Third Party Logistics Market Size, Share & Industry Analysis, By Mode of Transportation (Railways, Airways, Roadways, and Seaways), By Service Type (Dedicated Contract Carriage (DCC), Domestic Transportation Management, International Transportation Management, and Value Added Warehousing & Distribution), By Industry (Technological, Automotive, Retailing, Manufacturing, and Logistics), and Regional Forecast, 2024-2032

The global third party logistics market size was USD 1,065 billion in 2023 and is projected to grow from USD 1,142.7 billion in 2024 to USD 2,546 billion by 2032 at a CAGR of 10.5% during the 2024-2032 period.

Third party logistics service is a business process where companies outsource their distribution and logistics functionality to expert logistics service providers that are actively involved in and specialized in handling operations such as assembly services, warehousing, transportation, freight & forwarding. Third party logistics provides greater flexibility by reducing overall costs related to the distribution and warehousing of goods. Moreover, this is the most common business model in the logistics industry, enabling customers to focus on their core businesses.

Owing to the increasing consumer demand, some logistics companies offer value-added services, including door-to-door delivery, cross-docking, procurement & production of products, packaging, and inventory management. Moreover, the availability of custom-made, industry-specific third-party services from reputed logistics service providers is the key factor propelling the global market growth.  

The COVID-19 pandemic significantly impacted the Third Party Logistics (3PL) market. Supply chain disruptions, border closures, and fluctuating consumer demand led to operational challenges for 3PL providers. However, the crisis also accelerated the adoption of digital solutions and e-commerce logistics, driving growth in certain segments. As businesses prioritize resilience and flexibility in their supply chains post-pandemic, 3PL providers are expected to play a pivotal role in enabling agile and efficient logistics operations.

Third Party Logistics Market Trends

Increased Use Of Emerging New Game-Changing Technologies In 3PL Business to Set a Positive Trend For Market Growth 

Technology plays an important role for shippers as well as service providers. The shippers are majorly seen depending on third party logistics for costly & sophisticated technology solutions. Users also increasingly rely on their logistics providers, who are experts in supply chain event management (SCEM), transportation management systems (TMS), international trade logistics systems (ITLS), and warehousing management systems (WMS). Moreover, third party service logistics providers can also purchase these technologies/software and implement them in their operation to avail the most productivity. Moreover, using this advanced technology software helps achieve powerful savings in operational efficiencies. For instance, the company can benefit from 80% of cost-cutting using this supply chain management (SCM), cloud ERP, TMS, web-based s/w, fully automated systems. In addition, warehouse management and web-based transportation systems also help 3PL companies to reach smaller customers. For instance, Schneider Logistics uses a Web-based SUMIT system to serve a much broader range of customers in a cost-effective manner. Thus, recent innovations in 3PLs technologies and systems to ease the overall operation will lead to a global market growth rate in the forecast period.

Third Party Logistics Market Growth Factors

Expansion of E-Commerce Business and Policy Support to Drive Market Growth

As consumers increasingly turn to online shopping, businesses are compelled to optimize their supply chains to meet the growing demand for fast and efficient delivery services. The COVID-19 pandemic further accelerated this trend, with lockdowns and social distancing measures prompting a surge in online retail transactions. As e-commerce continues to thrive, businesses are faced with the challenge of fulfiling orders promptly and cost-effectively, which often requires outsourcing logistics functions to specialized 3PL providers.

One of the key advantages of 3PL services in the e-commerce ecosystem is their ability to offer scalable solutions tailored to the specific needs of online retailers. By leveraging the expertise and infrastructure of 3PL providers, businesses can streamline their supply chain operations, reduce delivery times, and enhance customer satisfaction. In addition to e-commerce, globalization has emerged as another significant driver for the 3PL market. As businesses expand their operations into new geographic regions, they require logistics partners with the expertise and infrastructure to navigate complex international supply chains. This trend is particularly evident in industries, such as manufacturing, automotive, and pharmaceuticals, where companies rely on 3PL providers to manage cross-border transportation, customs clearance, and warehousing.

Moreover, the increasing complexity of supply chain networks and the growing emphasis on sustainability have further fueled the demand for 3PL services. Companies are seeking logistics partners that can help them optimize routes, minimize carbon emissions, and reduce waste throughout the supply chain. By outsourcing logistics functions to specialized providers, businesses can achieve greater efficiency and environmental responsibility. Overall, the rapid growth of e-commerce, coupled with the need for scalable, flexible, and sustainable logistics solutions, positions the Third Party Logistics market for continued expansion in the coming years. As businesses adapt to the evolving demands of the digital economy and the global marketplace, 3PL providers are poised to play a vital role in driving supply chain innovation and facilitating seamless logistics operations.

