The fourth party logistics market was valued at $57.9 billion in 2021, and is estimated to reach $111.7 billion by 2031, growing at a CAGR of 6.7% from 2022 to 2031.
Fourth party logistics, also known as 4PL, is a model where the business owner outsources its supply chain and logistics to an external service provider. This provider is responsible for the assessing, designing, planning, building, running, and even tracking an integrated comprehensive supply chain solution on the behalf of the firm. They are also called lead logistics providers. The external provider can either have his own warehouse or tie up with warehouse companies. Therefore, fourth party logistics represents a higher level of supply chain management for the client.
Prime determinants of growth
Increase in demand for easy & effective supply chain system, increase in the complexities in the operation process, and rise in demand for customized solutions propel the growth of the fourth party logistics market. However, reluctance of companies to outsource the logistics function and changes in logistics regulations in different countries are expected to hinder the growth of the market. On the other hand, increase in demand for consumer electronics and growth in the e-commerce market are anticipated to present new opportunities in the coming years.
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Covid-19 Scenario
- The outbreak of the Covid-19 pandemic had a negative impact on the global fourth party logistics market, owing to implementation of the global lockdown and stringent import & export restrictions.
- Important supply chains in the logistics and transportation industry were hampered, though differently across air, freight, and sea sectors. Logistics firms, which are involved in the movement, storage, and flow of goods, were directly affected by the COVID-19 pandemic.
- Moreover, changes in consumers purchase behavior due to pandemic uncertainties could significantly impact the growth of the 4PL logistics market.
- With the growing internet penetration and smartphone usage, an increasingly shift to online shopping was witnessed within the consumers during lockdown. This resulted in a large-scale shift in consumer behavior, preferences, and expectations when it came to shopping & shipment deliveries. Hence, the growth normalized from 2021 onwards and the market is projected to grow at a steady pace from 2021 to 2031.
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The solution integrator model segment to maintain its leadership status throughout the forecast period
Based on type, the solution integrator model segment held the highest market share in 2021, accounting for around three-fourths of the global fourth party logistics market, and is estimated to maintain its leadership status throughout the forecast period. Increased customer loyalty and open opportunities such as up-selling and cross-selling of the component products or services are expected to fuel the adoption of the solution integrator model in businesses. However, the industry innovator model segment is projected to manifest the highest CAGR of 11.2% from 2022 to 2031. Rapid industrialization and digitalization have increased the demand and adoption of the industry innovator model, which drives the segment.
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Asia-Pacific to maintain its dominance by 2031
Based on region, Asia-Pacific, followed by Europe & North America, held the highest market share in terms of revenue in 2021, accounting for more than two-fifths of the global fourth party logistics market. This is attributed to the booming e-commerce industry in emerging economies. In addition, increased adoption of outsourced logistics services in the region is driving the growth of the 4PL logistics market in Asia-Pacific. However, Europe is expected to witness the fastest CAGR of 8.4% from 2022 to 2031. This is due to the growth of e-commerce, retail sector, and manufacturing sector coupled with the digitalization of infrastructures in the European countries.
Leading Market Players: –
- 4PL Group
- 4PL Insights
- Accenture Consulting
- Allyn International Services, Inc.
- C.H Robinson Worldwide, Ltd.
- CEVA Logistics
- DAMCO
- DB Schenker
- Deloitte
- Deutsche Post AG
- GEFCO Group
- Global4PL Supply Chain Services
- Logistics Plus Inc.
- Panalpina World Transport
- United Parcel Service, Inc.
- XPO Logistics, Inc.
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Similar Reports We Have on Logistics Industry:
3PL Market by Mode of Transportation (Railways, Roadways, Waterways, and Airways) and Service Type (Dedicated Contract Carriage (DCC), Domestic Transportation Management, International Transportation Management, Warehousing & Distribution, and Others): Global Opportunity Analysis and Industry Forecast, 2018 – 2030.
5PL Solution Market by Type (Transportation, Warehousing, and Other Services), and Application (Electronic Commerce, Traders, Logistics Company, and Others): Global Opportunity Analysis and Industry Forecast, 2021–2030.
Logistics Industry by Mode of Transport (Railways, Airways, Roadways, and Waterways) and End Use (Healthcare, Manufacturing, Aerospace, Telecommunication, Government & Public Utilities, Banking & Financial Services, Retail, Media & Entertainment, Technology, Trade & Transportation, and Others): Global Opportunity Analysis and Industry Forecast, 2017–2030.
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