Third-party logistics refers to a form of logistics that provides logistics services by professional enterprises within a specified period in the form of contracts in the logistics channel. It includes current demand and potential demand. Logistics enterprises can excavate in the future and convert it into the social logistics market, which is the latent demand for third-party logistics.
The global third-party logistics market has the potential to grow with USD 1785.24 billion with bolstering CAGR in the forecast period from 2020-2027. The company with substantial assets that provide logistics-related services to other companies. Such as transportation, warehousing, inventory management, order management, information integration, and value-added services, or related to the logistics service industry, are driving the market demand for the third-party logistics market.
Under the trend of increasingly fierce competition and specialization of the division of labor, enterprises must focus their primary energies on core business, and hand over part or all of logistics such as transportation and warehousing to more specialized logistics companies to ensure their competitive advantage.
For enterprises, third-party logistics can effectively reduce the operating costs of corporate activities and improve their operational efficiency. Specifically, third-party logistics has different effects on lowering the company’s logistics costs, storage costs, logistics fixed assets, order completion, and order accuracy.
Moreover, third-party logistics companies are generally small in size, have a single service function, and have decentralized operations, making it increasingly challenging to meet the needs of enterprises. In this context, the third-party logistics industry will usher in a new round of integration. With the development of logistics, concentration and inclusion is an inevitable trend of the development of third-party logistics enterprises, and it is also in line with the law of economic growth.
Also, the use of information technology to improve transportation quality and efficiency, improve customer service capabilities. Thus, improve the core competitiveness, is an inevitable choice for many third-party logistics companies to respond to market competition, and is also one of the leading development trends of the third-party logistics industry.
The use of third-party logistics can reduce the fixed asset investment of self-operated logistics. Also, by handing over logistics services to professional companies for contracting, the original logistics system can be integrated and optimized through plan design to reduce unnecessary costs.
To reduce costs and improve production efficiency, more and more companies began to choose JIT production mode (Just in time). The essence of which is to keep the material flow and information flow synchronized in production, with the right amount of materials, at the right time, enter the right place. Thus, it produces the right quality products, as far as possible, to achieve the ideal production model of zero inventory, defect-free, and low cost. Also, the logistics activities are becoming larger and more complex, and the enterprise’s self-managed logistics can no longer meet the needs. Therefore, outsourcing logistics to professional third-party logistics companies will be the best choice for management.
Based on the services, the global third-party logistics market classified into Dedicated Contract Carriage (DCC)/Freight forwarding, Domestic Transportation Management (DTM), International Transportation Management (ITM), Warehousing & Distribution (W&D), Value Added Logistics Services (VALs). The domestic transportation management segment accounted for the largest share in the global third-party logistics market. It is mainly owing to reduce the complexity in providing services to the customer by delivering the product on time. It coupled to reduce the cost that involves the effective management of a purchased transportation process. Moreover, emerging globalization and penetration of internet services have increased the demand for customers to provide logistics operations in a safe and timely manner.
Based on the transportation, the global third-party logistics market segmented into Roadways, Railways, Waterways. The roadways segment generated the most significant revenue in recent years, and it expected that it would remain at the same level during the third-party logistics market forecast. With the development of highways and bolstering logistics infrastructure is propelling the market value for the third-party logistics market. In addition to it, government initiatives and rising investment in developing transportation networking are also emerging demand for third-party logistics.
Based on the end-use, the global third-party logistics market categorized into Manufacturing, Retail, Healthcare, Automotive, Others. The retail segment accounts for the largest share in the global third-party logistics market and will continue to grow in the forecast period from 2020-2027. Due to the emerging e-commerce industry, third-party logistics are gaining momentum in increasing market share. Also, the adoption of predictive analysis in 3PL to reduce cost, improve function, and to take care of all the delivering the product at timely manner are bolstering the market demand for the global third-party logistics market.
Based on geography, the global third-party logistics market segmented into North America, Europe, Asia Pacific, South America, and Middle East & Africa. In the Asia-Pacific region, China’s third-party logistics market is particularly prominent. It is owing to the development of third-party logistics, especially with the entry of foreign companies and the intensification of market competition, companies have gradually deepened their understanding of the importance of logistics. The demand for specialized and multi-functional third-party logistics is increasing day by day.
Companies in the global third-party logistics market include C.H. Robinson Worldwide, Inc., DB Schenker, DHL International GMBH, FedEx Corporation, KUEHNE+NAGEL Inc., Maersk, Nippon Express, Panalpina World Transport Ltd., Union Pacific Railroad, United Parcel Service, and others.