Fifth-party 5PL Logistics Market

Rise of omnichannel retailing and the e-commerce industry to propel market growth

The increase in the efficiency of supply chain and management systems, the expansion of the e-commerce industry, and the increase in international trade drive the fifth-party (5PL) logistics market CAGR. In the current scenario, the e-commerce industry is emerging rapidly due to internet penetration. Multiple benefits associated with e-commerce, like the facility of home delivery, upgradation in logistics services, and ease of payments, have made it an ideal platform for purchasing.

For example, in May 2021, according to UNCTAD, a United Nations Conference on Trade & Development expert, the share of the global e-commerce sector's retail sales increased dramatically from 17% to 20% in 2020. Similarly, according to the India Brand Equity Foundation (IBEF), India's e-commerce is expected to reach USD 99 billion by 2024, growing at 27% compared to 2019–2024, with food and fashion apparel likely to be major products.

Omnichannel retailing is a market trend characterized by the seamless integration of online and offline channels, allowing customers to interact with retailers via various touchpoints. The rise of e-commerce has fueled this trend, as people increasingly prefer to shop online for convenience and a greater product selection. The advent of omnichannel shopping and e-commerce has also raised the need for efficient and flexible logistics solutions, such as fifth-party (5PL) logistics, to handle the complex supply chains required to meet customer demands. Third-party logistics service providers have been commonplace across industries for over a decade.

Since then, the use of 3PL among small and mid-sized organizations and large corporations has been steadily increasing. While 5PL is a newer segment of the logistics industry, it has the potential to serve a broad range of end users due to its ability to manage entire supply chain networks. The providers in the fifth-party logistics market are mostly interested in expanding e-commerce firms. The industry is expected to grow rapidly across Europe, Asia, and North America.

With multiple logistics service providers participating in handling various components of the supply chain, the global supply chain is getting increasingly complex. 5PL service providers simplify and manage these complicated logistics operations by providing a single point of contact for logistics management. Furthermore, technological advancements such as IoT, cloud computing, and big data analytics make it easier to manage and track the movement of goods across multiple channels. This is another factor that is likely to have a significant impact on the growth trajectory of the fifth-party (5PL) logistics market revenue.

The Global Fifth-party (5PL) Logistics Market Industry is poised for substantial growth, with projections indicating a compound annual growth rate (CAGR) of 6.52% from 2025 to 2035. This growth trajectory reflects the increasing adoption of 5PL logistics solutions across various sectors. The market is expected to reach 9.64 USD Billion in 2024 and expand to 19.3 USD Billion by 2035. This upward trend is driven by factors such as technological advancements, globalization, and the rising demand for integrated supply chain solutions. As businesses recognize the strategic advantages of 5PL logistics, the industry is likely to witness significant investments and innovations in the coming years.

The Global Fifth-party (5PL) Logistics Market Industry is significantly influenced by globalization and the rapid growth of e-commerce. As businesses expand their reach across borders, the demand for efficient logistics solutions becomes paramount. E-commerce platforms require agile and responsive logistics networks to meet consumer expectations for fast delivery. The market is projected to grow to 19.3 USD Billion by 2035, driven by the increasing volume of online transactions and the need for seamless cross-border logistics. Companies are investing in 5PL logistics to enhance their capabilities in managing complex supply chains, ensuring timely deliveries, and improving customer satisfaction in a competitive landscape.

Technological advancements play a crucial role in shaping the Global Fifth-party (5PL) Logistics Market Industry. Innovations such as artificial intelligence, machine learning, and the Internet of Things are transforming logistics operations. These technologies enable real-time tracking, predictive analytics, and automated decision-making, enhancing efficiency and reducing costs. As organizations increasingly adopt these technologies, the market is expected to grow significantly. The integration of advanced analytics into logistics processes allows for better demand forecasting and inventory management. This technological evolution not only streamlines operations but also fosters collaboration among supply chain partners, further driving the adoption of 5PL logistics solutions.

Regulatory compliance and risk management are critical factors influencing the Global Fifth-party (5PL) Logistics Market Industry. As governments worldwide implement stricter regulations regarding transportation, safety, and environmental standards, businesses must adapt their logistics strategies accordingly. Compliance with these regulations is essential to avoid penalties and ensure smooth operations. The complexity of global trade necessitates robust risk management practices, prompting companies to seek 5PL logistics providers that can navigate these challenges effectively. By leveraging the expertise of 5PL logistics partners, organizations can enhance their compliance efforts and mitigate risks associated with supply chain disruptions, thereby fostering resilience in their operations.

