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The third-party logistics market in India is estimated to grow at a CAGR of 8.62% between 2022 and 2027. The size of the market is forecast to increase by USD 13,978.33 million. The growth of the market depends on several factors, including the introduction of tax reforms and initiatives for third-party logistics in India, the growth of the e-commerce sector in India, and an increase in investments for third-party logistics startups in India.
This report extensively covers market segmentation by service (transportation, warehousing and distribution, and VAS), and end-user (manufacturing, consumer goods, food and beverage, automotive, and others). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
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The introduction of tax reforms and initiatives for third-party logistics in India are notably driving the market growth, although factors such as high operational costs may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
The introduction of tax reforms and initiatives for third-party logistics in India are notably driving the market growth. The third-party logistics sector in India is experiencing a transformative phase with the introduction of various reforms and initiatives. For instance, the GST is one of the major tax reforms that was introduced by the Government of India. Earlier, before the implementation of GST, companies built and managed multiple warehouses in every state of business operation to avoid cross-border tax. This made supply chains costlier and inefficient, resulting in the development of an unorganized logistics sector. The implementation of GST helped reduce the price differences between states and make tax liabilities uniform across India. The new tax regime reduces logistics costs and increases operating efficiencies by reducing border checks.
Furthermore, in April 2018, the e-way bill was introduced under the GST regime across India. The e-way bill is used for interstate transportation of goods worth over USD 775 through roads, railways, airways, and vessels. E-way bill systems reduce the idle time spent at check posts for tracking and inspection and make tax compliance easier. Thus, such factors are expected to fuel the growth of the 3PL market in India during the forecast period.
The modernization of logistics infrastructure in India is an emerging trend in the market. The importance of infrastructure is quite high in logistics services. The Government of India is offering various initiatives to help companies leverage their economies of scale and provide integrated logistics networks that are cost-effective. For instance, logistics parks are constructed across India, which act as centers for freight aggregation and distribution hubs, storage, warehousing, and multimodal transportation.
The government has also been working vigorously toward the construction of dedicated freight corridors. For instance, the National Industrial Corridor Development Programme comprises the development of various Industrial Corridors like Delhi Mumbai Industrial Corridor (DMIC), Amritsar Kolkata Industrial Corridor (AKIC), Chennai Bengaluru Industrial Corridor (CBIC) with extension to Kochi via Coimbatore, East Coast Economic Corridor (ECEC) with Vizag Chennai Industrial Corridor (VCIC) as Phase 1, and Bengaluru Mumbai Industrial Corridor (BMIC). Thus, the rise in the modernization of logistics infrastructure is likely to boost the 3PL market in India during the forecast period.
The high operational costs are a major challenge impeding the market growth. Transportation costs form a major part of logistics costs. The volatility in fuel prices in India is contributing to the rise in transportation costs. As fuel prices increase, logistics service providers charge customers to achieve profits. However, logistics service providers in the market are also under added pressure from customers to reduce rates. The constant demand for lower rates from customers creates pricing pressure on logistics service providers.
Furthermore, the availability of inadequate logistics infrastructure in India also increases operational costs. Moreover, the unorganized and inefficient logistics supply chain in India results in various indirect costs, such as inventory carrying costs, as well as damages and losses to goods in transit. These incidences are very common in the Indian logistics sector and account for a larger part of operational costs. Hence, these factors are likely to restrict the growth of the 3PL market in India during the forecast period.
The report includes the market's adoption lifecycle, covering the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Third-party Logistics Market in India Customer Landscape
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Pyramis Cargo Management Pvt. Ltd. - The company offers sea freight, air freight, road transport services, and value-added services. The key offerings of the company include third-party logistics.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
The market share growth by the transportation segment will be significant during the forecast period. Transportation of goods in the third-party logistics market is done through different modes of transport such as road, rail, air, and water. In India, the majority of goods are transported by road. As logistics services require high investment and expertise that adds significantly to operational costs, many companies are outsourcing these services to third-party logistics providers.
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The transportation segment was valued at USD 11,872.94 million in 2017 and continued to grow until 2021. The inadequate logistics infrastructure in India has increased logistics spending across India. In 2017, the widespread road network in India carried more than 50% of the freight. However, the overall quality of roads is quite poor in India, which is leading to the slow movement of goods, increased wear and tear of vehicles, and high accident rates. These factors have increased the lead time and operational costs for third-party logistics operations in India. In India, there is a large number of international and domestic airports. However, the use of airports for cargo shipments is poor in India in terms of world standards and is used only when sea trade is not possible.
Hence, various investments have been made by the Government of India to improve the air infrastructure in India. Such investments are likely to improve the air infrastructure, thereby fueling the demand for airways to carry out logistics operations. Furthermore, various policy changes and reforms have been undertaken by the Government of India to improve the logistics industry in the country. The Indian government has also taken initiatives for the construction of dedicated freight corridors and logistics parks across the country to improve the overall logistics infrastructure. Such reforms are likely to bring about a positive change in transportation services in India, thereby fueling the growth of the 3PL market in this segment.
The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
Third-party Logistics Market In India Scope |
|
Report Coverage |
Details |
Page number |
138 |
Base year |
2022 |
Historic period |
2017-2021 |
Forecast period |
2023-2027 |
Growth momentum & CAGR |
Accelerate at a CAGR of 8.62% |
Market growth 2023-2027 |
USD 13,978.33 million |
Market structure |
Fragmented |
YoY growth 2022-2023(%) |
7.76 |
Regional analysis |
India |
Performing market contribution |
APAC at 100% |
Key countries |
India and APAC |
Competitive landscape |
Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled |
AP Moller Maersk AS, Aegis Logistics Ltd., Allcargo Logistics Ltd., AWL India Pvt. Ltd., Delhivery Ltd., FedEx Corp., Gati Ltd., Mahindra Logistics Ltd., Meesan Logistics Pvt. Ltd., Pyramis Cargo Management Pvt. Ltd., SICAL Logistics Ltd., United Parcel Service Inc., VRL Logistics Ltd., ARK Supply Chain Solutions Pvt. Ltd., Blue Dart Express Ltd., Container Corp. of India Ltd., Deutsche Bahn AG, Safexpress Pvt. Ltd., T V Sundram Iyengar and Sons Ltd., and TCI Express Ltd. |
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, and Market condition analysis for the forecast period. |
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Service
7 Market Segmentation by End-user
8 Customer Landscape
9 Drivers, Challenges, and Trends
10 Vendor Landscape
11 Vendor Analysis
12 Appendix
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