Report Overview

A spurring demand for cost-effective and efficient logistics solutions from the thriving e-commerce and online retail, a growing emphasis on supply chain optimization, and the government's initiatives to improve infrastructure and ease regulations in the logistics sector are propelling the growth of the India Third-Party Logistics (3PL) Market during the forecast period between 2023 and 2029.

India Third-Party Logistics (3PL) Market – Industry Trends & Forecast Report, 2029

India third-party logistics (3PL) market size was estimated at USD 58.63 billion in 2022. During the forecast period between 2023 and 2029, the size of India third-party logistics (3PL) market is projected to grow at a CAGR of 7.74% reaching a value of USD 94.22 billion by 2029. The major factor driving the growth of the India third-party logistics (3PL) market is increasing adoption of 3PL services across various industries, such as e-commerce, retail, automotive, and pharmaceuticals. The rise of e-commerce has particularly fueled the demand for efficient logistics solutions. Also, there is a growing emphasis on technology integration in 3PL operations, including the implementation of automation, artificial intelligence, and cloud-based platforms for improved tracking and real-time visibility. The government's supportive initiatives, such as the implementation of the Goods and Services Tax (GST), have helped in streamlining logistics operations, leading to enhanced efficiency and cost savings. There is also a surge in demand for value-added services, such as packaging, reverse logistics, and supply chain consulting, driving the growth of the India third-party logistics (3PL) market.

India Third-Party Logistics (3PL) Market - Overview

Third Party Logistics (3PL) refers to the outsourcing of logistics and supply chain management activities to a specialized external service provider. Companies that engage in 3PL services rely on these providers to handle various aspects of their supply chain, such as transportation, warehousing, inventory management, and order fulfillment. 3PL providers offer expertise, infrastructure, and resources to streamline and optimize logistics operations, allowing businesses to focus on their core competencies. They often leverage technology and networks to provide efficient and cost-effective solutions. 3PL services are beneficial for companies seeking to enhance operational efficiency, reduce costs, improve customer service, and gain a competitive edge in the market.

Growth Drivers

Booming E-commerce Accelerates Growth of India's 3PL Market

In recent years, the e-commerce sector in India has witnessed an unprecedented boom, fueling the rapid expansion of the country's third-party logistics (3PL) market. As more consumers embrace online shopping, there has been a surge in demand for efficient and reliable logistics services to manage the complex supply chain operations involved. Third-party logistics providers offer end-to-end solutions, including warehousing, inventory management, transportation, and last-mile delivery, enabling e-commerce companies to focus on their core business activities. This symbiotic relationship between e-commerce and 3PL has propelled the growth of the Indian market, attracting investments, technological advancements, and strategic partnerships, thereby facilitating the seamless movement of goods and stimulating overall industry growth.

Restraints

Infrastructure Challenges

In recent years, India's third-party logistics (3PL) market has witnessed substantial growth driven by increasing e-commerce activities and the need for efficient supply chain management. However, the sector is now grappling with significant infrastructure challenges. The inadequate transportation network, congested roadways, and limited warehousing facilities pose obstacles to the seamless functioning of 3PL services in the country. These constraints lead to delays, increased costs, and inefficiencies in the logistics operations, affecting both service providers and end-users. To sustain the growth momentum and unlock the full potential of the 3PL market, India must invest in improving infrastructure, expanding transportation networks, and developing modern warehousing facilities across the country.

Impact of COVID-19 on India Third-Party Logistics (3PL) Market

The COVID-19 pandemic adversely affected the India third-party logistics (3PL) market, causing disruptions across the supply chain. With nationwide lockdowns, restricted movement of goods, and reduced industrial activities, the demand for 3PL services witnessed a sharp decline. The logistics industry faced challenges, such as labor shortages, transportation constraints, and operational complexities. The shifting consumer behavior towards online shopping and e-commerce resulted in a surge in demand for last-mile delivery and warehousing services. 3PL providers had to swiftly adapt to new safety protocols, implement contactless delivery, and enhance their digital capabilities to ensure business continuity and meet changing customer needs. The pandemic has reshaped the landscape of the India 3PL market, emphasizing the importance of agility and resilience.

