Third-party Logistics Market By Service (Value added Logistics Services, International Transportation Management, Warehousing & Distribution, Dedicated Contract carriage, Domestic Transportation Management); By Transport (Waterways, Railways, Roadways, Airways); By End-Use (Automotive, Retail, Healthcare, Manufacturing, Others[);By Geography, Segment revenue estimation, Forecast, 2023-2030.

The Third-party Logistics Market size in 2023 was worth USD 1,096.75 billion and will grow at a 9.1% CAGR by 2030. The surging e-commerce market and growing complexities of global trade are fueling the demand for efficient and specialized third-party logistics solutions.

 

Outsourcing supply chain management and logistics to deliver a company's goods to a client is known as third-party logistics. Third-party logistics providers provide receiving, storage, packing, and shipping services, among other logistics solutions. Due to the inefficiencies of handling all operations in-house, e-commerce brands are increasingly turning to Third-party Logistics for fulfillment services. 

 

 

The Third-party Logistics sector is changing due to the uptake of cutting-edge technologies like Blockchain, machine learning, AI, & the Internet of Things. These technologies improve supply chain operations' accuracy, efficiency, and visibility.

 

Logistics operations optimization is increasingly dependent on data-driven decision-making. Third-party logistics providers use data and predictive analytics to estimate demand, enhance routing, and reduce interruptions.

 

The e-commerce industry's continued expansion has resulted in significant growth for the third-party logistics sector. Currently, the worldwide e-commerce market is valued at over $5.55 trillion. E-commerce companies constitute approximately 53 percent of the market and are the primary users of Third-party Logistics services. These businesses rely heavily on Third-party Logistics providers to efficiently and promptly ship and deliver customer orders.

 

Industry estimates indicate that Third-party Logistics global market suppliers handle nearly 60% of all shipments made by e-commerce companies. The worldwide market is growing, and there is an increase in international trade due to economic globalization, which has also led to the growth of the e-commerce industry. The third-party logistics market has grown as a result of changes in the fulfillment landscape brought about by an increase in international trading operations. Many stand-alone e-commerce businesses need help to handle the complex and adaptable logistics operations needed to meet the demands of domestic and international networks. It has been demonstrated that third-party logistics companies may assist companies in managing their foreign shipments and meeting deadlines significantly faster.

 

Transportation management scheduling (57%), transportation management planning (62%), and warehouse/distribution center management (48%) continue to be the most often cited execution- and transaction-based technologies in 3PL.

 

At the beginning of 2020, the epidemic outbreak caused significant and enduring changes in consumer behavior and supply chain disruptions across several industries. Lockdowns also provided customers more time and incentives to shop online, as many brick-and-mortar retail stores experienced a sharp decline in foot traffic.

 

 Furthermore, there were notable limitations in labor and workforce availability, which greatly influenced international supply chains. A 25% decrease in supply chain activities was experienced by more than half of Third-party Logistics shippers (58%). This meant that many businesses faced significant obstacles, but it also meant that they would have to depend on bigger Third-party Logistics operators that could adjust and meet capacity and demand.

 

 

Current State of Third-party Logistics

• According to a recent poll, 71% of shippers believe using third-party logistics (3PLs) has improved customer service. Additionally, 92% of 3PLs and 71% of shippers agree that 3PLs offer innovative and effective methods to enhance logistics efficiency.

• The percentage of freight forwarding climbed from 44% to 60% in the previous year, and the percentage of foreign transportation likewise increased from 44% to 52%. The percentage of warehousing decreased from 63% to 43%.

• Transportation management scheduling (57%), transportation management planning (62%), and warehouse/distribution center management (48%) continue to be the most often cited execution- and transaction-based technologies.

• Labor shortages have negatively impacted numerous industries, particularly the supply chain. 78% of shippers and 56% of 3PLs claimed that labor shortages affected their supply chain operations.

• Environmental, social, and governance (ESG) activities are becoming increasingly popular, and many supply chain firms are implementing programs to support the attainment of ESG objectives. According to a recent survey, shippers are somewhat ahead of third-party logistics providers (3PLs) when it comes to their environmental, social, and governance (ESG) initiatives. About 22% of shippers consider themselves leaders and trailblazers in ESG, as opposed to only 17% of 3PLs. Additionally, 45% of shippers have average ESG procedures compared to 41% of 3PLs.    

• Logistics expenses encompass all costs related to transportation, distribution, warehousing, and value-added services. The percentage allotted to logistics outsourcing averaged 42%, compared to 2022 (40%), 2021 (53%), and 2020 (56%).

