The global third-party logistics market is expected to witness sustainable growth (CAGR of 8%) from 2020 to 2025 as manufacturers and end-use industries in emerging countries lack the internal control required for addressing logistics challenges. Moreover, the rapid adoption of logistics software and IT applications, to increase distribution coverage, is expected to boost the demand for 3PL services globally.
3PL suppliers are also positioning themselves for growth by collaborating with freight payment and audit companies to more efficiently handle time-consuming tasks such as back-office freight payment processing. Third-party logistics suppliers are collaborating with regional players to benefit from their knowledge of the local market, and maintain high-profit margins, low overhead costs, and their overall competitiveness. Furthermore, the advent of automation in logistics services is helping providers realize savings in processing and transportation costs.
The third-party logistics market features a highly fragmented competitive landscape and entrance of several small players. An increase in mergers and acquisitions, coupled with diffused customer concentration, has enabled the suppliers to secure add-on offerings to realize growth in new geographies.
However, the rate of acquisitions and mergers is expected to slow down in the near future, as the industry needs a substantial amount of time to adapt to the large number of acquisitions that took place in the last five years and focus on organic growth.
Transportation and warehousing are two of the biggest cost components (~70%) of a third-party logistics service. In the fields of warehousing and transportation, several cost components determine the overall cost of the service.
The third-party logistics market procurement intelligence report provides a detailed analysis of the cost structure of the service along with the prevalent pricing models that prominent suppliers opt for.
The Asia Pacific regional market holds the highest share of the global 3PL market, owing to China’s position as the leading sourcing destination due to its low-cost transportation and warehousing services.
However, quality concerns have been raised about China’s warehousing services in recent years, compelling customers to shift their supply chain to other equally cost-effective destinations such as India. India offers huge potential for growth owing to the increasing investments in its retail and manufacturing sectors. Factors such as the promising future growth prospects of India’s retail industry and an increasing share of organized retail in it are expected to drive the third-party logistics market in India over the next ten years.
From a sourcing perspective, the majority of suppliers opt for a full-service outsourcing engagement model as it reduces the complexities associated with in-house logistics.
Suppliers widely prefer approved provider operating models to reduce risks and improve the potential for value creation. As such, suppliers are expected to move from offering generic services to proprietary services in the future. The report also provides details regarding quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis.
b. The global 3PL market size was estimated at USD 889 billion in 2020 and is expected to reach USD 1,315 billion in 2025.
b. The global 3PL market is expected to record a CAGR of 8.1% from 2019 to 2025.
b. The fast growth of e-commerce and increasing focus on core business activities are two of the major driving factors for the 3PL market.
b. LCC/BCC sourcing analysis indicates China as one of the best sourcing destinations for 3PL services.
b. Some of the key 3PL suppliers are UPS, DHL, Kuehne + Nagel, FedEx and Nippon Express.
b. The global 3PL market is highly fragmented and competitive with many large corporations strategically forming partnerships with mid-sized or small-sized companies to leverage their regional logistics capabilities.
b. Transportation and warehousing are two of the biggest cost components (~70%) of the 3PL service.
b. Dispatch timeliness, inventory management accuracy, and cost per unit shipped are some of the KPIs of 3PL services.
b. The prevalence of innovative sourcing practices, increasing spend transparency, migration to cloud-based procurement tools, and standardization of contract period are some of the best practices in the 3PL market.
Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process
Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier
Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.
A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.
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