH is a Germany-based company that provides a range of international delivery and logistics services, including air freight, overland transport, sea freight, and supply chain management.
• Kuehne+Nagel Inc., a world-leading logistics company, offers a wide range of integrated logistics services worldwide through its subsidiaries. The company operates through four segments - sea freight, airfreight, overland, and contract logistics - and also provides import and export documentation, door-to-door, and logistics supply movement arrangement services.
• DB Schenker, a division of the DB Group, functions as a freight transportation company and is involved in the transportation of various goods such as chemicals, mineral oil, paper, metal, and coal. It provides time and cost-optimized services for general cargo, partial and full load transport, and door-to-door solutions across Europe.
• Nippon Express is a leading provider of logistics services in the third-party logistics market to various industries, including automotive, food, art, electric and telecommunication, aerospace and aviation, fashion and retail, and railway. The company provides transportation services, including cross-border freight, ocean freight, air freight, and railway freight.
• FedEx Corporation is a U.S.-based company that provides transportation, e-commerce, and business services worldwide. The company operates through four segments - express, freight, ground, and service - and provides a range of services, including sales, communications, marketing, information technology, and technical support services. It also offers FedEx mobile, a suite of solutions to create shipping labels, track packages, view account-specific rate quotes, and access drop-off location information.

List of Key Companies Profiled:

• DHL INTERNATIONAL GmbH (DEUTSCHE POST DHL GROUP)
• KUEHNE+NAGEL INC.
• DB SCHENKER (DB GROUP)
• NIPPON EXPRESS
• C.H. ROBINSON WORLDWIDE, INC.
• UNION PACIFIC CORPORATION
• FEDEX CORPORATION
• UNITED PARCEL SERVICE (UPS)
• PANALPINA WORLD TRANSPORT LTD.
• MAERSK
• Other Prominent Players

Segmentation Overview

The following are the different segments of the global third-party logistics market:

By Mode of Transport segment of the global third-party logistics market is sub-segmented into:

• Railways
• Roadways
• Waterways
• Airways

By Service segment of the global third-party logistics market is sub-segmented into:

• Dedicated Contract Carriage (DCC)
• Domestic Transportation Management
• International Transportation Management
• Warehousing & Distribution
• Others

By End User segment of the global third-party logistics market is sub-segmented into:

• Technological
• Automotive
• Retailing
• Elements
• Food & Groceries
• Healthcare
• Others

By Region segment of the global third-party logistics market is sub-segmented into:

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • Western Europe
    • The UK
    • Germany
    • France
    • Italy
    • Spain
    • Rest of Western Europe
  • Eastern Europe
    • Poland
    • Russia
    • Rest of Eastern Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Australia & New Zealand
  • ASEAN
  • Rest of Asia Pacific
• Middle East & Africa (MEA)
  • UAE
  • Saudi Arabia
  • South Africa
  • Rest of MEA
• South America
  • Argentina
  • Brazil
  • Rest of South America