• The rising demand for cold chain services impacts the current cold chain's capacity. 82% of shippers and 84% of 3PLs anticipate that demand for cold chain capacity will expand over the next three years.

• Roughly 60% of shippers and 3PLs reported that they have boosted their cold chain capabilities in the last year due to rising demand. Furthermore, during the next three years, 67% of shippers and 72% of 3PLs stated they intend to keep growing their cold chain capacities. Over the next three years, shippers (67%) and 3PLs (75%) anticipate an increase in the outsourcing of cold chain requirements.

• Future cold chains are anticipated to be shaped by growing customer demand, heightened competition, and technological advancements as 3PLs and shippers fulfill stringent delivery requirements.

 

 

Market Drivers (Beyond Borders: E-commerce and Globalization Reshaping 3PL market)

The e-commerce industry's rapid expansion has led to the growth of the third-party logistics sector. Currently, the worldwide e-commerce market is valued at over $5.55 trillion. Nearly 53% of third-party logistics users are e-commerce companies. This is mostly because these businesses depend on Third-party Logistics suppliers to expeditiously and effectively ship and deliver client orders. Industry estimates indicate that Third-party Logistics global market suppliers handle nearly 60% of all shipments made by e-commerce companies. As more businesses move to online platforms, this trend will continue in the coming years. The worldwide market is growing, and there is an increase in international trade due to economic globalization, which has also led to the growth of the e-commerce industry. The third-party logistics market has grown as a result of changes in the fulfillment landscape brought about by an increase in international trading operations. Numerous e-commerce businesses operate independently and need help to cope with the intricate and flexible logistics operations necessary to fulfill domestic and international demands. Third-party logistics companies can provide valuable assistance to such businesses in managing their overseas shipments and ensuring timely delivery more effectively.

 

Building a Connected Supply Chain: Omnichannel Retail Fosters Closer Shipper-3PL Partnerships

Other factor driving the growth of the Third-party Logistics market is the growth of omnichannel retail. Relationships between shippers and 3PLs are expanding as a new omni-channel commerce environment emerges. Retailers are beginning to invest in technology, supply chain resources, and fulfillment methods that will give a seamless experience across all retail sales channels in response to consumer demand for always-on, shopping opportunities. Omnichannel retail is becoming more and more important due to the growth of e-commerce, shifting consumer behavior, and fierce retail competition.  Over 73% of consumers use multiple channels when making purchases, highlighting the need for omnichannel fulfillment solutions, a specialty of 3PLs. Online buyers anticipate same-day or one-day delivery choices nearly half the time (47%) which 3PLs with strategically placed networks may fulfill.

 

Meeting Consumer Demands: Sustainability Drives Innovation in 3PL

Customers are increasingly concerned about the environmental impact of quick-ship logistics. There is a growing demand for sustainable logistics, as over 60% of consumers are changing their purchase habits to live more sustainably. Third-party logistics providers need to take on a more significant role in long-term return management to reduce the environmental impact of the shipping industry. Implementing electrified delivery fleets, using recycled packaging, and improving inventory management are some strategies for addressing this trend.

 

Challenge and Restraints (Nowhere to Grow: E-commerce Boom Meets Warehouse Capacity Woes)

• Shortages of Labor and Retention: Labor shortages are one major factor limiting the market growth rate. According to recent research, labor costs accounted for 25–39% of costs for a third of the respondents and more than 40% of overall operating expenses for 59% of third-party logistics providers. Finding, keeping, and training employees has proven to be a substantial problem for 70% of logistics providers. Furthermore, 79% of respondents expressed concern about rising labor expenses in the same study.

 

• Limitations on Warehouse Space: A significant factor in the global economic recovery after COVID-19 has been the surge in e-commerce providers who are struggling to sustain their operations and have limited options when it comes to expanding their facilities or purchasing new equipment. Thus, maximizing the use of existing space is crucial to address the challenges the sector faces. Nearly 40% of Third-party Logistics warehouses are currently operating at 90–99% capacity, while the percentage of Third-party Logistics warehouses operating at 100% or higher has increased to 20%. For third-party logistics, this presents a big obstacle in meeting rising consumer demands and inventory levels.

 

• Declining Profit Margin and Increasing Costs of Fulfillment: The level of competition has increased as the number of Third-party Logistics suppliers in the worldwide market has increased, placing pressure on profit margins across the board. The fuel, real estate, and labor prices are all rising, becoming a major challenge for the industry's profit margins. Labor costs have been consistently increasing, coupled with rising real estate prices & a shortage of warehouse space; the industry is facing a difficult situation. Furthermore, growing fuel prices have significantly impacted transportation operations, and logistics companies that supply last-mile transportation solutions suffer from the volatility of world oil prices.