RESTRAINING FACTORS

Infrastructure Limitation, Shortage of Logistics Experts, And Regulatory Issues Can Restrain The Growth Of The Market

The development of logistic services in developing countries is continuing to lack behind compared to developed countries. This development is due to limited number of highly trained professionals available in the industry. The lack of logistics experts with experience further limits the growth of this market. Similarly, the current infrastructure condition in developed countries, including China is insufficient to meet the demand for advanced logistics services. Some of the warehouse in countries uses/operates with outdated equipment. The ground infrastructure fails to meet efficient connection with the logistic hub, which prevents the establishment of advanced intermodal logistics operations. In addition, majority of the industry operation is controlled/governed by the Ministry of Transportation, National Development and Reform Commission, and others. The differences in policies among multiple government authorities require that logistics service providers employ additional administrative and management resources. As a result, regulatory discontinuity may slow down the pace of development in the global logistics services industry. Thus, all such factors, including lesser manufacturers' control on logistics & delivery services hinder the global market growth.

Third Party Logistics Market Segmentation Analysis

By Mode of Transportation

Roadways Segment Dominates the Market

Mode of transportation is segmented into roadways, railways, seaways, and airways.

The largest share in held by the roadways segment and is expected to maintain its position in the market in the upcoming years. The need for roadways as a mode of transport in 3PL industries has been witnessed to increase considerably owing to the improvement of road infrastructure and the increase in cross-border trades between landlocked countries across the globe. Moreover, 3PL service providers adopt the latest IT solutions such as WMS and transport management systems (TMS) to provide innovative delivery solutions to first-party companies.

Railway serves as the fastest mode of transportation. Logistics provider companies are improving their services to offer reliability and improve efficiency. For instance, in October 2019, global leading logistics company UPS opened its 2^nd largest U.S.-based network package operating facility incorporated for railway cargo.

Seaway serves as one of the most expensive modes of transport. Leading companies are entering into a joint venture to operate across various regions using seaway transport operations. Various airlines are launching flights for logistics to provide fast and urgent transportation services across countries.

• For example, in May 2023, Integrated logistics solution provider Mahindra Logistics Ltd. (MLL) announced the commencement of cargo charter operations in the Middle East. UAE has emerged as India's third-largest trading partner in the years 2021-22. Dubai has also emerged as a global and regional trading hub. Mahindra Logistics will service the large Middle East region from its Dubai operations.

By Service Type

Domestic Transportation Management (DTM) Segment to Hold the Largest Market Share

The market is segmented into dedicated contract carriage (DCC), domestic transportation management, international transportation management, and value-added warehousing and distribution based on service type.

DCC service providers enable better utilization of capital and integration of transportation management to their customers, which help customers to focus on the core business issues and end-user, thereby driving the adoption of dedicated contract carrier service. Domestic transportation management consists of a flow of goods between the states of the same nation. Companies are also actively involved in expanding their domestic business.

• For instance, in July 2023, DHL Group acquired the Turkish parcel service provider MNG Kargo and its subsidiaries. MNG Kargo is one of the leading parcel service providers in Turkey, and the parcel and e-commerce market is growing rapidly. With this acquisition, DHL Group secures a leading position in the rapidly developing domestic parcel market and creates additional synergies for the company.

International transportation management manages the flow of products through the supply chain to customers by crossing international boundaries. Effect transport management due to the adoption of automated technologies, increase in trading activities between nations, and improvement in logistics infrastructure are propelling to grow the International transportation management segment share.

The surge in penetration of completely automated warehousing distribution systems is extremely low, which is expected to provide a remarkable growth opportunity for key players operating in the market.

By Industry Analysis

Booming Electronic Product Sales To Favor Technological Segment Market Growth

The rise in industry trends in ordering goods, products such as mobile phones, computers, and other electronic products from e-commerce websites, and increasing internet penetration dominate this segment. Many automotive manufacturers are involved in multiple strategies with service providers, and 3PL allows automobile industry players to respond more efficiently and effectively according to the increasing consumer demand across the globe. Third-party logistic service providers were becoming crucial for retailers as the key priority and were expected to be quick to cater to the demand. Giant Companies, including DHL, Amazon, and others have introduced a strategy of shipping goods in one to two hours in some major cities. Thus, retailers' strategy provides a remarkable growth opportunity for service providers. The manufacturing logistics industry relies on 3PL services, including raw material procurement to deliver the desired product to end customers with a complex supply chain process. Thus, it highly dominated the market and expected to grow in the future significantly.

