Third Party Logistics Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Third Party Logistics Market Data

Third Party Logistics Market Trends & Drivers

Innovative Methods Are Key Trends

• IoT enables systematic management of the shipment, which helps service providers track inventory while on the move. It also provides analytics, which guides the selection of placement and accuracy of inventory.
• It gives access to 3PL companies to anticipate seasonal inventory builds and also supports in routing transport vehicles to ensure the least damage potential for fragile goods.
• Integrated supply chains have generated solutions for better visibility, transparency, and accountability, which is crucial for global supply chains, which are becoming increasingly complex.
• Additionally, a large number of companies utilize digital dashboards to enhance visibility throughout their supply chains, making them half as likely to suffer interruptions as companies that do not follow this approach.
• With automation in the industry, highly repetitive tasks, which consume a lot of the time of workers, are being handled by sorting machines and systems, such as robotic pickers, making operations more efficient and reducing risks.

New Regulations Are Enhancing Market Growth Potential

• With the rapid trade deregulation around the world, 3PL companies are able to operate with fewer restrictions and more ease. This development has also allowed the market players to offer their services outside their home countries.
• The entry of new competitors creates opportunities for innovation and also compels the existing players to lower the prices of their services. This competition not only enables the incorporation of advanced technologies into 3PL operations but also offers economic advantages to customers.
• Intermodal transportation is being utilized by the market players as it considerably helps in saving the cost of transportation. Depending upon the distance of consignee, the longer the distance, the more the cost saving, which can range from 10% to as high as 40%.
• The market has gained many benefits with ongoing intermodal transportation, likewise, greater access to capacity, increased safety, lower fuel cost and handling charges, and increased sustainability.

Warehousing Management Is Main Challenge

• The COVID-19 pandemic had a huge impact on warehousing operations. Retail e-commerce sales increased considerably during the outbreak. This accompanied e-commerce growth, which presented a huge potential for the market to reach more people and improve sales. Yet, the exceptional e-commerce surge posed challenges for warehousing as they attempted to keep up.
• Earlier, centralized warehouses were used to store the goods, but nowadays, decentralized locations are being used to keep up with the growing e-commerce order volume. Decentralized warehouses allow businesses to deliver their products to customers faster and more frequently—exactly what today’s customers demand.
• With an increasing number of decentralized warehouses, management become more difficult. The greater the number, the tougher it becomes for companies to manage them efficiently, but it also increases the real time visibility of the warehouses.
• The increasing number of warehouses also creates the requirement for more human laborers, but the pandemic created a shortage of workers, which could hamper the market if the situation does not improve.

Segmentation Analysis

Domestic Transportation Management Contributes the Largest Share

• The domestic transportation management category is projected to grow at the highest CAGR, of around 8.4%, during 2024–2030, driven by the continuous growth in e-commerce sales. The influence of COVID-19 led to a shift in consumers’ needs to same-day deliveries.
• Domestic transportation management contributes to a critical and dynamic supply chain, reinforcing 3PL providers. In this regard, the convergence of new market technologies, policies, and consumer demands has boosted the market growth at a greater pace than before.
• With the 5G technology, the market is provided with real-time visibility, decentralized inventory management, and quick responsive co-ordination due to high-speed and low latency connectivity. Autonomous vehicles and platooning systems also benefit from the confluence of these factors.

The market categories on the basis of service are:

• Domestic Transportation Management (Largest and Fastest-Growing Category)
• Dedicated Contract Carriage
• International Transportation Management
• Warehousing and Transportation
• Value-Added Logistics Services

Mode of Transport Analysis

• The roadways category held the largest share, of around 45%, in 2023, as this mode offers flexibility, accessibility, and cost-efficiency for logistics companies, actual product manufacturers, and end customers. The extensive road network in all regions and the high demand for last-mile deliveries make a significant contribution to this category’s market dominance.
• Being independent of the requirement for a port, airport, or railway station, roads allow companies to move goods independently and for much less cost. Road transportation is also required to transfer goods from airports, railway stations, and seaports to warehouses or factories and vice versa.
• 3PL companies offer project cargo knowledge and great access to flatbeds and other specialized equipment at a low cost. Thus, roads are preferred as they are the cheapest mode and enable a vast variety of products to be delivered, such as flammable or toxic products, cold products, heavy equipment, and small packages.
• With advancements in live tracking and monitoring technologies, conditions, such as unsuitable weather and heavy traffic, can be tackled. Additionally, the most-suitable route for transport can be selected, which is another key reason roadways is considered the safest as well as the cheapest option for 3PLs.