 

Innovation Fuels Expansion: Advancements in Software and Technology Pave the Way for 3PL Growth (Opportunity)

The significant shifts of the past several years have highlighted the necessity for Third-party Logistics and other distributors to invest in cutting-edge software and technology, from robust shipping solutions to extremely capable Third-party Logistics warehouse management systems.

 

Advancements in Third-party Logistics software and technological developments, like the rise of the IoT, artificial intelligence, and Blockchain, will contribute to the industry's sustained expansion and success of Third-party Logistics. Artificial Intelligence can revolutionize the supply chain. When it came to demand forecasting and planning, spreadsheets remained the most popular tool used by supply chain leaders at 73% in early 2022, according to a McKinsey analysis. Additionally, 3PLs' usage of technology is increasingly including AI. Applications of AI in third-party logistics include intelligent automation that boosts productivity across a range of operational procedures and predictive analytics that foresees changes in the market and supply chains. AI-driven solutions, for example, can improve inventory control and routing, cutting costs and raising service standards. Moreover, 3PL providers can make more strategic and well-informed judgments because to AI's capacity to handle and analyze enormous amounts of data in real time, which forms the basis of data analytics.

 

 

Understanding the Landscape: Segmentation in the Third-Party Logistics Market

The market for Third-party Logistics is segmented on the basis of service, transport, end-use, and region.

By Service

• Value added Logistics Services

• International Transportation Management 

• Warehousing & Distribution

• Dedicated Contract carriage 

• Domestic Transportation Management

 

By Transport 

• Waterways

• Railways

• Roadways

• Airways

 

By End-Use

• Automotive

• Retail

• Healthcare

• Manufacturing

• Others

 

 

A Global Network: Third-Party Logistics Powering Economies Worldwide

North America

• USA

• Mexico

• Canada

 

Asia Pacific 

• China

• South Korea

• India

• Japan

• Rest of APAC

 

Europe

• France

• UK

• Germany

• Rest of Europe

 

Latin America

• Brazil

 

Middle East & Africa

• South Africa

• KSA

• U.E.A

 

Optimizing Local Goods Movement: Domestic Transport Management Takes lead

Domestic transportation management held the largest market position on the basis of service, with a revenue share of nearly 33.5%. Planning, carrying out, and optimizing domestic goods movement inside a nation are outsourced as part of a third-party logistics (Third-party Logistics) Domestic Transportation Management (DTM) service. Domestic Transportation management mostly handles shipments that come from and are headed for locations in North America. Services are frequently provided under contracts and are typically carried out with freight brokerage.

 

From Factory Floor to Customer: Manufacturing Fuels 3PL Growth

The manufacturing segment held a dominant position in the market based on end-use, with a revenue share of nearly 45.7%. Manufacturers collaborate with third-party logistics providers to handle their supply chain and distribution requirements. Third-party logistics organize the transportation of goods from manufacturing facilities to their destination by designing a personalized logistics plan that considers the manufacturer's demands. 

 

Paving the Way to Efficiency: Road Transportation Powers Third-Party Logistics

On the basis of transport, the roadways segment held the largest market share of nearly 59.3% in the year 2023. The need for effective logistics operations to maintain seamless supply chains is being fueled by globalization. This increases the demand for road transportation to provide top-notch service. Over 54% of all northern border freight between Canada and the United States is truck freight alone. Truck transportation is the best choice for companies that require prompt and secure delivery of small items to their customers' homes, warehouses, or workplaces because it can accommodate any potential delays.

 

E-commerce Boom and Digitalization Fuel 3PL Growth in Asia-Pacific with 43.45% revenue share.

Geographically, Asia-Pacific held a maximum market position with a revenue share of 43.45% in the year 2023. The Asia-Pacific area is predicted to have the fastest-growing third-party logistics market because of the region's quickly growing e-commerce industry and rising use of automation and digitalization in logistics procedures. The increasing use of digital technologies, such as AI, big data analytics, and IoT, will likely impact the market and result in growth.

 

On the other hand, North America also held a significant market share in 2023. Third-party logistics companies in North America offer distribution, warehousing, and transportation services. The growth of e-commerce and the requirement for economical and effective supply chain management are two factors driving the market. Retail e-commerce sales reached $257.3 billion in the Q2 of 2022, according to the Census Bureau of the US Department of Commerce. This is a 2.7% increase from the first quarter of 2022 but a 21.7% increase from the second quarter of 2020. In the US, e-commerce retail accounts for 14.5% of total retail sales. FedEx Supply Chain, XPO Logistics, and UPS Supply Chain Solutions are some major companies in the North American Third-party Logistics sector.

