Satish Jindel estimates the top 40 global third-party logistics providers control 60 to 70 percent of the market. They are primarily focused on large corporations, leaving a lot of smaller business to local and regional 3PLs. “That’s the reason they continue to exist, to cater to the smaller companies,” said Satish Jindel, president of SJ Consulting, which developed the Top 40 Global Logistics Providers for The Journal of Commerce.
The global 3PL market is strong and growing. In 2011, the market generated about $582 billion in total revenue, including $174 billion in the Asia-Pacific; $167 billion in North America; $134.8 billion in Europe; and $35 billion in Central and South America, according to estimates by supply chain consultants Armstrong & Associates.
Revenue rose in each region from 2010, when they were $165.7 billion, $150 billion, $145.7 billion and $33.3 billion, respectively.
Structurally, the 3PL business model remains strong as companies turn to outsourcing to focus on core businesses. Factor in regulatory and compliance demands, supply chain complexity and rising transportation costs, and it’s clear why 82 percent of Fortune 500 companies used 3PLs services in 2010, up from 56 percent in 2004, said Evan Armstrong, president of Armstrong & Associates. “You don’t want to build an internal staff to manage networks when providers can do it better,” he said.
The significant market share small 3PLs hold is likely to shrink as the major global providers grow even bigger through strategic acquisitions, said Dan Albright, vice president of Capgemini Consulting.
Global 3PLs turn to Capgemini and other consultants for help with planning, fulfillment, LEAN Methodology, asset management, entering new markets, adding services and due diligence related to acquisitions. The top priority for many of the biggest players today is developing end-to-end capabilities and being perceived in the marketplace as a one-stop shop.
The second-highest priority is adding or upgrading value-added services, notably business intelligence and analytics related to customer data. “Instead of relying on customers to identify trends, 3PLs have the responsibility to analyze data and identify savings opportunities,” Albright said.
The major global 3PLs remain intently focused on the BRIC countries of Brazil, Russia, India and China. Many continue to pursue mergers and acquisitions to grow in their target markets and gain specialization in industries such as pharmaceuticals, perishables or consumer electronics.
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