For years industry insiders have predicted that the logistics sector is on the brink of commoditization, relegating 3PL companies to mainly short-term contracts for execution based services at the lowest price. While this is a trend happening in many industries and certainly the logistics industry is seeing some of this, the reality is more complex. Drastic shifts in the business landscape and technology have led more companies than ever to outsource their logistics activities and the services and expectations of logistics service providers in warehousing, trucking, and integrated providers have never been higher.
According to recent estimates by Armstrong and Associates, the cost of logistics services accounts for 8.5% of United States GDP, 9.2% for Europe, 11% of South America and more than 17% for Greater China.
Third Party Logistics revenue is estimated to increase 6.4% from 2013-2016.
The biggest industries projected to be key drivers of this growth:
- Industrial- 10.6%
- Healthcare – 8.9%
- Technology – 8.6%
- Foods/Grocery – 8.2%
With the dynamic nature of logistics and the increasing needs of organizations to manage their supply chains, the 3PL industry seems poised to continue its expansion.