3PL Services

Global Market Outlook on 3 PL services

The global 3PL industry is estimated to grow at a CAGR of 7–9 percent, amid the geopolitical issues and the series of ongoing pandemic lockdowns, as the market growth is majorly driven by the soaring demand form the e-commerce, pharmaceutical, food and now energy sector has been a new opportunity for the logistics market to innovate due to the prevailing high energy demand across the world

In order to overcome the economical distress, the governments of major democracies across the world is standing in support to the SCM players in development of port and logistic facility infrastructure and adoptions of automation to strengthen its supply network and add to its income flow.

Supply Outlook:

• The increased demand of oil and gas, due to the ongoing coal crisis, is expected to continue to affect the global supply chain network with higher fuel price escalations in 2023.

• Global 3PL players are into large-scale investments towards process automation to overcome the labor supply issues, while the regional and local suppliers are hiring more temporary laborers to sustain the demand in peak season

Demand Outlook:

• Demand for goods from Asian countries is likely to increase in the coming quarters of 2023, as shippers in the western countries will get prepared for the peak season, in order to avoid last-time delays and port congestions.

• The rising inflation and the fall of currency value across the globe will directly affect the consumption pattern, thereby affecting demand for the 3PL services

• There is also steady demand coming from the manufacturing and IT industries they revamp their operations to overcome economical distress, amid pandemic

3PL Industry - Market Overview

The global 3PL industry is estimated to grow at a CAGR of 7–9 percent during 2022–2026, due to the upcoming new trends and disruptive demand caused by the ongoing geopolitical issues and COVID-19 pandemic - the increase in the outsourcing of logistics activities by the pharmaceutical and the e-commerce sectors are high and is expected to continue the trend for the year 2022.

In 2023, the global 3PL industry size is expected to anchor around $1131.9 billion, with APAC, North America, and EU contributing to approx. 85 percent of the market.

Global 3PL Industry - Price Forecast: Customs Brokerage

• The increased demand of oil and gas, due to the ongoing coal crisis, is expected to continue to affect the global supply chain network with higher fuel price escalations in Q1 2023.

• Several important exporting and manufacturing hubs, including Chengdu, Dalian, Guangzhou, Shenzhen, and Tianjin, have been impacted by the Chinese Government initiative - dynamic zero-COVID policy

• Demand for goods from Asian countries is likely to increase in the coming weeks, as shippers in the western countries will get prepared for the peak season, in order to avoid last-time delays

COVID-19 and Russia-Ukraine War Impact on Global 3PL Market

The disruptions and port closures recently in China, due to the rise in pandemic cases and the ongoing war conflicts, the major global ports are expected to see shipment delays and a rise in surcharges for the containers holding at the ports. Additionally, the geopolitical issue has disrupted the oil prices, influencing a sudden surge in fuel prices.

Labor wages are expected to increase by 4–5 percent, due to high demand for skilled labor. Labor union strikes, due to economical distress and increased number of COVID affected laborers, leading to labor shortage until the end of Q4 2022.

The major global ports are expected to see shipment delays and a rise in surcharges for the containers holding at the ports, due to the rise in pandemic cases and the ongoing war conflicts. This lead to the increase in clearance rates by 4–6 percent in the upcoming years of 2022–2023.

IAG Cargo is helping Bolloré Logistics minimize CO2supply chain emissions by purchasing 1 million gallons of sustainable aviation fuel. On a net lifespan basis, the SAF will remove around 2,400 tons of CO2and will be deployed in two shipments by the end of 2022

Ceres Terminal intends opening a 300,000 m2new container yard in Port Houston, which is next to Barbours Cut Terminal. It intends to give clients access to close dock capacity and ease container terminal pressure

The US has passed federal laws to have more control over liner activities, and there are rising requests for other countries, particularly the UK, to do so as well. Recently, the UK imposed windfall taxes on gas and oil companies

Freight Forwarding - Market Overview

The new trend of online transactions of essential commodities (food, health care, etc.) has exerted pressure on both temperature-controlled logistics in last mile delivery services. This trend is expected to have a permanent impact on the 3PL market by the demand-driving industries, like e-commerce, pharmaceutical, and online retailing, resulting in the greater surge in the last mile delivery and other 3PL operations in North America, Europe, and Asian supply chain markets.

Growth Rate –2023 F

CAGR: 5-7 percent

• With high demand coming from the cross-border imports and exports fueled by the raise in ecommerce transactions across the world, amid the ongoing pandemic and geopolitical conflicts

• The freight forwarding industry is expected to grow by 5-6 percent for 2023. However, after the ongoing geopolitical crisis, it is expected to grow at a CAGR of 6-7 percent until 2026

Factors Influencing the Growth Rate of Freight Forwarding Market

• High demand from the last mile delivery services, due to soaring e-commerce and online shopping trends has been driving the freight industry amid all the supply chain disruptions prevailing in the market.

• To boost the air freight revenue and tonnage, forwarders are focusing more on industries, such as perishables and pharmaceuticals, and for sea freight, it is oil & gas(high demand due to global energy crisis), retail, and e-commerce.

Cost Structure - Freight Forwarding

• Due to an increase in the local operators and reduced cost structure by the local operators, freight forwarders operate currently at a high-moderate margin of 5-10 percent and are highly sensitive to decline in profitability.

• Costs of 3PL carriers can be indirectly influenced by forwarders by having economies of scale, leading to lower cost per shipment. Also, freight forwarders should have matured purchasing strategy and pro-active capacity management, in order to control the operating costs.

Factors Impacting Customs Brokerage Services Cost

• Hidden cost components play a vital role in customs brokerage charges. It is found that corruption is the major hidden cost parameter that adds to the cost of customs clearance and customs visit charges.

•  When the variety of goods is more, a single declaration is not enough. Additional charges are levied for every additional declaration made for customs clearance. This further adds to the total cost of customs clearance.

Why You Should Buy This Report

• This report provides the statistical illustration of the global 3PL industry overview in tandem with the recent trends and future projections to represent the potential investment pockets.

• The 3PL report offers insights associated with the major drivers, constraints, and opportunities of the market with comprehensive impact analysis.

• The overall industry potential is estimated to help clients comprehend the lucrative trends and ensure a broader footprint.

• SWOT and Porter’s five forces analysis elucidate the potential of the suppliers and buyers in the 3PL market.

• The present market is quantitatively examined from 2019-2027 to measure financial capability.