Logistics Outsourcing Market Size, Share, Growth, and Industry Analysis, By Type (Material Management, Supply Chain Management, Distribution Management, Shipment Packaging, Channel Management and Others), By Application (Air Transportation, Sea Transportation, Railway Transportation, Highway Transportation and Others), Regional Insights and Forecast to 2031

Updated On: 22 April 2024

Logistics Outsourcing Market REPORT OVERVIEW

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The global logistics outsourcing market size was 60850.0 million in 2021. As per our research, the market is expected to reach USD 76425.0 million by 2027, exhibiting a CAGR of 3.87% during the forecast period. The COVID-19 pandemic has been unprecedented and staggering, with logistics outsourcing experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

Logistics outsourcing, also known as third-party logistics (3PL), is a business practice where companies delegate various aspects of their supply chain and logistics operations to external service providers. These third-party logistics providers specialize in offering a range of logistics services, allowing businesses to focus on their core competencies while benefiting from the expertise and resources of these logistics experts.

Outsourcing logistics functions can lead to cost savings for businesses. 3PL providers often have economies of scale, advanced technology, and specialized expertise that can reduce transportation, storage, and labour costs. Logistics outsourcing providers offer a wide array of services, including transportation management, warehousing, distribution, inventory management, order fulfilment, customs brokerage, freight forwarding, and more. These services can be tailored to meet the specific needs of individual companies.

COVID-19 IMPACT: Increased Demand for E-Commerce to Boost Demand Significantly

COVID-19 had a life changing impact globally. The logistics outsourcing market was significantly affected. The virus had various impacts on different markets. Lockdowns were imposed in several nations. This erratic pandemic caused disruptions on all sorts of businesses. Restrictions tightened during the pandemic due to increasing number of cases. Numerous Industries were affected. However, the market for logistics outsourcing experienced an increased demand.

The pandemic disrupted global supply chains, leading to significant challenges for logistics outsourcing providers and their clients. Lockdowns, travel restrictions, and factory closures disrupted the movement of goods, leading to delays and inventory shortages. The types of logistics services in demand shifted during the pandemic. There was a greater need for last-mile delivery, cold chain logistics for vaccines and pharmaceuticals, and specialized handling of essential goods.

The pandemic led to a surge in online shopping as people sought to minimize in-person interactions. E-commerce companies required efficient and flexible logistics solutions to meet this increased demand. Logistics outsourcing providers played a crucial role in helping e-commerce businesses scale up their operations to handle higher volumes of online orders. With more people staying home and ordering online, optimizing last-mile delivery became essential. Logistics outsourcing providers leveraged technology and data analytics to improve last-mile delivery efficiency, reducing delivery times and costs. The market is anticipated to boost the logistics outsourcing market share following the pandemic.

LATEST TRENDS

"Advancement in Technology to Broaden Market Growth"

Logistics outsourcing companies are increasingly leveraging advanced analytics and artificial intelligence (AI) for route optimization, demand forecasting, and predictive maintenance. These technologies improve efficiency and reduce costs. Automation in warehouses and distribution centers is on the rise. Logistics outsourcing providers are incorporating robotics and automation for tasks such as picking, packing, and sorting, leading to improved efficiency and accuracy.

Block chain is being explored for its potential to enhance transparency, security, and traceability in the supply chain. Some logistics providers are experimenting with block chain-based solutions for tracking goods and managing documentation. These latest developments are anticipated to boost the logistics outsourcing market share.

SEGMENTATION

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By Type

Based on type, the market is divided into Material Management, Supply Chain Management, Distribution Management, Shipment Packaging, Channel Management and Others.

By Application

Based on application, the market is bifurcated into Air Transportation, Sea Transportation, Railway Transportation, Highway Transportation and Others.

DRIVING FACTORS

"E-commerce Growth to Boost Market Share"

The rapid growth of e-commerce has transformed the logistics landscape. Online retailers and marketplaces require efficient and scalable logistics solutions to fulfill orders and meet customer expectations for fast and reliable delivery. Logistics outsourcing providers specialize in e-commerce fulfillment, last-mile delivery, and returns management. Customers have high expectations when it comes to the speed and accuracy of deliveries. Logistics outsourcing providers play a critical role in meeting these expectations by optimizing supply chains for efficient and timely deliveries.

"Supply Chain Complexity to Boost Market Size"

As businesses expand their operations globally, supply chains have become more complex. Companies often lack the in-house expertise to manage international logistics effectively. Logistics outsourcing providers offer the necessary global reach and expertise to handle cross-border logistics, customs regulations, and international trade complexities. Companies increasingly recognize the value of concentrating on their core business activities. Outsourcing logistics functions allows them to allocate resources, time, and attention to areas where they have a competitive advantage while leaving the complexities of supply chain management to experts. These factors are anticipated to drive the logistics outsourcing market share.

RESTRAINING FACTORS

"Data Security and Privacy Concerns to Hamper Market Share"

The logistics industry relies heavily on data for tracking, routing, and managing inventory. Sharing sensitive supply chain and customer data with third-party logistics providers can raise concerns about data security and privacy. Companies must ensure that their logistics partners have robust data protection measures in place. Concerns about data security and privacy can hinder the adoption of logistics outsourcing, especially when sensitive customer or business data is involved. The factors are anticipated to hinder the logistics outsourcing market growth.

REGIONAL INSIGHTS

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"North America Dominates the Market with Extensive Supply Chain"

The U.S. has been a major player in the global logistics outsourcing market due to its large economy, extensive supply chains, and the presence of many multinational companies. The North American market has seen growth in logistics outsourcing driven by e-commerce, pharmaceuticals, and technology industries. The United States is a global leader in e-commerce, with a substantial number of online retailers and a large consumer base. The growth of e-commerce has driven the need for efficient logistics and last-mile delivery solutions, making it a significant driver of the logistics outsourcing market.

KEY INDUSTRY PLAYERS

"Key Players Focus on Partnerships to Gain a Competitive Advantage "

Prominent market players are making collaborative efforts by partnering with other companies to stay ahead in the competition. Many companies are also investing in new product launches to expand their product portfolio. Mergers and acquisitions are also among the key strategies used by players to expand their product portfolio.

List of Market Players Profiled

• DHL [Germany]
• UPS (United Parcel Service) [U.S.]
• Tibbett and Britten [Germany]
• PSA (Port of Singapore Authority) [Singapore]
• Ryder Logistics [U.S.]
• TNT (Thomas Nationwide Transport) [U.S.]
• Schneider [U.S.]
• Logipoint [Saudi Arabia]
• Menlo Worldwide Logistics [U.S.]
• Exel Logistics [Germany]
• FedEx [U.S.]

REPORT COVERAGE

This research profiles a report with extensive studies that take into description of the firms that exist in the market affecting the forecasting period. With detailed studies done, it also offers a comprehensive analysis by inspecting the factors like segmentation, opportunities, industrial developments, trends, growth, size, share, restraints and others. This analysis is subject to alteration if the key players and probable analysis of market dynamics changes.