REGIONAL INSIGHTS

The Asia Pacific region is anticipated to grow at the fastest rate during the forecast period in this market. The region has observed sturdy growth, driven by initiatives by the e-commerce industry to incorporate warehouse projects and their solutions in the supply chain by regional companies. In addition, the collaboration of logistics service companies with transport companies is fueling the growth of the Asia Pacific third-party logistics market.

The North America market is anticipated to show remarkable growth due to an increase in partnership among leading logistics service providers to incorporate new projects. In addition, forming a joint venture to operate in the market and incorporating new services to serve countries fuel the regional market growth.

Europe is expected to witness a boost in the market owing to the growing technology adoption in the logistics field, increasing food & groceries industry in Europe, and rising e-commerce market. These factors will offer immense growth opportunities for the market to flourish. The acquisition of logistics services by 3PL providers giants and large storage facilities will boost the market growth. Rising attention on truck platooning by logistics vendors, and growing  economy will considerably influence the market growth.

The rest of the world currently contributes less than the other region; however, it is anticipated to contribute significantly to the market's growth.

List of Key Companies in Third Party Logistics Market

Acquisition Strategies Of Many Third Party Logistic Market Players to Enhance Market Prospects

C.H Robinson is one of the American multimodal transportation service provider companies also engaged in third party services. The company provides freight transportation, brokerage & warehousing facility, transportation management services, and many others. In March 2020, the company announced that it has acquired prime distribution services (“Prime”), a value added service provider in North America from Roadrunner Transportation with a valuation of USD 220 million.

In September 2021, Maersk acquired a Portuguese startup specializing in logistics and planning to use its technology to benefit its business. Also, in September 2020, A.P. Moller – Maersk company acquired European customs services specialist KGH Customs Services to further enhance its logistics and services offering.

LIST OF KEY COMPANIES PROFILED

• DHL Group (Bonn, Germany)


• Kuehne + Nagel (Schindellegi, Switzerland)


• C.H. Robinson  (Minnesota, U.S.)


• Ceva Logistics (Marseille, France)


• FedEx Corporation (Tennessee, U.S.)


• Nippon Express (Tokyo, Japan)


• DB Schenker (Essen, Germany)


• UPS (Georgia, U.S.)


• JB Hunt (Arkansas, U.S.)


• Panalpina (Basel, Switzerland)

KEY INDUSTRY DEVELOPMENTS

• February 2024: Germany-based DHL partnered with resale-as-a-service firm Reflaunt. In a partnership with resale service provider Reflaunt, the company will be offering fulfillment, shipping, and platforming solutions for brand clients interested in entering the secondhand space.


• January 2024: C.H. Robinson became the first third-party logistics provider to adopt a new electronic version of an essential shipping document; C.H. Robinson has advanced the digitization of the less-than-truckload industry by implementing an eBOL with 10 of the top LTL carriers and is in progress with four more. Standards for the eBOL were developed by the NMFTA’s Digital LTL Council, creating greater efficiency and real-time visibility for LTL shippers.


• November 2023: DHL Deployed 1,000 warehouse robots in view to expand warehouse automation. This partnership with Autostore has expanded for more than 12 years as the companies work to redefine the future of warehousing with deployment. DHL is already involved in nine operational AutoStore warehouse projects across Singapore, the U.S., and Germany, with four more in the planning stage.


• July 2023: A.P. Moller–Maersk, the global integrated logistics company, opened the doors to its third Warehousing & Distribution (W&D) facility in Dubai, UAE, which is also its first Cold Store in the country spread over 13,000 sq. m at Dubai Industrial City. It is strategically located for connectivity to Jebel Ali Port, Al Maktoum International Airport, direct road access across the UAE, and an Etihad Rail freight terminal.


• June 2023: DHL Supply Chain agreed with Vizient, the largest member-driven healthcare performance improvement company in the U.S. The agreement allows Vizient members, including hospital systems and healthcare suppliers, increased access to best-in-class service logistics supply chain third-party logistics (3PL) services solutions delivered by DHL Supply Chain.

REPORT COVERAGE

The third party logistics market report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, service types, and leading product applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors contributing to the market's growth over recent years.

Report Scope & Segmentation