Did you know that third party logistics have existed since the 1980’s?
Yes! It has been decades since third party logistics, more commonly known as 3PLs, have existed. It all began when the Motor Carrier Act of 1980 led to the deregulation of the trucking industry. This meant that companies that were previously only providing warehousing services could now also dabble in transportation, and that’s where the whole concept of 3PLs emerged from.
In around 1990, businesses all over the world began to realise that the whole third party logistics model can simplify many supply chain complexities, and that’s when 3PL started penetrating international markets. The rest, as they say it, is history.
Today, it is hard to imagine a world without 3PLs. 3PLs form a major chunk of the logistics industry, and are an integral component to the fulfilment strategy of thousands, if not millions, of businesses ranging from retailers to manufacturers and everyone in between.
If there is one thing we can gauge from the evolution of 3PL as an industry, it is that it is incredibly dynamic. It has constantly been transforming ever since its advent, and adapts to the needs of businesses worldwide.
Essentially, this means that whether you are a business that works with 3PLs or you are a 3PL yourself, it is wise to keep an eye on where the industry stands and where it’s headed. This is more important now than ever, in light of the fact that the 3PL industry is now considered to be one of the fastest growing industries in the world.
To help you, we have compiled the top 3PL trends and statistics that will help you understand the current standing of 3PLs, as well as get an interesting insight into where the industry is headed.
Ready for some fun facts, figures, and statistics? Then keep on reading!
Let’s take a look at the best 3PL market statistics, which will help us understand the 3PL space a lot better:
This is a testament to the growth of 3PLs. The fact that the market has grown by 29 percent and continues to grow worldwide proves that there are many advancements taking place in the industry as of now, and if any business wants to have a positive experience both with a 3PL and as a 3PL, they will take into regard the overall strength and growth of the industry, and set the pace of their operations in accordance with that.
For businesses that work with 3PLs, the growth could also signify that in the future there will be more options that they can choose from when it comes to 3PL services. However, for 3PLs, this means the competition is going to be unreal and they need to gear up for fierce, head-to-head races with other 3PLs.
Compound annual growth rate signifies the growth rate of an investment over a specified period of time that exceeds one year. As such, this CAGR shows that the 3PL market is likely to grow by 8.58% over the next seven years or so. Again, this is an indicator of the 3PL market not only being extremely dynamic, but also lucrative.
If you were looking for the right time to be a part of this industry, it seems that there is no better time than now!
For this one, the figures speak for themselves! Not only does this reflect that the market is lucrative, but it also takes the stakes up real high. 3PLs should prepare themselves to be the best version of themselves if they want to succeed in this environment, and that can be done taking into account various industry practices and properly strategising your operations in a way that makes you a prominent contender in the 3PL industry.
$1789 billion is a lot of money – but some of it can be yours if you play your cards right.
This makes sense, considering that the development and improvement of roadways all over the world is already playing an important part in boosting the growth of 3PL. For example, China’s Belt and Road Initiative, which is already underway, is expected to invest heavily in the logistics services infrastructure, by strengthening the transportation system between Europe and China. Needless to say, such initiatives will only make it easier for 3PLs to operate globally and deliver products internationally.
Again, this is an indication for future expansion and a heads up for 3PLs to prepare accordingly in the upcoming year.
Since Asia is the biggest region, it’s no surprise that it is also the biggest 3PL market. But it’s also quite lucrative, and for businesses that want to try dabbling into international 3PL activity, it would be wise to consider the APAC market. However, since it is the biggest market, it will also present the most challenges. Our advice would be to take a few years and prepare yourself for it before you actually think of expanding into the APAC region as a 3PL.
Now, let’s turn to the latest 3PL statistics that can give you a deep insight into what 3PLs are doing currently.
This stat is very important in quite a lot of ways. Firstly, it shows that the relationship between 3PL users and 3PL providers is mostly positive. More importantly, it shows 3PL providers that 3PL customers are used to stellar services. It can be gauged from here that 3PLs have been providing good logistics to businesses, to the point that a positive 3PL experience is now the industry standard and norm. So, if you are a 3PL, keep this stat in mind. It will help you optimise your operations accordingly.
Remember: your customer should be your focus, and this is exactly what this particular stat stands for!
More and more businesses are starting to realise that opting for 3PLs is actually better for the pockets than relying on your own logistics framework. If you are a business wondering whether or not you should indulge a 3PL for your shipping and deliveries, this is your sign. Not only does it help you save money, but it will also make your operations a lot more efficient and give you more room to focus on other aspects of your business as well as, you know, just take a breather every once in a while.
The lesson here? Communication is important. Our advice for 3PLs is that from the get-go, make sure you are in touch with your client and understand their needs. For businesses that are looking to work with 3PLs, on the other hand, we suggest you to do the same. Communicate your needs clearly, so that the 3PL experience can be seamless on all ends.
If 73% of shippers out there can interact with their 3PL providers on a daily or hourly basis, then so can you! No shame in it, and it will only prove to be beneficial for you.
3PLs, this means that the world is your oyster. There is no need to limit yourself to just one type of logistics service, because businesses out there need ALL kinds of services. For success, provide them with unparalleled convenience whether they need your help domestically or internationally, and see your business prosper without any boundaries. On the other hand, for businesses that want to work with 3PLs, this is also a great thing since it means that you can cater to both your domestic and international clients by using 3PLs.
If they are being 100% real here, this is a win-win situation for everyone.
63% shippers are willing to increase their use of 3PL services. Whether it is the convenience 3PLs provide or the fact that they definitely cost less than bearing your own logistics, the third party logistics industry has proven to be a great contribution for many businesses.
This statistic shows that it is to the point where businesses would not hesitate before increasing their use of 3PL – so there is something that the 3PL industry is definitely, presently doing right.
Want to better prepare for the future and make use of 3PL services in the best possible way? Have a look at these statistics:
Almost $2100 billion. That’s mind-blowing. Yet, this is the most evident stat on just how lucrative the 3PL market is going to be. THIS is what the future looks like for 3PL, and it probably feels great to know that you are going to be a part of it. However, to get to that point, you also have to make your way through some challenges and make sure that by the time 2030 rolls around, you are one of the top guns in order for you to actually enjoy the benefits of being a part of such a lucrative industry.
So, spend 2023 strategising your growth plan for the next 7 or so years.
Unfortunately, it’s not all sunshine and rainbows. Currently, the 3PL industry is suffering from a talent and labour shortage. This is quite problematic because without the manual workforce, it is simply impossible to provide 3PL services. Insufficient staff can prove to be detrimental for even the most technologically advanced 3PLs – so you really want to get on top of this problem as soon as you can.
The fact that 27% of 3PLs think that labour shortages are a permanent shift for the industry means that there are some problems in 3PL that are hard to deal with due to the labour shortage, so tackling it should be one of your biggest concerns.
Environmental, Social, and Governance factors are quite important, and will only become more important in the future. It is unfortunate that only 17% 3PLs think they are actually doing a good job in this area. However, this means that you can get an edge over your competitors by valuing ESG, and becoming a trailblazer in it wherever possible. It will prove to your customers that you are a responsible 3PL provider, and is the only way to go forward into the future where everyone needs to do their part for the general well-being of the world.
Spend 2023 working in this direction, and something tells us that you will definitely be thanking us later for this one.
The present for the 3PL market is bright. The future for it seems even brighter. If that makes you want to be a part of the 3PL industry, you are on the right track.
With Canary7’s 3PL fulfilment solutions, you can become a 3PL of the future in 2023.
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