Aggressive Growth in Third-Party Logistics (3PL) Market, Says Tompkins

According to Tompkins International, which  recently reviewed the third-party logistics  (3PL) industry, growth will far outpace that of the U.S. gross domestic product (GDP) and top the 6 percent growth number cited by other sources.

“Global GDP is expected to expand by 2.2% and less than 2% in the U.S.,” says Valerie Bonebrake, Senior Vice President, Tompkins International. “Tompkins believes 3PL growth will be three to four times GDP, or 7 to 10 percent for 2013.”

What is driving this growth?  According to Tompkins:

•  New Players Stepping Up: As mid-market traffic managers retire, non-asset transportation brokers such as Coyote, TQL, and Blue Grace Logistics are stepping in. These companies are growing at record pace. Contract logistics outsourcing, including fleet and warehousing, is also on the rise.
• Increase in US-Mexico cross traffic: There is renewed interest in outsourcing over the border as long lead times and rising costs cause shippers to reconsider their Asia strategy. Manufacturers are increasingly looking to Mexico to take advantage of shorter lead times and reduce overall product costs.
• New global opportunities: Emerging markets across the globe are complicating supply chains and increasing the need for logistics handling by 3PLs. Shippers are looking to leverage fewer relationships globally, often using a Lead Logistics or 4PL provider. The top 50 global 3PLs continue to grow, and comprise a larger percentage of the overall market now representing almost half of the total market.
• Need for new services and technologies:  When it’s tough to get funding for technology projects, headcount, or new facilities, shippers often turn to third parties to meet their needs.  For example, retailers scrambling to figure out how to best adapt to changing channel requirements are turning to third parties for technology, fulfillment services, and final mile delivery.

Tompkins also says 3PLs will continue to grow through a combination of acquisition and organic growth, but with buyers sometimes coming up short, organic growth gains importance.

Tags: Thompkins International

Category: General Update