LONDON--(BUSINESS WIRE)--Please replace the release dated October 19, 2016 with the following corrected version due to multiple revisions.
The corrected release reads:
GROWTH OF 3PL TRUCKING SERVICES ACCREDITED TO SUPPLIER’S FLEXIBILITY IN MANAGING LOGISTICS: TECHNAVIO
Technavio’s latest research study covers the present scenario and growth prospects of the 3PL trucking services market for 2016-2020. Some of the top suppliers listed in the report include DHL, DB Schenker, C.H. Robinson, DSV, and CEVA Logistics.
3PL market at a glance
A third-party logistics (3PL) trucking services provider manages all or significant parts of an organization’s logistics requirements, wherein transportation is managed through trucking services. These activities comprise of inbound logistics, transportation, warehousing and distribution, packaging, order fulfilment, and outbound logistics. Shippers can benefit from the provider’s expertise, geographical scalability, and technological capabilities by outsourcing their logistics related supply chain activities to 3PL providers.
According to Angad Singh, a category spend intelligence specialist, “The growth of the 3PL trucking market is due to the supplier’s geographical presence, efficiency, and flexibility in managing logistics. By outsourcing cost-effective trucking services, firms are able to focus on strengthening their core competencies.”
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Retail, food and beverages, consumer goods, pharmaceuticals, and chemicals are the key end-users of 3PL logistics trucking services. In 2015, retail industry had the largest market share with approximately 21%. Retailers are increasingly using 3PL providers to use data-driven analytical solutions to design distribution strategies, predictive analytics to manage their fleet, and warehouse management systems to help reduce inventory costs.
The 3PL trucking services market comprise of both global suppliers and regional suppliers.
Profit margin by supplier type 2015 (%)
Regional players have higher margins due to lower overhead costs and also better local market knowledge. Often, global 3PL companies sub-contract services to these players in markets where regional players dominate.
Additionally, to compete with regional players, global 3PL providers operate on thinner margins to attract or retain client accounts. However, global players make use of fluctuating currency values to maximize their profits in the form of hidden costs wherein, they typically look to sign contracts in either USD or EUR, even if the contract is for rendering services in low cost markets such as India and Brazil.
Global players are also involved in several M&A activities to increase their geographical reach and enhance service capabilities in specific markets. For instance, in 2015, XPO Logistics acquired Con-Way Freight, which enhanced its trucking capabilities, making it the one of the largest LTL providers in North America.
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