SCMR Guest Feature: Four Major Trends Propelling 3PL Market Growth

Editor’s Note: A civil engineer by qualification, Anchal Solanki now writes on supply chain management issues.

Escalating demand for low-cost services among e-commerce companies is likely to play as one of the major factors pushing third-party logistics (3PL) market growth. The 3PL industry is observing a notable surge in the adoption of third-party logistics services by e-commerce concerns to manage warehousing, shipping, inventory, packaging, tracking, and timely delivery.

In addition, the advent of sophisticated technologies, such as blockchain, IoT, and cloud computing have helped to significantly improve operations of 3PL providers. Easy availability of advanced digital technology solutions and growing demand for reverse logistics will also stimulate third-party logistics industry outlook.

According to a research report published by Global Market Insights, Inc., third-party logistics market size is projected to surpass $1.8 trillion by 2026.

Enlisted below are the key trends influencing third-party logistics industry growth:

*Adoption of advanced logistics solutions
*Logistics applications are highly being incorporated with several advanced software solutions, such as cloud ERP and SCMs.

These software solutions deliver a number of advantages, including real-time data, inventory tracking, warehouse management, and online documentation for international freight. Growing trade activities and rising globalization have accelerated integration of advanced logistics features, which will spur 3PL market growth.

Rapid demand from the manufacturing sector

The 3l industry is likely to derive commendable gains from the manufacturing sector. Technological advances in logistics and supply chain management have facilitated various enhanced functions, such as warehouse management, online documentation for international freight, real-time data, and others, which helps the manufacturing sector to ease the complexities of its business operations.

Expanding manufacturing sector across several regions, especially in Europe is likely to induce massive 3PL industry demand. For example, as per the estimates of the ‘Manufacturing Organization UK’, in 2019, the UK became the ninth largest manufacturing country in the world by generating an annual output revenue of $192 billion. Also, Europe is entering into free trade agreements with several nations, resulting in huge growth opportunities for 3PL market.

Penetration of 3PL services within the retail industry

Third-party logistics service providers are significantly pushing the transformation of supply chain management system, which has attracted the attention of the retail industry. Retailers are utilizing 3PL services to increase value, improve customer engagement, and most importantly, to expand their geographical reach. Incorporation of the latest technologies within logistics services, help 3PL service providers to deliver data-driven solutions, which are becoming pivotal for retail business expansion.

3PL industry players are extensively focusing on delivering advanced value-added services and offering better services to secure customer loyalty. These service providers are offering cost-effective services and technically advanced solutions to expand their customer base globally. For example, in December 2019, J.B. Hunt Transport Services, Inc., integrated JB hunt 360 with the supply chain management platform of JDA Software Inc. to offer value-added services to its consumers, such as higher pricing visibility.

3PL industry is majorly catering to e-commerce organizations. For example, Orio Logistics is delivering third-party logistics services to e-commerce firms for ensuring flexible & fast distribution, and effective returns management. The competitive landscape of third-party logistics industry is characterized by prominent strategies undertaken by industry players such as mergers & acquisitions.

Also, collaboration with local players to expand in underserved & unserved regions remains among key growth strategies. A few of the notable companies partaking in 3PL market are UPS Supply Chain Solutions, FedEx, DHL, Nippon Express, DB Schenker, C.H. Robinson, JB Hunt, XPO Logistics, Expeditors International, Expeditors International, and Kuehne + Nagel amongst others. Some other renowned players include Deutsche Post DHL (Exel), Dachser, Sinotrans, CEVA Logistics, Panalpina, Gefco, SNCF Geodis, and Kintetsu World Ex

https://www.gminsights.com/industry-analysis/third-party-logistics-3pl-market-size

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