Logistics article(s)
July 23, 2020
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The global 3PL sector is expected to grow into a US$1.8 billion industry by 2027 to be driven by increased trading worldwide and the development of the e-commerce industry.


Progress in reverse logistics operations would also fuel the growth of the global third-party logistics (3PL) market.


Allied Market Research said in its study called "Third-party Logistics (3PL) Market by Mode of Transportation, Service Type, and Industry: Global Opportunity Analysis and Industry Forecast, 2020–2027" that the global 3PL industry was estimated at US$1 billion in 2019, and is anticipated to hit US$1.789 billion by 2027, registering a CAGR of 7.1% from 2020 to 2027.


Drivers, restraints, and opportunities

"Rise in trading activities due to globalization, increase in focus of manufacturers and retailers on core competencies, and development of the e-commerce industry coupled with progress in reverse logistics operations fuel the growth of the global third-party logistics (3PL) market," the US-based market research firm said.


On the other hand, it noted that the lack of control of manufacturers on logistics service impedes the growth to some extent. However, increase in use of IT solutions & software and reduction in cost cutting and lead time due to adoption of multi-modal system are expected to create multiple opportunities in the industry.


COVID-19 scenario


Allied Market Research said the COVID-19 outbreak that started engulfing various nations across the globe has forced government bodies to take unprecedented measures like lockdown of cities and restricting the movement of people to check and control the exponential spread of the pandemic. This has consequently affected the global third-party logistics market badly.


It noted that most of the countries have restricted on international flights and air travel, which has led to a deferred slowdown as far as the movement of goods is concerned.


The shipping sector has also been hit, as vessels are placed under quarantine for weeks before being allowed into the ports thereby slowing down processes. Shipping containers are stuck either at ports or at state borders.


However, it said e-groceries continue to meet the increasing demand for daily supplies by the consumers, as the agriculture sector has been exempted from the restrictions. This has ensured sufficient supplies of food and other daily needs products.


Roadways segment to dominate 3PL by 2027


"Based on mode of transport, the roadways segment contributed to more than two-fifths of the global 3PL market share in 2019 and is expected to lead the trail by the end of 2027," Allied Market Research said.


It added that this is due to the improvement of road infrastructure and an increase in cross-border trade among the landlocked countries across the world.


The airways segment, on the other hand, would grow at the fastest CAGR of 13.1% throughout the forecast period. Various airlines are launching dedicated flights for logistics to provide fast and urgent transportation service across different regions. This factor has driven the growth of the segment.


Tech segment to maintain the dominant share


Meanwhile, the research said based on the industry, the technological segment accounted for more than one-fourth of the global 3PL market revenue in 2019, and is projected to remain dominant until 2027, owing to increase in internet connectivity and rise in trend of ordering goods from e-commerce websites.


At the same time, it said that the food & groceries segment would register the fastest CAGR of 9.6% during the study period. Integration of distribution network in food start-ups to transport foods propels the segment growth.


Latin America, Middle East and Africa to lead growth


Allied Market Research said based on region, Asia-Pacific, followed by North America, held the highest share in 2019, generating nearly two-fifths of the global 3PL market with the initiatives by the e-commerce industry for the incorporation of warehouse projects and IT solutions in the supply chain driving the growth.


However, it said the region across LAMEA would cite the fastest CAGR of 10.4% from 2020 to 2027. This is attributed to the growing alliance between the e-commerce industry and third-party logistics companies.


Among the key players in the industry cited in the report include DB Schenker, DHL International GMBH, UPS, FedEx, Kuehne+Nage, C.H. Robinson Worldwide, Union Pacific Railroad, Nippon Express, Panalpina World Transport, and Maersk.

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