The 3PL (third party logistics) market is estimated to grow from Rs. 580 Billion in 2020 to Rs. 1,200 Billion by 2025, with the Indian 3PL logistics market expected to outperform the industry growth. Increasing demand for integrated logistics solutions and higher preferences from end-user industries like Manufacturing, FMCG, Pharmaceutical and Ecommerce sectors have boosted the demand for 3PL logistics. The key segments include road, rail, warehousing, cold chain, coastal transportation, container freight stations and inland container depots (CFS/ ICD).
Let’s have a look below at some of the key market trends:
Increased digitization
The rapid pace of digital transformation is redefining Indian logistics. Automation, artificial intelligence, machine learning, data analytics, and the Internet of Things (IoT) are significantly contributing to increasing operational efficiency.
Infrastructure modernization
Infrastructural development like dedicated freight corridors, free trade warehousing zones, logistics parks and container freight stations are expected to improve the efficiency of the Indian 3PL market. The National Highways Development Project aims to expand India’s current expressway network of 2000 kms and plans to add 18,637 km of greenfield expressways by 2022. The Bharatmala project is aiming to construct 83,677 km of highways by 2024.
Government initiatives like National Infrastructure Pipeline, Sagarmala, and the National Monetization Pipeline are expected to further give a boost to the 3PL market and substantially aid last mile delivery capabilities in India.
Fragmented market, multiple players
At present the 3PL market in India is fragmented and is assumed to remain so till 2024. This implies that the 3PL market is and will remain to be highly competitive.
The 3PL sector in India is poised for robust growth, sustained by new technological adaptation and enabling infrastructure. It is expected that the 3PL sector might also evolve aggregator models over the next few years.
Steps towards reducing the carbon footprint
With India intending to move towards net zero emissions across industrial sectors, green logistics is likely to become an important segment as more companies will adopt corporate strategies where they are able to reduce their carbon footprint, integrate sustainable solutions, and ensure competitive operations. Some e-commerce giants have also pledged to go electric, and these trends align with India’s own government-supported push for greater adoption of electric mobility. Hence, giving a major push towards the growth of third party logistics in India.