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.
Factors such as expansion of the e-commerce industry, rise in efficiency of supply chain & management systems, and increase in international trade are expected to drive the growth of the fifth-party logistics market. However, complex supply chain and government barriers for logistics companies restrain the market growth. Conversely, technological advancement and introduction of blockchain are projected to offer lucrative growth opportunities for the market players.
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Major Market Players:
- 5PL Logistics Solutions LLC
- Toll Holdings Ltd
- DHL International
- Renaissance Network Reinvent
- MGL Global Logistics
- Maine Pointe
- Deloitte
- Bain and Company
- Boston Consulting Group
- McKinsey & Company
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 Services
- By Application
- E-commerce
- Traders
- Logistics Company
- Others
Fifth-party logistics companies focusing on customizing the supply chain according to need of customer, improving supply chain efficiency, and increasing transparency in supply chain operations. However, the problem with this scenario is that traditional supply chain management (SCM) methods cannot identify potential supplies for a particular user. In the current scenario, enterprises need well-developed infrastructure, out-of-the-box complementary services, and need to build an integrated supply chain that relies on logistics as a network technology, which works as a bridge between logistics company and consumers.
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.
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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COVID-19 impact analysis
- The COVID impact on the logistics market is unpredictable and it is expected to remain in force till the second quarter of 2021.
- The COVID-19 outbreak forced governments across the globe to implement strict lockdowns and made social distancing mandatory to contain the spread of the virus. This led to a sudden downfall in global trade, which further reduced the demand for logistics across the world.
- Moreover, the nationwide lockdown forced the logistics service providers to partially or completely shut their operations which resulted in delays in the supply chain activities.
- Rise in pharmac
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