The global fifth-party logistics market is expected to be valued at $9.21 billion in 2025, and is likely to reach $17.30 billion in 2035, registering a CAGR of 6.5%.
Fifth-party logistics provider is responsible for management of networks of supply chain. Fifth-party logistics service providers construct, organize, and implement logistics solutions and technologies on behalf of multiple clients. Moreover, fifth-party logistics companies combine the shipping needs of multiple logistics companies. Fifth-party logistics companies serve third-party logistics companies by acting as logistics aggregators and they aggregate third-party logistics demands into bulk volumes for more favorable rates.
The global fifth-party logistics market is dominated by Europe followed by North America, Asia-Pacific, and LAMEA. Europe is expected to maintain its dominance in the global market, as the demand for technology-driven supply chain management services is increasing in the region. Moreover, surge in adoption of blockchain for logistic management is driving the growth of this market.
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Major Market Players:
- 5PL Logistics Solutions
- Bain & Company Inc.
- Boston Consulting Group (BCG)
- Deloitte
- DHL International
- Maine Pointe
- McKinsey & Company
- MGL Global Logistics
- Renaissance Network Reinvent
- Toll Holdings Limitedb
In current scenario, the e-commerce industry is growing rapidly, due to rise in penetration of internet. Multiple benefits associated with e-commerce such as facility of home delivery, improvements in logistics services, and ease in payments have made it an ideal platform for purchasing. For instance, in May 2021, according to UNCTAD, a United Nation Conference on Trade and Development expert, the share of the global e-commerce sector’s retail sales increased dramatically from 16% to 19% in 2020. Similarly, according to the India Brand Equity Foundation (IBEF), India’s e-commerce is expected to reach $99 billion by 2024, growing at 27.00% compared to 2019–2024, with food and fashion apparel likely to be major products.
Furthermore, countries across the globe are improving the connectivity infrastructure to improve internet connectivity. For instance, according to the Organisation for Economic Co-operation and Development (OECD) organization, Austria, Belgium, Chile, Ireland, Israel, and the UK all expanded their fiber connections by more than 50% in 2020. Similarly, according to the World Bank, by 2022, total annual internet usage is expected to increase by approximately 50% from 2020 levels to reach 4.8 zettabytes, equivalent to 150,000 GB per second. Furthermore, increase in global internet traffic is astounding. Personal data is expected to make up a significant portion of the total amount of cross-border data. Thus, as result of the growth of the e-commerce industry, the infrastructure of logistic industry is improving, due to rise in internet penetration globally, which helps consumers to shop through online platforms. Moreover, third-party and fourth-party logistics companies are expected to give contracts to fifth-party logistics companies. For instance, in December 2019, M3B GmbH partnered with DHL Trade Fairs and Events, part of DHL Global Forwarding and Freight, as the official logistics supplier. DHL provides all freight transportation services for five years from January, 2020 in its 40,000 sq.mt. exhibition center. Thus, fifth-party logistics all these factors collectively are expected to drive the growth of the global market during the forecast period.
Key Market Segments
- By TYPE
- Transportation
- Warehousing
- Other service
- BY APPLICATION
- E-commerce
- Traders
- Logistics company
- Others
- BY REGION
- North America
- U.S.
- Canada
- Mexico
- Europe
- UK
- Germany
- France
- Italy
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- South Korea
- Rest of Asia-Pacific
- LAMEA
- Latin America
- Middle East
- Africa
- North America
SCM requires consistent optimization. Products need to move efficiently along the supply chain, from parts manufacturers to distribution centers, various retailers, and end customers. To achieve optimal efficiency, it is important to use the right tools, software, and the best supply chain model. Therefore, the fifth-party logistics model was developed to help e-commerce companies find a supply chain management approach that effectively addresses the increasing pressures they face. In addition, fifth party logistics enhances a company’s revenue by reducing the overall cost of network participants. This can be implemented depending on new interaction models in current digital environment through system integration and using advanced supply chain management solution . Thus, all these factors notably contribute toward the growth of the overall market.
Logistics companies have long recognized the importance of disaster recovery and emergency preparedness, particularly in areas such as information technology and manufacturing operations. In addition, logistics companies (and their insurers) are paying more attention to business risk, particularly in terms of market share loss, and the time and expense of re-entering a market after a severe supply disruption. Thus, the complex supply chain in the logistics industry is expected to hinder the market growth.
Increase in penetration of Internet of Things (IoT) in the logistics sector enables freight companies and consumers to directly access the company network via the internet. The logistics infrastructure is constantly upgraded to meet the needs. Moreover, increase in use of AI, machine learning, radiofrequency identification (RFID), and Bluetooth coupled with other newly introduced technologies, such as drone delivery and driverless vehicles, is being witnessed in logistics services. These technological advancements act as the catalyst to the growth of the fifth-party logistics market. In addition, some of the logistics companies across the world are increasing their spending and using technologically advanced systems for logistics enhancement, which are further expected to propel the growth of the logistics market. For instance, SimpliRoute, an urban logistics solution raised the $3 million funding to improve its AI-powered logistics platform. The new funding will help the start-up to grow its logistics intelligence platform and expand to other countries besides Mexico, Chile, Peru, and Uruguay.
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