The global 3PL market is growing at an incredible pace and predicted to post a CAGR of close to 6% during the projection period. In the coming years, the increasing headways in e-commerce across the retail industry will push the growth expectancies for the global 3PL market. As a result,

demand for the 3PL solution providers is increasing.

Competitive Landscape

The global 3PL market outlook is buoyant. Due to the presence of a huge number of local and international vendors, the market has become highly diversified and

Adoption of the internet and mobile services are the major factors accountable for the development of the e-commerce sectors. Dynamic inventory management and swift delivery are other important factors for the operational success of this industry.

competitive. In the last few years, several new entrants are joining the force, as the demand for contract logistics is increasing. Though there are some big names in the market, the segment is largely dominated by SMEs as well as specialists. As the competition in the

segment is intensifying, 3PL service providers are trying to be specialists in their power domain and focusing more on obtaining an edge by adapting to the changing marketplace and customer demands.  

Adoption of the internet and mobile services are the major factors accountable for the development of the e-commerce sectors. Dynamic inventory management and swift delivery are other important factors for the operational success of this industry.

competitive. In the last few years, several new entrants are joining the force, as the demand for contract logistics is increasing. Though there are some big names in the market, the segment is largely dominated by SMEs as well as specialists. As the competition in the

segment is intensifying, 3PL service providers are trying to be specialists in their power domain and focusing more on obtaining an edge by adapting to the changing marketplace and customer demands.  

LSPs Dominance &

Ecommerce is the key

More and more businesses are considering 3PLs to strengthen its supply chain and it is paying off big time.

  • With the help of a 3PL, companies are entering into a new market where they don’t have a physical presence. They are starting operations without setting up a new distribution center. A multi-location distribution network with less investment is feasible through 3PL providers.
  • Using a 3PL partner who is having superior technological advances, an enterprise can increase its efficiencies with proper inventory management and timely delivery.
  • 3PL services are consistently used to scale labor, warehouse space and transportation to offer

hassle-free service during pick business seasons.

  • Transportation cost and inventory cost are optimized when engaging 3PL service providers as they have the capability to leverage load consolidation, and volume of freight is not concern in this case

50% of the 3PLs believe growth strategies would be enabled through technological investment, while 25% believe this can be achieved through greater expertise delivered by high-caliber people.

3PLs: Growth Constraints – Growth Strategies

Without doubt, 3PLs cannot ask for better time to expand the market share. However, they continue to face same hurdles which they faced over the years.   Our survey indicates that “Increasing Competition” & “Commoditization” are the two highest ranked challenges in 3PL market. To sustain this 3PLs need to be more creative in their approaches where technological investment is inevitable approach.

Recently Gartner shared key characteristics to measure the 3PL partnerships  

In similar survey, 3PL users rated their 3PLs partners

Top survey scores are for

3PLs, are uniquely decked with knowledge, technology, and experience to help fill the gap for companies looking to go global without a master’s degree in Logistics management. Warehousing is an area where companies can take advantage of time and cost savings from leveraging 3PL provider.

In general, successful 3PL partnership delivers

  • End-to-End Visibility (E2ESCV)
  • Intelligent planning, Real time Optimization, Smart Analytics
  • Edge for Latest Technology for evolving business 
  • Customer-Centric Approach 

Further dissecting these features involves

Technology Investment

To achieve success, many 3PLs are using cutting-edge technology to increase their productivity which boosts operational efficiencies and grow customer base. Global 3PLs typically invest, on an average 5% to 10% of their annual budget to technological enhancements. Accelerating efficiency through automation can result in visible benefits. We have seen major 3PLs invest more on warehouse automation. This will reduce the number of full-time workers and reduce time significantly, which will fasten customer deliveries. Other SME 3PLs invest in inventory optimization, asset management, fleet management and other distribution center operations. 3PL intends to use technology to fill the gaps in what we believe is a shrinking logistics labor pool. The best way to reduce costs is by using technology in logistics. The solutions which include features like advanced analytics, artificial intelligence, automation, and IoT.

Top Talent

Talent retention is an area where 3PLs are increasingly focusing efforts. Due to rapidly growing e-commerce companies and industry competition, 3PLs are facing a tough

Communication & Collaboration

Communication & collaboration will be crucial for 3PLs in 2018 and years to follow. Communication between shippers, partners, and customers will increase visibility into demand forecasting, inventory prediction, service rendered, audits, freight, and pricing models.

More Corporate Investment

More and more enterprises will start collaborating with 3PL service providers in the near future. They are looking to take the advantage of professional services and technological power of 3PLs. This includes companies start using outsourced Warehouse Management Systems (WMS), Transportation Management Systems (TMS), Hub Management, Fleet Management, Labor Management etc. to meet evolving customer demands.

Value Added Services 

3PLs can increase their value by offering value-added services to manage a complex world of global e-commerce. Rather than a

time. They are investing more in their resource training and welfare to retain talents.


technological edge, enterprises are looking more value addition from a 3PL service provider. They are expecting 3PL guidance to leverage challenges like capacity crunch, data analysis, cost reduction, and customer retention. Enterprises are eager to understand how a 3PL can offer a 360-degree business value by going beyond technological capabilities.

Cloud Platform to boost accessibility

Integrated cloud platforms are allowing enterprises to manage their business from anywhere at any time. Cloud computing is eliminating much of the IT constraints by offering scalable solutions. Much of the 3PLs are adopting cloud solutions to serve their partners in a better way. 3PLs are exploring cloud platforms to improve margins while taking advantage of technological advancements. 3PLs is investing on cloud solutions which supports customizations in cloud platforms   to take full advantage of their investments

Final Thoughts

2018 is setting up to be a crucial year for global supply chain and logistics service providers. Enterprises are continuously looking for cost reductive solutions and value addition from 3PLs. Due to heavy competition, 3PLs are also struggling to retain their customers. As per a recent Gartner report, 3PL service providers must consider 5 factors to maximize their profits.

End-to-End Visibility (E2ESCV) –  Intelligent planning, Real time Optimization, Smart Analytics –  Edge for Latest Technology for evolving business   – Customer-Centric Approach  

ITOrizon helps 3PL service providers who are listed in magic quadrant to retain their strategic partner positions. Talk to our expert on how to transcend from a transactional provider to preferred service provider without compromising your bottom-line.
www.itorizon.com  | engage@itorizon.com