Third Party Logistics (3PL) is the function by which a manufacturer outsources activities related to logistics and distribution. Often a 3PL company can go beyond just logistics and distribution and can provide specialized services such as inventory management, cross-docking, door to door delivery and packaging of products. The market for this service is expected to witness growth at good pace owing to its use in todays competitive environment. Moreover, the demand is expected to rise due to increase in the focus of manufacturer and retailers on their core business (known as core competencies) and subcontracting activities, such as logistics where they have less expertise. Thus, the increase in the competition has diverted the focus of manufacturer to promote respective specializations in production and distribution.
Increase in the globalization helped in setting up a worldwide network of manufacturing activities. To maintain it efficiently, the demand of 3PL companies is expected to rise. The scope of 3PL services is expected to increase as productivity gains in supply chain in terms of cost and reliability can be derived with the help of managerial and information technology expertise provided by 3PL companies. Increase in the e-commerce industry and reverse logistics operations are also driving the market of 3PL industry. However, loss of direct control on the logistics service and potential loss of reputation are the most critical factors, which are likely to restrict the growth of this market. The market of 3PL is still fragmented, with plenty of room for growth. With number of orders increasing in small amount of time the opportunity or challenge to the 3PL companies will be to meet the demand by completing more orders at lower cost with the help of multi-channel distribution.
The report segments the 3PL market on the basis of mode of transport, service type and geography. On the basis of mode of transport, the market is segmented into roadways, railways, airways and waterways. On the basis of service type, the market is segmented into dedicated contract carriage (DCC), domestic transportation management, International transportation management, warehousing and distribution, others (IT services and logistics software). Geographical breakdown is done as North America (U.S., Mexico and Canada), Europe (U.K., France, Germany, Italy and Rest of Europe), Asia-Pacific (China, India, Japan, South Korea, Australia and Rest of Asia-Pacific) and LAMEA (Latin America, Middle East and Africa)
Increasing in the trading activities globally due to globalization
Increase in the number of trading activities due to globalization. The major force driving this growth is the growth of global economy and relaxation of trade barriers. Corporations across the world are increasing manufacturing, sourcing, warehousing and distribution at global scale making their supply chain complex for them to manage.
Increase in the focus of manufactures and retailers on core competencies
Increasing focus of retailers and manufacturers on their core business to promote the respective specialisation in production and distribution is increasing sub contracting activities such as logistics.
Different countries policies and regulations differs
Awareness about rules and regulations of different countries is difficult to maintain. Therefore, 3PL service providers having more awareness about policies and regulations make their work easy which increases their efficiency.
Evolution of e-commerce industry
Increase in the technological advancement has led to the growth of e-commerce industry around the globe. Many e-commerce service providers have expanded their services by integrating shipping service with public and contract warehousing as well as freight management.
Increase in Reverse logistics operations
Increase in demand for repairs, re-manufacturing, returns etc have increased over a period of time as a result of which manufactures and retailers are not able to cope up effectively with reverse logistics. Therefore, they outsource to 3PL service providers to effectively and efficiently provide this service.
Reduction in control on logistics service
Manufactures rely on core competencies, reliability and honesty of 3PL service providers and its staff. Mode of communication between manufacturer and 3PL service provider remains through phone or e-mail.
Risk in potential loss of reputation
As there is no direct control over the logistics service, it is difficult to keep check on service provider. Any delay or damage from their side will create negative impact on customers about the manufacturer as they have placed order with the manufactures, so they find that its sole responsibility of manufacturer to deliver the quality order they placed.
Some of the key players in 3PL market at global stage are DHL, United Parcel Service, FedEx Corporation, Maersk Logistics, DB Schenker, Kuehne+Nagel Inc., NYK logistics, Panalpina World Transport Ltd., Union Pacific Corporation and BNSF Railway Company
Key benefits of the study
THIRD PARTY LOGISTICS (3PL) MARKET SEGMENTS
The market is segmented on the basis of service type and geography.
MARKET BY MODE OF TRANSPORT
Market By Service Type
Market By Geography
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