3PL Industry forecast to grow at CAGR of 4.6% from 2017 to 2024: Global Market Insights Inc.
Third party logistics industry has lately evolved as one of the most lucrative fraternities of its time, pertaining to the extensive set of collaborative logistics services offered by 3PL providers. As per a 2004 survey, more than 40% of the confederates revealed that they outsourced services such as customs clearance, inbound transportation, warehousing, freight forwarding, outbound transport, and fright payment, to 3PL service providers, which has undeniably served to enhance the growth prospects of 3PL market. The rapidly escalating growth curve of Third Party Logistics (3PL) Market is quite evident from the numerous collaborations witnessed across this business sphere. For instance, recently, CFAO Equipment Ltd, one of the many leading suppliers of industrial and construction equipment across the globe, has signed an agreement with a Ghana-based logistics company called Third Party Logistics Limited. As per the conditions of this partnership, CFAO Equipment will be providing Toyota forklifts to Third Party Logistics to be used in its business operations. Third party logistics industry is characterized by innumerable such acquisitions, subject to the widespread utilization of these services by major companies across myriad geographies, owing to which experts claim 3PL market size to cross the frontier of USD 1,100 billion by 2024.
With the increasing rate of outsourcing logistics services to third parties, an estimate of reduction in costs was observed. For instance, the overall logistics costs for a company will be reduced by nearly 12%, if outsourced to third parties. It was found that the order cycle period was reduced from 7 days to 4 days, approx., which is a major milestone for retail companies. This reduction was expected to eventually create a favorable roadmap for the development of 3PL market. While logistics assets may be reduced by more than 24%, the overall inventory will be reduced by more than 8%. The reduction in costs gave rise to a massive adoption of 3PL services, spurring third party logistics industry share across major geographies. The survey indicated that more than 43% of a company’s logistics budget across North America is expended on 3PL services, with around 78% of North American companies using 3PL services. Similarly, while around 51% of a company’s logistics budget across Western Europe was spent on 3PL services, with around 94% of the companies in Western European use 3PL services. With the massive expansion of companies across the globe and the simultaneous expansion of their consumer pools, it is but obvious that the 3PL market will observe a meteoric rise over the next few years. This business space is driven by numerous 1|Page