 

The third-party logistics market in Europe is expected to be worth USD 97.42 billion, with a compound annual growth rate of 9.13% from 2023 to 2028. The growth of the 3PL market is being driven by the acceleration of globalization and the expansion of international trade. Businesses are implementing a range of software programs for inventory tracking, online documentation for international freight, real-time data, and warehouse management. Due to the region's improving economic conditions, increasing internet penetration, and the manufacturing sector's sustained expansion, the European 3PL market is expanding significantly. For example, according to The Manufacturing Organization UK, the United Kingdom ranked tenth globally for manufacturing revenue in 2019 with US$192 billion.

 

The 3PL market in Africa is expected to continue expanding in the coming years due to increasing trade and investment, urbanization, and the growth of e-commerce. However, the market also faces several challenges, including inadequate logistics and transportation networks, poor infrastructure, and the need for a more skilled workforce.

In the Middle East, companies are increasingly seeking to focus on their core competencies and outsource logistics to specialized professionals. The region's strategic location at the crossroads of Asia, Europe, and Africa, combined with the growth of e-commerce, has attracted 3PL (third-party logistics) companies in the area.

 

Argentina and Brazil have the two largest 3PL markets in South America. The market is dominated by a few major global corporations and a significant number of small and medium-sized firms. It is expected to continue expanding in the coming years due to various factors, including the increasing demand for environmentally friendly and sustainable logistics solutions, as well as the growing adoption of technology and automation in logistics operations.

 

 

Driving Innovation: Key Players Shaping the Third-Party Logistics Industry

• Burris Logistics

• BDP International

• C.H. Robinson Worldwide, Inc.

• DSV

• FedEx

• Yusen Logistics Co. Ltd.

• CEVA Logistics

• DB Schenker Logistics

• Kuehne + Nagel

• United Parcel Service of America, Inc. (UPS)

• J.B. Hunt Transport, Inc.

• Nippon Express

• XPO Logistics, Inc.

• Others 

 

Third-party Logistics (3PL) Market Report Coverage

Report Attribute	Details
Forecast Period	2023 – 2030
Market Size Value in 2023	USD 1,096.75 Billion
Revenue Forecast by 2030	USD 2,042.10 Billion (estimated based on CAGR)
Overall Growth Rate	CAGR of 9.1% (2023 – 2030)
Base Year for Estimation	2022
Historical Data	2017 – 2021
Unit	USD Billion, CAGR (2023 – 2030)
Segmentation	By Service, By Transport, By End-Use, By Geography
By Service	Value Added Logistics Services, International Transportation Management, Warehousing & Distribution, Dedicated Contract Carriage, Domestic Transportation Management
By Transport Mode	Waterways, Railways, Roadways, Airways
By End-Use Industry	Automotive, Retail, Healthcare, Manufacturing, Others
By Region	North America, Europe, Asia-Pacific, Latin America, Middle East & Africa
Country Scope	U.S., Canada, Germany, UK, France, China, Japan, India, Brazil, GCC countries, etc.
Market Drivers	Growing e-commerce sector, globalization of supply chains, cost reduction pressure among shippers
Customization Option	Available on request

 

The Rise of Automation: Recent Advancements in 3PL Operations

• In April 2023, ShipStation, the top cloud-based shipping solution for e-commerce globally, launched ShipStation third-party logistics, its first feature created especially for third-party logistics companies. Through a self-service interface, the technology enables third-party logistics to expedite client onboarding and management. Third-party logistics may reduce client friction through the platform and automate manual fulfillment activities. 

• In June 2023, Vizient, the largest member-driven healthcare performance improvement organization in the US, and DHL Supply Chain reached an agreement enabling DHL to become a qualified supplier of supply chain Third-party Logistics services. Thanks to this collaboration, Vizient members, such as hospital systems and healthcare suppliers, now have greater access to DHL Supply Chain's best-in-class service logistics solutions.

• In September 2023, Warehouse Services Inc. ("WSI"), a privately held, women-owned (Third-party Logistics) nationwide company that provides transportation, value-added logistics, and warehouse services, announced that it has acquired Sky Trans Group Holdings, LLC, a privately held company situated in El Paso, Texas ("Sky Transportation Services"). Regional truckload carrier Sky Transportation Services is exclusively committed to moving dry-van freight, mostly in the Southwest region of the United States and Mexico. The agreement is anticipated to increase WSI's yearly revenue by over $60 million by 2023 and improve its cross-border capabilities from the US to Mexico.