The third party logistics (3PL) market has grown stably in the past five years. This was attributed to the outsourcing of logistic undertakings by firms. 3PL providers decrease CAPEX, alleviate dangers, manage inventories, offer market prospects, and help companies in regular business operations.
The third party logistics (3PL) market is projected to attain around USD 925.3 billion by 2020. Increase in the capacities of firms by outsourcing logistics seems to be the key driver of the market. This can be attributed to dispersal of supply-chain management firms on account of globalization.
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Big data solutions and industry-tailored mobile applications are the emerging trends of the market. Several automotive and healthcare firms outsource their logistic operations to third parties to reduce distribution costs. This assists automobile manufacturers to decrease their operational costs. Automated IT systems, coupled with security, flexibility, and material tracking, would be a vital parameter in choosing a logistics partner.
Services of the third party logistics (3PL) market have been split into Domestic Transportation Management (DTM), International Transportation Management (ITM), Warehousing & Distribution, Dedicated Contract Carriage (DCC), and Logistics Software. DCC is the fastest growing service, with players like Wal-Mart and Target using it to lessen the costs and increase truck capacities.
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DTM refers to value-added transportation services and freight brokerage. It should witness consistent growth during the forecast period (2014 to 2020). Pharmaceuticals and refrigerated grocery are the emerging applications of this segment. ITM deals only with international shipments. Warehousing & distribution refers to warehouses (with long-term contracts) serving as distribution centers.
In terms of regions, Asia Pacific had 30% share in the third party logistics (3PL) market in 2013. This growth could be credited to warehousing and distribution centers in Singapore, Indonesia, Thailand, China, and India. North America is estimated to experience significant growth opwing to reduced labor & transportation costs in Mexico and the United States.
Europe has faced hindrances from the Eurozone crisis. Its automotives and life sciences industries can rejuvenate the region. Mergers & acquisitions are a frequent ploy used by firms to gain an upper hand in the global market. For instance, FedEx signed a bond to buy its Dutch competitor, ‘TNT Express’ in 2015. Renowned firms in the worldwide third party logistics (3PL) market include Exel, FedEx, Schneider, Panlapina, and UPS Supply Chain Solutions.
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