With recent growth across the logistics industry and courier services, it is not surprising that the 3PL market has also shown significant growth over the last few years. With the latest figure (2020) reporting there are now 14,784 3PL companies operating within the UK.
Owing a number of factors including increased customer demand and the development of the e-commerce industry, the logistics industry has seen a surge in activity that has resulted in vast increases in the number of parcels and packages being sent from a wide variety of businesses. However, this has created a real need for technological innovation to mitigate the disruptions to supply chain that has led to mass shortages of products on shelves and severe delays in delivery times as a consequence of the COVID-19 pandemic.
3PL or third-party logistics is an option that allows companies to outsource their operational logistics, which enables lower overheads and cost-savings when compared to fulfilling orders themselves. Third-party logistics encompasses companies from those dealing with warehousing to delivery and courier services. For many companies, such as e-commerce retailers, this provides a cost-effective and simple solution for dealing with logistics, without taking this in-house.
In the UK the 3PL industry has seen great market growth, despite the impact of both the COVID-19 pandemic and Brexit. With forecasts expecting this to continue over the next 5-10 years.
For companies looking to outsource their logistical operations, 3PL companies provide a number of benefits. This includes helping companies to reduce operating costs, providing an improved customer experience, gaining the instant expertise of logistics professionals and experts from the industry, as well as allowing for company growth.
3PL services currently offered by third-party logistics companies include:
Globally the third-party logistics market was estimated to be worth around $1,027.71 billion in 2019 with estimated growth projected to reach $1,789.94 billion by 2027. Leaders within this industry include big names such as DHL, FedEx, Maersk, and more.
Over the last few years, the 3PL industry has seen tremendous growth, with the industry reaching its highest number of companies operating in the industry, teams employed, and market share. There are a number of reasons why this growth has been seen, particularly over the last decade.
Factors contributing to the market growth of 3PL
One key factor for the growth of the 3PL industry is the advancement in technology. With access to the internet and additional software, third-party logistics companies have been able to improve their offering, investing in efficient ways to manage customer jobs, with improved coordination between suppliers and distributors. These technologies have further allowed the industry to offer their services at far cheaper prices while completing jobs quicker and to a higher standard.
Additionally, with the added growth of the e-commerce industry, the 3PL industry has had to grow in order to take advantage of this influx in demand for logistics services. Catering services, such as door-to-door delivery, packaging, and fulfillment services towards online retailers who do not have the internal resources nor do they specialise in this area to complete these processes themselves.
Plus, with the globalisation of trading activities over the last 20 years, the world now places great trust and reliance upon big players within logistics to manage vital logistical operations.
The 3PL industry can cater to a whole range of industries. Those that rely on these companies the most include industries like:
Many of these industries rely on these third-party companies to complete operations in an efficient, effective, and simple way without disrupting quality, profit, or customer satisfaction.
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