Third Party Logistics Market (By Service: Dedicated Contract Carriage (DCC)/Freight Forwarding, Domestic Transportation Management (DTM), International Transportation Management (ITM), Warehousing & Distribution (W&D), Value-Added Logistics Services (VALs); By Transport: Roadways, Railways, Waterways, Airways; By End use: Manufacturing, Retail, Healthcare, Automotive, Others) - Global Industry Analysis, Market Size, Opportunities and Forecast 2021 - 2028

The global third party logistics market is expected to grow at a CAGR of around 7.5% from 2021 to 2028 and expected to reach the market value of around US$ 1,800.1 Bn by 2028.

Report coverage

Third-party logistics (3PL) is a service that allows businesses to outsource operational logistics such as warehousing and delivery, allowing them to focus on other aspects of their operations. 3PL firms offer a variety of services related to supply chain logistics. Warehousing, transportation, inventory forecasting, order fulfillment, and freight forwarding are examples of these services.

Market Drivers

Big calls for “technology” drive the global third party logistics market

3PL has changed dramatically as a result of technological advancements and innovations, affecting 3PL and 4PL providers for proper logistics management. The development of specialized software, smart IT, and other technologically enhanced systems yield a high return on investment (ROI). Currently, 3PLs are investing in such advanced technologies to reduce costs, increase operational efficiency, save time, and improve accuracy. Furthermore, the majority of 3PL firms are incorporating Big Data and cloud-based technologies into their organizational systems and processes. Apart from that, shippers and 3PL companies are collaborating to improve operational efficiency and accuracy. Technology advancements have radically altered the way information is shared between logistics and shipping, allowing both parties to connect and engage on a higher level. 

Growth of e-commerce industry fuel the growth of global third party logistics market

As retailers such as Amazon and third-party logistics providers help manage omnichannel and e-commerce operations, the third-party logistics (3PL) segment grows rapidly. During the pandemic, e-commerce saw strong purchases in 2020, and companies continue to outsource rather than build internal fulfillment operations. According to the International Transportation Management (ITM), the 3PL segment, which includes air and ocean freight forwarding as well as complimentary value-added services, saw a 3.8% increase in gross revenue in the first half of 2020. Furthermore, the overall US 3PL market revenue increased by 5.9% in 2019 to US$91.5 Bn, bringing the total US 3PL market to US$212.8 Bn.

COVID-19 impact on 3PL market

The COVID-19 virus has infected a large number of people worldwide. Due to the strict lockdown, major production centers have been closed, causing a disruption in the supply chain in all manufacturing sectors. According to a report released by Frontiers Media S.A., firms should use 3PL services because they have the potential to support supply chains during disruptions. As a 3PL, you have a high potential to support the supply chain when it is disrupted. Previously, the 3Pl provided transportation and warehousing as well as new and innovative ways to reduce the contact distance between suppliers, manufacturers, and consumers. Furthermore, 3PL can assess and tailor a solution to a company's needs by gathering transportation and logistics information to forecast accurate needs, influence supply chain decisions, and ultimately increase process efficiency and customer service. As a result, collaborating with a 3PL can aid in mitigating the short-term impact of transportation disruptions on businesses.

Market Segmentation

The global third party logistics market is segmented based on service, transport, and end-use. Based on service, the market is segmented as dedicated contract carriage (DCC)/freight forwarding, domestic transportation management (DTM), international transportation management (ITM), warehousing & distribution (W&D), and value-added logistics services (VALs). By transport, the market is segregated as roadways, railways, waterways, and airways. Furthermore, end-use is segmented as manufacturing, retail, healthcare, automotive, and others.

Domestic Transportation Management (DTM) will account for the largest share of the global third-party logistics market in terms of service. The non-asset-based domestic transportation management segment (DTM), which primarily consists of freight brokerage services, leads the third-party logistics segment with a gross revenue contribution of 20.6%, totaling to US$86.5 Bn. Furthermore, strong demand combined with sequential carrier rate increases encourages DTM providers to plan capacity more effectively than the previous year, positively impacting net revenue growth. Such factors are responsible for segmental growth, which in turn contributes to the overall growth of the third-party logistics market.

In terms of transportation, the roadways segment dominates the market, accounting for a sizable share of the global third-party logistics market's growth. Increasing highway construction projects is one of the key factors driving segmental growth. For example, during 2019-2025, the roadway is expected to receive 18% of capital expenditure from the US$4 trillion National Infrastructure Pipeline. Since 2017, investment in road infrastructure has been volatile. Such factors fuel the expansion of the global third-party logistics market.

The manufacturing sector accounts for the largest revenue share of the third-party logistics market in terms of end-user. Manufacturers frequently outsource various aspects of their work to third-party logistics companies in order to save money on recruitment, training, employment, taxes, salaries, and employee benefit packages. Furthermore, due to a labor shortage in major markets, many manufacturers outsource work to 3PLs in order to scale their operations up and down, particularly when dealing with seasonal demand or the production or processing of seasonal goods. Such factors contribute to the expansion of the global third-party logistics market.

Regional Landscape

Asia Pacific accounted largest market share for the third party logistics market

The Asia Pacific region is expected to account for the lion's share of the third-party logistics market. In 2017, India was granted infrastructure status among Asia Pacific provinces. According to a Frontiers Media S.A. report, India was ranked 44th out of 167 countries in the World Bank's Logistics Performance Index in 2018. Furthermore, the government invested heavily in the construction of a national highway to improve logistics. The Indian e-commerce market is expected to grow from US$38.5 Bn in 2017 to US$200 Bn by 2026, owing primarily to the consistent increase in Internet and smart phone penetration, which has a positive impact on the regional market's growth.

North America has a sizable market share in the third-party logistics market. With a score of 85.2, the United States remained the top innovation performer in the North American region for third-party logistics in 2020. This is one of the most important factors influencing the growth of third-party logistics in the North American regional market.

Competitive Landscape

The prominent players of the global third party logistics market involve BDP INTERNATIONAL, C.H. Robinson, CEVA Logistics, DSV Panalpina A/S, DB Schenker, FedEx Corporation, J.B. Hunt Transport Services, Inc., Kuehne + Nagel International AG, Nippon Express Co., Ltd., United Parcel Service, and among others

Market Segmentation

Market By Service

Dedicated Contract Carriage (DCC)/Freight Forwarding
Domestic Transportation Management (DTM)
International Transportation Management (ITM)
Warehousing & Distribution (W&D)
Value-Added Logistics Services (VALs)

Market By Transport

Roadways
Railways
Waterways
Airways

Market By End use

Manufacturing
Retail
Healthcare
Automotive
Others

Market By Geography

North America
•    U.S.
•    Canada

Europe
•    U.K.
•    Germany
•    France
•    Spain
•    Rest of Europe

Asia-Pacific
•    China
•    Japan
•    India
•    Australia
•    South Korea
•    Rest of Asia-Pacific

Latin America
•    Brazil 
•    Mexico
•    Rest of Latin America

Middle East & Africa
•    GCC
•    South Africa
•    Rest of Middle East & Africa