The Third Party Logistics (3PL) Market is forecast to grow at a significant rate owing to the increasing focus of manufacturers on their core businesses and sub-contracting the activities, where they have less expertise. The growth in the e-commerce industry is expected to drive the 3PL market due to an increase in demand for fast delivery, efficient inventory management, freight forwarding, and individualized shipping time. The players in the e-commerce sector are focused on selling goods online, thus necessitating the need for 3PL market providers.
The adoption of various software solutions, such as cloud ERP and SCMs, is expected to positively impact the 3PL market growth. An increase in efficiency and a significant cut in costs enable the providers to increase their profit margins. Features, such as inventory tracking and online documentation for international freights, are attracting manufacturers toward the 3PL solutions.
3PL service providers offer a major share of their services through cost-effective modes of transportation such as railways and roadways. Vital governmental bodies across major geographies have been steadfastly promoting these transport modes by means of providing substantial financial assistance to the service providers. Another very essential driver of third party logistics (3PL) market is the rapidly expanding ecommerce sector. This ever-expanding business sphere has prompted the use of airways as a preferred mode of transport among consumers who thrive on quick product delivery. Despite being slightly more exorbitant compared to its counterparts, the increasingly changing preferences of the modern-day consumers have brought about a change in the delivery models of e-commerce firms, thereby propelling 3PL market, by extension. Electronics items, fashion accessories, smart textiles, and similar other products form a major part of air freight.
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Robust road infrastructure that enables effective transit of freight & goods to & from the production plant is expected to impact the third-party logistics operations across the Asia Pacific region. The continent also houses large manufacturing units, while a majority of the warehouse & distribution operations in the area are supported by strong internet connectivity and escalated economic development. With China being a key revenue pocket, APAC Third Party Logistics (3PL) Market is likely to witness massive gains.
The U.S. firms outsource transport and logistics services to the third parties to concentrate on their core competencies. In addition to this, an escalated urge for having just-in-time inventory management system is expected to lay the foundation of a lucrative roadmap for U.S. 3PL industry. Furthermore, the region has established strong trade relations with other nations that will support the expansion of its air freight sector, thereby generating a positive growth map for U.S. 3PL market.
The entry of Maersk and Amazon into Third Party Logistics (3PL) Market may pose a major challenge to the already existing service providers, nonetheless, it will enable these operators to scale up their service portfolio and offer a more diversified range of services. This service upgradation by means of deploying technological innovations will only serve to increase the growth rate of 3PL market, which will be augmented by numerous mergers and acquisitions. Maersk’s acquisition of logistics provider Hamburg Sud, and Nestlé’s selection of 3PL industry player, Kuehne + Nagel as its logistics provider, are key instances of the alliances that will define 3PL market in the future.