The third-party logistics (3PL) market registered valuation of over $1 trillion in 2019, and is anticipated to depict growth at 9% CAGR through 2026. This growth is ascribed to rising prevalence of globalization, which is compelling many enterprises to outsource logistics activities to third party providers.

In terms of the solutions spectrum, the third-party logistics market is segmented into DTM (Domestic Transportation Management), DCC (Dedicated Contract Carriage), ITM (International Transportation Management), logistics software and warehousing & distribution segments.

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Of these, the DTM segment is estimated to show a commendable growth trajectory. This segmental growth is largely attributed to the robust demand for third-party logistics services from the manufacturing sector.

The DTM segment consists predominantly of freight brokerage services. It also involves managed transportation, and digital freight brokers (DFMs) or digital freight matching enterprises, albeit to a lesser extent.

Third-party logistics market from the DTM segment is likely to witness steady growth in the years ahead, owing to consistent port-to-warehouse & warehouse-to-warehouse moves, robust domestic economy, escalating carrier rates, enhanced revenue from fuel surcharge, and consistent adoption of outsourcing by shippers.

In 2018, the warehousing and distribution segment held over 20% of the overall third-party logistics industry share in 2019. Warehousing is one of the most common third-party logistics services. These warehouses have the capacity to store, ship as well as handle returns of products in a seamless manner. International warehouses also facilitate the global expansion of enterprises by establishing a worldwide supply chain.

As demand for advanced and future-ready technologies like robotics, automation and artificial intelligence surges, in order to accommodate the needs of the e-commerce sector, the 3PL market share from the warehousing & distribution segment is likely to gain significant traction in the foreseeable future.

There is a vast array of transportation options available to third-party logistics providers. The 3PL market in terms of mode of transport is categorized into road & rail, sea and air. Among these, the sea segment in North America is anticipated to register a significant growth rate of 9% CAGR through 2026.

The sea mode of shipping, also called ocean freight, is one of the most commonly used transportation methods for logistics providers, particularly for long-distance deliveries. Shipping by sea is among the most cost-effective and reliable methods of shipping for large freight volumes.

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On the regional front, South America is emerging as a considerable revenue pocket for the global third-party logistics market. Multiple favorable initiatives from regional governments including the CBI (Caribbean Basin Initiative) and the CAFTA-DR (Dominican Republic-United States-Central America Free Trade Agreement) are facilitating the expansion of the manufacturing sector. This expansion will in turn propel demand for third-party logistics services in the region.

The Middle East & Africa third-party logistics market accounted for nearly 8% of the cumulative industry share in 2019. This growth is characterized by the rising presence of key e-commerce industry players, including Amazon, which is propelling regional demand for third-party logistics to a significant extent.

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