The following are the modes of transport analyzed during the study:

• Roadways (Largest and Fastest-Growing Category)
• Airways
• Railways
• Seaways

Market Analysis by Application

• The manufacturing category dominated the market with around 40% revenue in 2023.
• The manufacturing industry heavily depends on 3PL companies as they offer supply chain visibility, inventory and vendor management, reduced transportation cost, and improved customer services.
• New trends in computer technology, such as IoT, machine learning, and digital twins, have driven the manufacturing industry to new heights.
• The automotive sector category is projected to grow at the highest CAGR, of around 8.7%, during 2024–2030.
• This can be attributed to the growing trend of automotive e-commerce sales, including for complete new and reused vehicles or aftermarket parts.
• The global trend of electric and hybrid vehicles is driving the automotive industry at a high pace in contemporary times. The increasing demand for high-end passenger vehicles and electric commercial vehicles are the key factors for the market progress in this category.

On the basis of application, the following are the market categories:

• Manufacturing (Largest Category)
• Automotive (Fastest-Growing Category)
• Healthcare
• Food and Beverages
• Retail
• Others

North America Holds 50% of Share

• The North American region had the largest share in the market, of around 50%, in 2023.
• North America has a highly developed and sophisticated logistics infrastructure, and companies here are continuously investing in transportation management systems, warehouse management systems, and real-time tracking solutions.
• The shifting inclination toward paperless work, and rising adoption of just-in-time trucking by e-commerce companies have boosted the market. The increase in the demand for contract carriage services has had a great impact on the market in the region.
• The Asia-Pacific region is the fastest-growing market for third-party logistics services, with an expected CAGR of 8.5% during 2024–2030. The strategic location of the region makes it a global trade hub. Thus, with more international trade going through APAC countries, 3PL service providers have a wealth of opportunities here.
• Various trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), have encouraged the growth. Consumers in the region increasingly seek products from other countries, which raises the need for value-added services, such as kitting, labeling, gift wrapping, and returns management, which are supplied by third-party logistics firms.

The regions and countries analyzed for this report include:

• North America (Largest Regional Market)
  • U.S. (Larger and Faster-Growing Country Market)
  • Canada
• Europe
  • Germany (Largest and Fastest-Growing Country Market)
  • U.K.
  • France
  • Spain
  • Italy
  • Rest of Europe
• APAC (Fastest-Growing Regional Market)
  • China (Largest and Fastest-Growing Country Market)
  • Japan
  • India
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest and Fastest-Growing Country Market)
  • Mexico
  • Rest of LATAM
• Middle East and Africa (MEA)
  • U.A.E. (Largest and Fastest-Growing Country Market)
  • Saudi Arabia
  • South Africa
  • Rest of MEA

Competitive Analysis

The global 3PL market is competitive due to a substantial number of competitors. Pricing, service quality, innovation, and customer service are the primary drivers of the competition in the market. Major competitors are always looking to improve their standing by executing a variety of strategies, including increasing their global presence, forming strategic alliances, and investing in R&D efforts.

Third-Party Logistics Companies News

• In September 2023, Kuehne+Nagel and Capgemini began a strategic collaboration to develop a supply chain orchestration solution that will provide end-to-end services across the supply chain network.
• In February 2024, Bluefin Capital Management LLC made a new investment in FedEx Co. shares. The firm paid about USD 1,033,000 for 3,900 shares of the transportation service provider's stock.
• In February 2024, U.S.-based warehousing firm GXO Logistics offered around USD 965 million (GBP 762 million) to buy U.K.-based Wincanton, thus outbidding CEVA Logistics.
• The offer of 605 pence per share is approximately 26% more than CEVA's offer of 480 pence per share.