According to Evan Armstrong, president of the firm, this new data is an extension of its annual 3PL market analysis that was released over the summer.
“In 2016, the global third-party logistics market reached $802 billion and is on track to exceed $1.1 trillion in 2022,” said Armstrong. “Global logistics costs were $8.2 trillion in 2016 and should surpass $11.1 trillion in 2022. Globally, the Asia Pacific region is the largest logistics market, accounting for 39% of total global logistics costs and 38% of total global 3PL revenues.”
As for the years between now and fiscal year 2022, Armstrong’s data pointed to global 3PL cost estimates for fiscal years 2018 through 2021 coming in at $894 billion, $843 billion, $951 billion, $1.014 trillion, and $1.080 trillion, respectively.
This marks a steady, upward growth pattern, unlike from fiscal year 2014 to fiscal year 2015 which saw a 5.5% decline from $834 million to $788 million, primarily due to the U.S. dollar strengthening against other currencies and declining fuel costs.
Along with continued logistics outsourcing, the ongoing impact of e-commerce on the global 3PL market cannot be understated nor overlooked, something that is made very clear in this updated report.
“Third-party logistics provider revenues from e-commerce activity are growing faster than the overall 3PL market,” said Armstrong. “Of the $802.2 billion of total 3PL revenues globally, e-commerce related revenues are expected to grow from $40.6 billion in 2016 to $72.8 billion in 2020, making up 5.1% and 7.2% of total 3PL revenues, respectively.” He added that e-commerce 3PL business is generating a compound annual growth rate of 15.7% versus overall 3PL market growth of 6.0% for the same period.
With e-commerce the fastest-growing piece of the 3PL sector, Armstrong clearly contends that now is the time for 3PLs to be participating fully in that space. “The part that gets the most attention on this front is value-added warehousing and distribution,” he said. “This correlates strongly with outbound package transportation. There’s also a lot going on with international transportation management as well, bringing imports in from China to the U.S. and doing multiple last-mile delivery, an area where there is a lot of business.”
Not surprisingly, the report shows that the highest 3PL revenues, on a regional basis, run in tandem with the world’s most powerful economies. For 2016, Asia Pacific 3PL revenue led the pack at $305 billion followed by North America at $199.6 billion. Rounding out the top five were Greater China at $175.3 billion, Europe at $172.3 billion, and the United States at $166.8 billion.
Looking at some of these higher revenue regions, Armstrong noted that European growth is a by-product of it coming out of an economic austerity-driven recession, even though countries north of the Alps like Germany, Norway and the Netherlands are seeing higher financial growth than their geographical counterparts.
What’s more, Armstrong observed that European 3PLs-based on 2016 regional revenue-have penetrated around 25% of the total potential market, with the outsourcing of logistics still providing for growth over and above the overall economy.
“The best Europe-based 3PLs have made acquisitions to globalize their operations and participate in developing markets with higher rates of growth,” said Armstrong.
As for North America, Armstrong said that 3PLs are benefitting from an improving U.S. economy with increasing manufacturing levels, the nearshoring of some manufacturing to Mexico, and newly addressable oil and gas operations in Canada and the U.S.
“Consumers in the U.S. bounced back from the great recession of 2009 and started to spend more, especially on large ticket items,” explained Armstrong. “All of these factors are driving an improved 3PL market.”
-Jeff Berman, group news editor
Copyright Peerless Media Nov 2017