Third-Party Logistics Services in India – Moving Way Forward in Logistics Sector

Dilshad By Dilshad, 27th Dec 2016 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Business>Supply Chains, Procurement & Logistics

India spends significant percentage of its GDP on logistics, which major functions include transportation, warehousing, freight forwarding and other value added operations. Among these functions, freight and transportation have been traditionally outsourced to external service providers having good infrastructure and relevant expertise.

Reasons behind availing 3PL Services

Thus, with major businesses and corporation houses in India unable to manage their supply chains, businesses started outsourcing logistics activities to the 3PL service providers. Doing this, businesses were able to concentrate on their core operations and achieve cost-efficiency. This also improves their delivery performance and customer satisfaction. In the third party logistics services, a single service provider manages the entire logistics functions of a company. This concept was first originated in the Europe and America to provide industries some relief from huge logistics cost and it also saves them from the hassle of dealing with multiple logistics service providers.

Benefits of 3PL Services
Third party logistic services turned out to be immensely successful and it greatly improves the logistics efficiency of majority of industries and thus became immensely popular among the businesses. In the initial stage, 3PL providers rendered basic logistics services like warehousing and transportation but with growing logistics needs, 3PL providers offer several other value added services ranging from packaging to supply chain planning. However this market in India is still in a nascent stage with only multinational companies availing 3PL services. But the popularity of 3PL services is expected to rise and major domestic companies are expected to outsource their basic logistics functions.

Factors that are Driving Indian Logistics towards 3PL
The need of large centralized warehouse in logistics services encourage businesses to outsource the warehousing function since, building large warehouses requires huge investment. This creates immense potential for third-party logistic service providers, who offer all basic logistic services. Besides, coming up of several multinational companies in India are also expected to fuel the growth of 3PL market. Entry of big corporate houses will increase the usage of 3PL services among their respective sector. With third party logistic service provides offering several value added services like Fleet Management Systems, Warehouse Management Systems, and integrated Supply Chain Management systems are also playing crucial role in the popularity of third party logistic services.

Future Prospects
In the coming few years, the third-party logistic services are expected to grow tremendously, despite certain challenges the trend is highly positive in this sector. With conditions highly favourable for third party logistic service providers, the onus is now on these companies to offer top-quality logistic service at affordable price. The logistics companies need to deliver consistent result to maintain the growth momentum that has occurred in the sector. Currently the 3PL service providers are certainly way forward.

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This is Dilshad Alam an internet marketing expert

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