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The Billion-Dollar World of 3PL

It’s obvious to anyone who works with 3rd party fulfillment services that the segment is growing rapidly and changing all the time.

What isn’t as clear, however, is the actual size of that growth and change, which is pretty impressive, as it turns out. A report from Allied Market Research titled “World Third Party Logistics (3PL) Market – Opportunities and Forecasts, 2014-2022” shines a huge light on the sheer scale of it.

A Rapidly Growing 3PL Global Presence

According to the report, 3PL is expected to explode in the next few years, reaching revenues of $1.11 billion yearly in the next five years.

This is actually great news for anyone in the world of order fulfillment, since it should mean greater access to inaccessible markets and lower costs overall for shipping because the competition will be fierce. Global interdependency is expected to rise, but that’s not an entirely bad thing for companies. Instead of being limited to the skills and prices in just one area, your 3PL will have greater access to manufacturing and design experts everywhere.

The report is quick to point out that much of this growth is attributable to companies going to a model that supports their core competencies, allowing them to become more cost-efficient. By leaving their warehousing and distribution to a trusted 3rd party logistics company, businesses of all sizes can focus their budgets and efforts on what they’re best at, whether that’s making the best table anywhere or matching the right bicycle tire to the discerning cyclist.

Other Areas of 3PL Growth

3rd party logistics companies are great at another time-consuming service that many small- to medium-sized businesses tend to forget when planning their logistics: returns. The report demonstrates that the need for reverse logistics is growing, as more companies want to send their returns, repairs and refurbish elsewhere. As long as there are customers ordering products, reverse logistics will be needed, and in segments like fashion and technology, having an expert on board is a necessity.

The other main reason for the wild growth of 3PLs going into the future is the need to navigate foreign import policies and customs regulations. It might seem like your manufacturer should know what it takes to get your products from their country to yours, but the truth is that usually it takes a 3PL to broker that transportation. Developing economies like those in India and Africa are especially difficult, but may make a big difference to eCommerce opportunities in the near future.

There are so many things that 3PLs do for their customers behind the scenes that it’s no surprise that the industry is increasing in size so quickly. It just makes sense to use a 3PL when your expertise is in anything other than shipping and packaging.

 

May 18, 2017
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