What is 3PL?
In general, 3PL is a full suite of logistics services, from warehousing and order to inventory management and automated shipping. 3PL enables industrial organizations to access the larger service network of global supply chain logistic providers. For instance, a manufacturer firm integrates the 3PL system into its production and operational system; thus, providing finding tailor-made solutions for distribution, storage, and transportation. Participants in the 3PL market generate an economic value that amounts to over 961 billion U.S. dollars in 2020.Recent market changes
The global 3PL logistics industry has grown rapidly over the past few years as demands for transportation, warehousing, and many other services have expanded. Asia-Pacific accounts for more than one-third of the world’s 3PL market size, making it by far the largest regional market. The United States and China generated the largest revenues in the 3PL market by country comparisons, accounting for almost half of the global income. In 2021, the 3PL industry's total revenue in the United States had soared to approximately 348 billion U.S. dollars.Firms in the global market for 3PL services
Growing economic opportunities and diversified corporate structures in the logistics industry nurture a highly competitive business environment. As a result, new firms enter and inefficient firms exit the marketplace for 3PL services. Most of the 3PL providers experienced significant growth in total revenue in 2021. During the year, Kuehne + Nagel, DHL Supply Chain & Global Forwarding, DSV, and DB Schenker were some of the leading firms worldwide for 3PL services. In the same year, C.H. Robinson, Expeditors, and UPS Supply Chain Solutions were the leading 3PL firms in the U.S. Fierce competition can easily undermine dominating firms’ position in the market. For instance, the Swiss company, Kuehne + Nagel faced fluctuating revenue generation between 2006 and 2017, mostly due to high competition. Since 2018, the company performs better and reached a peak revenue value of 36.7 billion Swiss francs in 2021.Outlook of 3PL services
Like many industries, logistics is also not immune to potential disruptions in search for higher profit by some firms. The firm dynamics exposes current market-dominant players into an uncertain and disruptive situation by challenging the status quo of 3PL operations through new ways of doing business efficiently, sustainably, and more profitably. In addition to external business challenges, 3PL businesses are facing many internal challenges too. During the 2022 survey, providers and users of 3PL services expressed that capacity, finding or retaining, training qualified labor, and rising operational costs were the top three challenges in the 3PL industry. At the moment, 3PL service providers offer inbound logistics, integrated logistics, lead logistics, inventory management and many more. One of the innovative steps taken by 3PL businesses is to integrate IoT technologies into the supply chain services to face upcoming challenges ahead of time.
