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The Global Third Party Logistics Market is driven by Growing Demand from End-Use Industries

The Global Third Party Logistics Market is driven by Growing Demand from End-Use Industries

The third party logistics market facilitates transportation, warehousing, and distribution of goods through third party logistics service providers. These providers specialize in integrated operations, such as transportation optimization, inventory management, cross-docking and freight consolidation. They rely on continuous process improvement, information technology and operational excellence to provide customized logistics support to businesses.

The Global Third Party Logistics Market is estimated to be valued at US$ 1.63 Mn in 2024 and is expected to exhibit a CAGR of 5.9% over the forecast period 2024 to 2030.

Key Takeaways

Key players operating in the third party logistics are Johnson Controls (including ANSUL), Solberg (a division of Amerex Corporation), Dr. Sthamer, National Foam (a part of Kidde-Fenwal, Inc.), Eau&Feu, Dafo Fomtec AB, ICL Performance Products, KV Fire Chemicals, Auxquimia & Angus Fire. The rapidly changing global trade scenario and increasing complexity of supply chain operations are driving the demand for third party logistics services. Lack of infrastructure and technical expertise prompts several companies to rely on third party logistics providers for their logistical requirements.

Growing global trade has significantly increased transportation needs across diverse industries. Third party logistics providers are expanding globally to seize international business opportunities arising due to increased cross-border movement of goods. They offer seamless logistics services and real-time cargo visibility across national boundaries.

Market drivers

The primary driver for The Third Party Logistics Market is the growing demand from end-use industries such as retail, manufacturing and e-commerce. Third party logistics providers offer flexible, sustainable and cost-effective logistics solutions to businesses of varying sizes and scales. Their integrated warehousing, transportation and distribution services help companies focus on their core operations while outsourcing logistics management. This translates to reduced costs, improved supply chain efficiency and optimized inventory levels for businesses.

Impact of geopolitical situation on the growth of Third Party Logistics Market

The current geopolitical instability across several regions is impacting the growth of the third party logistics market. The ongoing Russia-Ukraine conflict and sanctions on Russia have disrupted global supply chains. It has hampered cross-border trade and transportation between Eastern Europe and other major economies. This is negatively impacting industries reliant on these regions for raw materials and parts. Rising fuel prices and supply chain issues arising due to the conflict are increasing operational costs for 3PL providers.

Geopolitical risks in other parts of Asia and Middle East are also hurting the market. Frequent lockdowns in China to curb Covid spread have led to factory shutdowns and port congestions, delaying shipments. Regional tensions between India and Pakistan periodically impact logistical activities along their border. Terrorist threats in West Asia and Africa also raise security concerns for transportation and warehousing in these areas. To sustain growth amid such challenges, 3PL companies will need to diversify their sourcing and delivery networks, develop alternative transportation routes, and use technologies like blockchain for efficient tracking of shipments. Short-term partnerships can also help minimize exposure to political instability in high-risk regions.

Geographical regions with major market concentration

Currently, North America accounts for the largest share of the global third party logistics market in terms of value. This can be attributed to extensive outsourcing of logistical activities by manufacturing and retail industries in the US and Canada. Large logistics service providers have established expansive distribution and fulfillment networks across the region to cater to its huge consumer base. Asia Pacific follows next and is expected to record the fastest growth during the forecast period. This is owed to rapidly expanding e-commerce markets, rising digitization and industrialization in countries like India and Indonesia. With growing middle-class populations and international presence of local online retailers, demand for modern 3PL solutions is surging in Asia Pacific economies.

Fastest growing regional market for Third Party Logistics

Asia Pacific emerges as the fastest growing regional market for third party logistics globally. Emerging countries within the region like India, Indonesia, Vietnam and Philippines are experiencing strong manufacturing growth to capitalize on low labour costs and shift in production away from China. This has boosted the need for efficient inbound and outbound logistics across diverse industries. Escalating internet and smartphone penetration is fueling the e-commerce boom in Asia Pacific. Cross-border shopping from global retailers is also picking up swiftly. All these factors are driving up uptake of digitally-advanced warehousing, transportation and value-added services provided by 3PL companies. In addition, infrastructure improvements underway throughout the region are enhancing connectivity between cities and facilitating cross-regional shipments.

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