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3PL market to grow, outstripping $900 bn in 2020, says report


As per the projection made in the ‘Global and China Third-Party Logistics Report, 2016-2020’, published in February 2017, in future, by virtue of high efficiency and highly standardised operations, the third-party logistics (3PL) market size will grow steadily, expectedly outstripping $900 billion in 2020, with a share of nearly 10 per cent of the market.


3PL can not only help companies complete cargo movement but also effectively reduce logistics costs and speed up cargo turnover, fully meeting their requirements on logistics quality. The report reveals that in 2015 the global 3PL market size hit $721 billion, a year-on-year (YoY) rise of 4.5 per cent, occupying 8.2 per cent of the logistics market size, and increased around $35.9 billion in 2016, up to $756.9 billion.


Mr Brijesh Lohia, Managing Director of Global Ocean Group, says, "The specific nature of the study demonstrates the upward curve for the 3PL sector. We can already say that the year 2017 is logistics year. Newer technologies such as Big Data and Analytics will become a core competency of supply chain operations in the future of third-party logistics sector. Thus further confirming the predictions made by the report."


"Although the effects of demonetisation had adversely affected the 3PL sector towards the end of 2016, the announcement for infrastructure development in Budget 2017 has opened corridors for boost in the sector. We can already affirm contribution of Indian 3PL market towards the promising global growth statistics," he added.


The Study


China is the world’s largest third-party logistics market. In 2015, its market size attained RMB 1,065.2 billion or roughly $171.8 billion (up 13.6 per cent YoY, a 23.8 per cent share in the global market, and reached around RMB 1,200 billion in 2016. Chinese (Mainland China) third-party logistics industry is still in its infancy and lags behind the developed countries/regions by share in the entire logistics market (developed regions are generally above 10.5 per cent, Mainland China around 8 per cent), leaving a large development space. Moreover, China’s regional trade imbalance also creates certain opportunities for the rapid development of third-party logistics. It is predicted that the third-party logistics market size in China will see a CAGR of around 15 per cent in the period 2016-2020.


Additionally, by not having a high market share, Chinese third-party logistics industry also has problems of insufficient and low-level demand due to the relatively little use of third-party logistics by most traditional companies, the basic and conventional demand of companies that choose third-party logistics and their limited demand for high value-added, comprehensive logistics services.


Development trend: To improve profitability and maximise operational efficiency, third-party logistics is heading towards large-scale, informatisation and asset-light. In addition, as E-commerce in China gradually spreads to regions outside the first-tier cities, third-party logistics companies can make their presence felt in the second- and third-tier regions.


Seen from the competitive landscape, the third-party logistics market has a low concentration rate, and the players compete fiercely, said a release.


Source: Exim News Service - Mumbai, March 19


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