Third Party Logistics Market to Surpass $925 Billion By 2020 - Global Trade Magazine
  February 22nd, 2016 | Written by

Third Party Logistics Market to Surpass $925 Billion By 2020

Sharelines

  • Asia Pacific contributed to 29 percent of the total global demand for 3PL services in 2013.
  • Logistics software and decline in labor and transportation costs contribute to the growth of North American 3PL.
  • Europe’s 3PL market is expected to witness a revival due to increasing demand from automotive and life science sectors.

According to a recent study conducted by Hexa Research, the global 3PL market is likely to surpass $925 billion in the year 2020.

The growth of 3PL is being supported by advancements in big data technologies and the availability of industry-specific services.

Global businesses often outsource secondary business activities like logistics in order to focus on core business operations.

Hexa Research found that Asia Pacific contributed to more than 29 percent of the total global demand for 3PL services in 2013. This was mainly due to growing warehousing and distribution facilities in countries like Indonesia, China, India, Singapore, and Thailand.

The U.S. is witnessing the emergence of technologically advanced logistics software solutions and, along with Mexico, a steady decline in labor and transportation costs. These factors contribute to the high growth of North American 3PL market by 2020, according to Hexa. Although, Europe’s 3PL market was adversely affected by the eurozone crisis, it is expected to witness a revival in future mainly due to increasing demand from automotive and life science sectors.

The study reveals that dedicated contract carriage (DCC) will experience rapid growth in the trucking and distribution industry. Leading retailers like Target, Kroger, and Walmart are relying on DCC for increasing truck capacity and lowering costs. The domestic transportation management (DTM) segment is also expected to exhibit consistent growth. Value-added warehousing is likely to be highly demanded in pharmaceutical and refrigerated applications in future.

Hexa Research identifies FedEx, DHL, C.H. Robinson Worldwide, UPS Supply Chain Solutions, Kuehne + Nagel and J.B. Hunt to be the main players in the global 3PL market. The market is fragmented with various established players and new entrants vying for the same customer base. The study concludes that companies that are able to facilitate better material tracking, flexibility, security, etc., by employing the most advanced IT and automation systems, will attract a sizeable chunk of the global 3PL market in future.

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