3PL Will Grow at 7.1% CAGR from 2020 to 2027: Report

by Ruth Seeley

The global Third-party Logistics (3PL) market, valued at US$1,027.71 billion in 2019, is projected to reach US$1,789.94 billion by 2027, at a 7.1% CAGR from 2020 to 2027.

3PL is the mechanism by which producers outsource logistics and distribution-related activities. Third-party logistics companies usually specialize in integrated warehousing and transportation services activities, which can be customized and tailored to the needs of consumers, depending on market conditions. Services also expand beyond logistics to provide value-added services related to the manufacturing or purchase of products, such as services that incorporate supply chain elements.

A new report from Valuates Reports covers the global impact of the 2019 coronavirus disease (COVID-19) as a separate chapter.

Trends analyzed in the report include: 

  • Growth of the global 3PL market size as e-commerce continues to develop, while reverse logistics operations increase.
  • The growth of globalization has helped create a global network of manufacturing activities. 3PL companies allow manufacturers to keep track and monitor these activities. This is expected to drive the 3PL market size.
  • In addition, the reach of 3PL services is expected to increase during the forecast period, as efficiency gains in the supply chain in terms of cost and reliability can be extracted with the aid of managerial and IT expertise provided by 3PL firms.
  • The market has witnessed an increased concentration of retailers and manufacturers on their core business and sub-contracting operations, such as logistics, where they have less expertise. 3PL Companies can make efficient use of transport assets by balancing the needs of several shippers through transport and distribution functions, resulting in economies of scale. Management of this form of supply chain is extremely difficult for manufacturers; thus the 3PL market size is expected to grow during the forecast period, due to rise in manufacturers and retailers’ emphasis on their core business (known as core competencies) and subcontracting operations, such as logistics where they have less expertise.

The full report is available here

Global Share Analysis

The Asia-Pacific region held the highest 3PL market share in 2019. This growth can be attributed to the economic growth of India and China. Implementation of Goods and Services Tax (GST) and the penetration of e-commerce are key factors leading to business growth in India. The GST is expected to dramatically reduce logistics costs, thus growing the Indian economy’s competitiveness. Furthermore, growing ongoing investment in railways, bridges, and airways across the region’s developing economies is expected to fuel demand in warehousing and logistics over the forecast period.

North America’s 3PL market share is expected to show remarkable growth during the forecast period due to the rising demand for logistics software. Increased investment to boost route optimization and visibility are expected to increase regional demand for 3PL services.

Europe is expected to witness slow growth in the coming years due to continuing apprehensions regarding labor shortages and talent management. More efficient logistics operations are expected, with the U.K. spearheading the uptake of these services.

Source: Valuates Reports

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