The increasing focus on core business activities and reduced shipping cost is expected to drive the third part logistics 3PL market during the forecast periods. The increasing freight rates are likely to fuel shipping companies towards innovating new opportunities to pull the cost out of the supply chain. 3PL service aims at providing optimized cost of transportation by providing efficient and timely supply chain solutions. The development of e-commerce along with the new ventures is expected to increase the demand of industry for specialized logistics as well as the capabilities to execute the supply chain.
With the increasing adoption of IT applications and software, the leading vendors are enhancing their distribution coverage, which is helping them to provide quality services to the users. Further, omni-channel distribution system is expected to gain significance owing to increasing use of online marketing services. The factor which hampers the growth of global 3PL services are emphasis on cost and risk containment. Also, inconsistent freight volumes and slow economic growth is expected to hinder the 3PL market demand over the several coming years.
3PL market is a business processes through which business organizations outsource their logistics and distribution functions to a service provider, which specializes in handling logistics functions such as warehousing, freight and forwarding, and transportation. Often 3PL providers try to go beyond the logistics functions and provide value-added services such as cross-docking, door-to-door delivery, inventory management, and the packaging of products. The 3PL service market also provides strategic and operational value to many shipping companies globally. The 3PL service market thus improves effectiveness by introducing new and innovative supply chain management.
3PL logistics suppliers have a large resource network that provides benefits over in house supply chains. Using a 3PL resource network each step in the supply chain can be implemented in the cost-effective and most efficient manner. 3PLs can leverage relationships and provides volume discounts, which result in lower overhead cost and the fastest possible service.
In the role of strategic partners, users consider 3PLs as the key strategic resources and both the parties are expected to invest in the relationship and share the returns on investment. Critical elements of their businesses and competitive positioning are the long-term plans with 3PLs that manage functioning of its supply chain. In this situation, 3PLs and the customers make sure that the alignment of business and operational goals are ensured.
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