Sustainability has emerged as a key driver in the Global Fifth-party (5PL) Logistics Market Industry. Companies are increasingly prioritizing environmentally friendly practices in their logistics operations. This includes optimizing transportation routes, utilizing alternative fuels, and implementing energy-efficient warehousing solutions. The growing consumer demand for sustainable products compels businesses to adopt green logistics strategies. As organizations strive to reduce their carbon footprint, the adoption of 5PL logistics solutions that emphasize sustainability is likely to increase. This shift not only aligns with corporate social responsibility goals but also enhances brand reputation, potentially leading to increased market share in an environmentally conscious consumer landscape.

The Global Fifth-party (5PL) Logistics Market Industry experiences a surge in demand for integrated supply chain solutions. Businesses increasingly seek comprehensive logistics services that encompass transportation, warehousing, and distribution. This trend is driven by the need for efficiency and cost reduction. In 2024, the market is projected to reach 9.64 USD Billion, reflecting a growing recognition of the value of 5PL logistics in optimizing supply chains. Companies are leveraging advanced technologies to streamline operations, enhance visibility, and improve customer satisfaction. As organizations strive for agility and responsiveness, the adoption of 5PL logistics is likely to accelerate, positioning it as a pivotal component of modern supply chain management.

By Region, the report provides market insights into Europe, North America, Asia-Pacific, and the Rest of the World. The Asia Pacific fifth-party (5PL) logistics market accounted for USD 3.89 billion in 2022 and will likely exhibit a significant CAGR growth in the study period. This regional market expansion can be attributed to increased trade activity, rising disposable income, and developing e-commerce sectors in China and India. In addition, the region is expected to see an increase in demand for 5PL logistics services due to the ongoing trend of outsourcing logistics operations to third-party providers.

Also, the major countries studied in the market report are the U.S., German, Canada, France, the U.K., Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: FIFTH-PARTY (5PL) LOGISTICS MARKET SHARE BY REGION 2022 (%)

Source: Secondary Research, Primary Research, Market Research Future Database, and Analyst Review

The European fifth-party (5PL) logistics market accounts for the second-largest global market share owing to the presence of established industries such as automotive, pharmaceuticals, and retail. The region is also expected to witness an increase in demand for 5PL logistics services due to the rising adoption of advanced technologies, such as blockchain and IoT, in the logistics sector. Further, the German fifth-party (5PL) logistics market held the largest market share, and the U.K. fifth-party (5PL) logistics market was the fastest-growing market in the European region.

The North America Fifth-party (5PL) Logistics Market is expected to grow at the fastest CAGR from 2023 to 2032 due to well-established infrastructure, robust regulatory framework, and a highly mature logistics industry. Moreover, the region is experiencing an increase in demand for 5PL logistics services, owing to the presence of established players and a highly developed e-commerce sector. Furthermore, the U.S. fifth-party (5PL) logistics market held the largest market share, and the Canada fifth-party (5PL) logistics market was the fastest-growing market in the North American region.

The global fifth-party logistics (5PL) industry is fiercely competitive, with numerous local and international competitors. Leading market players are working on developing innovative solutions, expanding their geographical reach, and strengthening their service offerings to obtain a competitive advantage. Recent key market developments include launching new services & solutions, strategic partnerships, and mergers & acquisitions.

Major players in the fifth-party logistics (5PL) market, such as CEVA Logistics, XPO Logistics Inc, Deloitte, DHL International GmbH, and McKinsey & Company, are also investing in advanced technologies such as blockchain, IoT, and AI to improve supply chain efficiency, reduce operational costs, and increase customer satisfaction. Moreover, key players in the fifth-party (5PL) logistics industry focus on providing value-added services such as reverse logistics, order management, and customs clearance to differentiate their offers and enhance client retention.

Agility Logistics is a logistics firm established in Kuwait that offers various logistics services, such as freight forwarding, warehousing, and supply chain management solutions. The company was established in 1979 and is based in Sulaibiya, Kuwait. Agility Logistics has a global footprint, operating in over 100 countries and employing over 26,000 people worldwide. In 2021, the company introduced Shipa Freight, a new digital platform that offers real-time freight prices and online booking for international shipments. This technology is intended to improve customer visibility and control over their shipments by streamlining the logistics process.

XPO Logistics is a transportation and logistics firm based in the United States that offers supply chain solutions to various industries, including aerospace, automotive, and retail. XPO Logistics announced the completion of its separation of GXO Logistics, a new pure-play logistics company, in August 2021. Moreover, in September 2021, XPO Logistics announced the acquisition of Shift Freight, a last-mile logistics provider.