What’s behind the growth of third party logistics?

As economic uncertainty once again sweeps across the globe due to the crisis in Greece and uncertainty in the Chinese market the Third Party Logistics industry continues to go from strength to strength. Showing it’s staying power by growing gross revenues in the USA by 17.8% against a GDP of 4.1% the market has continued to boom in stronger economic times. The coming years appear very positive with US industry experts expecting 3PL revenues to grow to $195.8 billion in 2018. The positivity in the market cannot be underestimated and it is worth looking at what is behind the continued growth of 3PL services.

Can logistics change economic fortunes?

While it is evident that 3PL’s are able to survive (and even thrive) through a recession, the economy has slowly improved globally since the crash of 2008. This has led to a growth in manufacturing and emerging markets are fast becoming the new power players. With the recent trend of automobile companies manufacturing parts on a global basis before bringing everything together for assembly this has proved a great boost to 3PL organisations that can use their global knowledge to reduce transportation costs and gain a larger market share.

Along with the trends in the automotive industry 3PLs are entering new markets on a daily basis and it is expected that by 2017 Asia will be the largest market for third party logistics taking over from Europe, which currently holds a 37% share of the global market. By recognizing where the power now lies and forecasting future trends 3PL’s can future proofs their business to ensure they are not caught out by market changes.

The globalization and emergence of new markets has also lead to an increase in collaboration between 3PL’s. By working alongside local carriers and even collaborating with 3PL’s in these new markets companies can quickly develop a strong understanding of these regions and offer a secure and knowledgeable service in areas out with the traditional European and American markets. The trend towards takeovers, mergers and corporate collaborations is expected to continue through the decade as the manufacturing strongholds of the world shift.

Added Value for 3PL’s

As the major manufacturing powers in the world move from Europe to Asia and India large 3PL’s are recognizing that they can no longer expect to win business solely on price. As mergers continue and the main players are all working to economies of scale we are beginning to see a plateau where price differences between 3PL’s are minimal. To combat this and see the market continue to grow companies are focusing on adding value to the supply chain by offering non-traditional services. Whether these services are packaging, labeling or inventory management it shows that 3PL’s are responding to the changing face of business and coming up with new ways to boost the industry without diluting the core product

Will this trend continue?

With experts across the globe expecting the value of the 3PL industry to continue to grow internationally there is a great deal of positivity in the air. As the market becomes more consolidated and focused on collaboration and market knowledge it is expected that the use of 3PL’s will continue to increase. While the economy is currently facing some questions over its long-term stability and driver numbers continue to dwindle there is still a lot of reason for positivity.