Global Third Party Logistics (3PL) Market to Reach $1.3 Trillion by 2026

Third party logistics (3PL), also known as TPL, refers to the outsourcing of logistics operations, which could include using of transportation carrier, third party freight manager, or a warehouse, for carrying out a part of all of the production distribution operations of a company. Providers of third party logistics (3PL) services are engaged in managing freight organizations. 3PL service providers generally specialize in integrated transportation, warehousing, freight forwarding, packaging, inventory management, and cross-docking services, which can be customized or scaled as per customer requirement on the basis of demand and delivery requirement, and market conditions. The most commonly outsourced logistical activities include functions that are repetitive and transactional. Customers tend to retain in-house strategic, IT-centric, and customer-centric operations. 3PL providers offer a wide range of services that can be broadly categorized into domestic transportation management (DTM), international transportation management (ITM), warehousing and distribution, and dedicated contract carriage.

Amid the COVID-19 crisis, the global market for Third Party Logistics (3PL) estimated at US$838.9 Billion in the year 2020, is projected to reach a revised size of US$1.3 Trillion by 2026, growing at a CAGR of 8% over the analysis period. DTM, one of the segments analyzed in the report, is projected to grow at a 8.3% CAGR to reach US$503.5 Billion by the end of the analysis period. After a thorough analysis of the business implications of the pandemic and its induced economic crisis, growth in the ITM segment is readjusted to a revised 7.6% CAGR for the next 7-year period. This segment currently accounts for a 30.8% share of the global Third Party Logistics (3PL) market.

The U.S. Market is Estimated at $222.1 Billion in 2021, China is Forecast to Reach $328.4 Billion by 2026

The Third Party Logistics (3PL) market in the U.S. is estimated at US$222.1 Billion in the year 2021. The country currently accounts for a 24.68% share in the global market. China, the world second largest economy, is forecast to reach an estimated market size of US$328.4 Billion in the year 2026 trailing a CAGR of 9.9% through the analysis period. Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 5.5% and 6.2% respectively over the analysis period. Within Europe, Germany is forecast to grow at approximately 6% CAGR while Rest of European market (as defined in the study) will reach US$358.9 Billion by the end of the analysis period. Globalization of trade and liberalization of national economies along with steep expansion in demand for manufactured goods due to various socio-economic factors influenced significant growth in the global manufacturing sector. Escalation in manufacturing activity subsequently resulted in need for well-organized supply chain logistics, while generating substantial opportunities for 3PL services. A growing number of enterprises are showing higher reliance towards outsourcing various logistics functions including transportation, warehousing, and distribution, thus fueling growth in the 3PL market. On the other hand, availability of industry-specific, tailor-made 3PL services from established logistics services vendors is steering market momentum in a major way. Established 3PL vendors equip themselves with full-fledged road/ground, rail, air, and sea/ocean transportation infrastructure to perform numerous logistics functions including dry van freight, truckload freight, less-than-truckload (LTL) freight, flatbed & heavy freight, bulk freight, refrigerated freight, and intermodal shipments etc., on behalf of client enterprise.

Market momentum is also being funnelled from growing awareness among enterprises about the benefits offered by full-fledged 3PL service. By deploying 3PL in their SCM strategy, enterprises can typically gain access to established resource network and industry expertise of 3PL partners, and benefit from optimal cargo turnover, distribution efficiency, superior inventory management, reduced inventory and overall cost economies. Since the 3PL model invalidates the need for maintaining in-house workforce, machinery, vehicles, and warehousing capabilities, enterprises can free up their financial and human resources to maintain rigid focus on improving business competencies. In general, 3PL fully understands and acknowledges logistics and distribution needs of modern enterprises and induces flexibility, agility and scalability into supply chain processes to enhance market competitiveness of client enterprise.

DCC/FF Segment Corners to Reach $161 Billion by 2026

In the global DCC/FF segment, USA, Canada, Japan, China and Europe will drive the 8.8% CAGR estimated for this segment. These regional markets accounting for a combined market size of US$69.3 Billion in the year 2020 will reach a projected size of US$125.1 Billion by the close of the analysis period. China will remain among the fastest growing in this cluster of regional markets. Led by countries such as Australia, India, and South Korea, the market in Asia-Pacific is forecast to reach US$19.9 Billion by the year 2026, while Latin America will expand at a 10.4% CAGR through the analysis period.