India Third-Party Logistics (3PL) Market

Segmental Coverage

India Third-Party Logistics (3PL) Market – By Service

On the basis of service, India third-party logistics (3PL) market is divided into Dedicated Contract Carriage (DCC)/Freight forwarding, Domestic Transportation Management (DTM), International Transportation Management (ITM), Warehousing & Distribution (W&D), and Value-added Logistics Services (VALs) segments. The largest segment in the India third-party logistics (3PL) market is Warehousing & Distribution (W&D). The W&D segment encompasses the storage, handling, and distribution of goods, catering to the needs of various industries. With the growth of e-commerce and the expansion of supply chain networks, the demand for efficient warehousing and distribution services has increased significantly. Companies rely on 3PL providers to manage their inventory, streamline logistics operations, and ensure timely delivery. The W&D segment plays a crucial role in optimizing supply chains, reducing costs, and improving customer satisfaction, making it the largest segment in the India 3PL market.

India Third-Party Logistics (3PL) Market – By End Use

Based on end use, the India third-party logistics (3PL) market is divided into Manufacturing, Retail, Healthcare, and Automotive segments. The India third-party logistics (3PL) market is comprised of several segments, including manufacturing, retail, healthcare, and automotive. Among these segments, the largest one in terms of size and scope is the manufacturing sector. The manufacturing segment accounts for a significant portion of the 3PL market in India, driven by the country's robust manufacturing industry. With the rise of e-commerce and globalization, manufacturers require efficient and streamlined logistics solutions to manage their supply chains effectively. This has led to an increased demand for third-party logistics services in the manufacturing sector, making it the largest segment within the Indian 3PL market.

India Third-Party Logistics (3PL) Market – By Region

Geographically, India third-party logistics (3PL) market is divided into North India, South India, East India, and West India regions. Each region has its unique characteristics and demands. North India, with its prominent cities like Delhi and Gurgaon, holds a significant share due to its strategic location and robust infrastructure. South India, encompassing major hubs, such as Chennai and Bengaluru, benefits from a strong manufacturing base and extensive port connectivity. East India, including Kolkata and Bhubaneswar, offers tremendous potential with its emerging industrial clusters and access to major ports. West India, comprising Mumbai and Ahmedabad, leverages its proximity to key commercial centers and advanced transportation networks.

Competitive Landscape

Major players in the India third-party logistics (3PL) market include DHL Supply Chain India Pvt Ltd, Blue Dart Express Ltd, FedEx Express Transportation and Supply Chain Services (India) Pvt Ltd, Gati Ltd, Mahindra Logistics Ltd, Safexpress Pvt Ltd, Allcargo Logistics Ltd, Transport Corporation of India Ltd (TCI), Xpressbees Logistics, and Ecom Express Pvt Ltd. To grow their market share, these companies are also focusing on investing in innovations, collaborations, and expansions.

Recent Developments

• In February 2020 - Groupe ADP purchased a 49% stake in GMR Airports - a unit of India’s GMR Infrastructure (GIL), for INR 107.8 billion.

• In September 2019 - FM Logistics, a France-based company, announced an investment of USD 30 million for the development of a 31-acre multi-client logistics facility in Jhajjar, Haryana, India. The warehouse is expected to have a storage capacity of 1,00,000 pallet positions and a dedicated area for co-packing and other value-added services.

Scope of the Report

By Service

• Dedicated Contract Carriage (DCC)/Freight Forwarding

• Domestic Transportation Management (DTM)

• International Transportation Management (ITM)

• Warehousing & Distribution (W&D)

• Value-added Logistics Services (VALs)

By End Use

• Manufacturing

• Retail

• Healthcare

• Automotive

By Region

• North India

• South India

• East India

• West India