The Third Party Logistics (3PL) market in the country is expected to touch Rs 48,000 crore by 2019, mostly fuelled by outsourcing especially in retail, pharmaceutical, according to a survey.
“The Indian 3PL market is geared for a robust growth during 2014-2019. It is anticipated to grow at a CAGR of 21 per cent to touch Rs 48,000 crore over the period 2014-2019.
“The 3PL market growth is fuelled by factors like the inclined outsourcing by Indian companies and many MNCs particularly in retail, pharmaceutical, automobile and FMCG sectors,” according to a report by research and consultancy firm RNCOS.
The government’s investment towards development of freight corridors, ports and highways, increasing demand by pharmaceutical industry and significant growth of e-commerce industry will be other growth drivers for the sector, it added.
The third-party logistics has been proved to be successful in enhancing logistics efficiency of many organisations and rapidly gained popularity while spreading across the country, the report pointed out.
“The 3PL players are emphasising more on the technological upgradation to engage with the customers and also points out a trend of Fourth-party logistics (4PL) that is emerging to support the 3PL business in the country.
The concept of 4PL is expected to catch momentum over the coming years and it is expected to address the strategic failures of 3PL services and proposes the opportunity to achieve incremental benefits,” RNCOS Founder Sushmul Maheshwari said.
Majority of overall market of third-party logistics is organised and it has been observed that it is utilised mainly in industrial and automobile sectors followed by pharmaceutical, consumer products and retail.
As most of the revenue in the industry is contributed by big players, share of organised segment is expected to rise in future due to tie-ups and mergers and acquisitions which are anticipated to be more within domestic and international third-party logistics companies, it said.
However, there are challenges like low flexibility of third-party logistics systems to model different clients supply chain needs, congestion in ports due to less storage capacity, poor transport vehicles, jammed roadways and ports causing delay in movement of goods and lack of quality manpower that needs to be addressed, it said.