India 3PL - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2024 - 2029)

The India 3PL Market size is estimated at USD 40.03 billion in 2024, and is expected to reach USD 56.88 billion by 2029, growing at a CAGR of 7.28% during the forecast period (2024-2029).

The market is expected to be driven by the growth in manufacturing, FMCG, retail and e-commerce sectors. The Indian companies are demanding new logistics capabilities and complex solutions from the 3PL service providers to help them in the successful management of supply chain processes, bring down conventional logistics costs and handle more complicated tasks.

The key segments include road, rail, warehousing, cold chain, coastal transportation, container freight stations and inland container depots (CFS/ ICD). Development of the infrastructures like dedicated freight corridors, free trade warehousing zones, logistics parks and container freight stations are expected to improve the efficiency of the Indian 3PL market. The Indian logistics industry is associated with a relatively high cost of transportation and storage. A significant proportion of the higher cost can be attributed to the absence of an efficient intermodal and multimodal transport systems, poor road infrastructure leading to lowering of the maximum distance that can be covered by any commercial vehicle and toll on the highways. Further, higher warehousing costs are driven by a shortage of warehousing capacity in India, non-standardization of warehouses in terms of IT application, etc.

The Government of India has set the target to bring down the current 14% logistics cost of India's GDP to 9% by 2022 and has requested the Ministries of Railways, Transport, Shipping and Aviation to work in tandem to reach the aforementioned goal.

3PL in India Market Trends

Developments in the Healthcare Sector

With the growing senior population, increasing healthcare awareness, and launch of new products in the market, the global sales of prescription drugs is growing rapidly. Drug manufacturers are continuously introducing specific medicines for treating minor conditions which increases their sales significantly. The growth in pharmaceutical sales will fuel the demand for healthcare logistics in India during the forecast period of 2020-2025.

Among recent updates, Kool-ex, a specialist in pharmaceutical cold chain solutions is focusing on a significant expansion splurge with a planned investment of more than Rs 300 crore. Backed by the growing demand for cold chain logistics in the pharma industry, the company is planning to double its fleet to 800 reefer trucks by the year 2021 investing Rs 140 crore. It is also investing an amount of Rs 90 crore in a 25,000-pallet capacity cold storage warehouse for pharmaceutical products near Pune. The company, in 2019 also acquired 200 completely built reefer trucks from Tata Motors, increasing its fleet size to 400 and becoming the largest player in India in pharmaceutical cold chain logistics.

Expanding its dedicated cold chain facilities in India, the world's largest container carrier, Maersk, in May 2019, handled an export consignment of butter from Bulandshahr, Uttar Pradesh, to Turkey. It is transforming itself into an integrated logistics service provider with end-to-end transportation assistances parallel to those provided by players like DHL, or FedEx in the express parcel sector. This move by the company has opened up a niche cargo category, encouraging the shipping of a range of commodities within the reefer market.

In October 2019, CEVA Logistics announced the launch of innovative and expert installation service for large-scale medical equipment using its dedicated team of engineers and technicians in India. The company's expert team will be handling the unpacking, installing and setting up the equipment like MRI Scanners, Cath Labs, Digital Radiography machines and CT Scanners on behalf of a number of global manufacturers.

Government Policies Aiding the Developments in Logistics Sector

The government has echoed its firm commitment to modernizing the functionalities of Indian logistics with a key focus on infrastructure development. With a view to increase the efficiencies of the supply chain and enhance the connectivity to support logistics players to reach the under-explored markets in the country, key infrastructure development projects have been rolled out.

Measures and policy interventions like Goods and Services Tax, (GST), relaxed FDI regulations and granting of infra status has boosted the core competencies of the Indian logistics industry.

GST was a game-changer and has laid the foundation for the logistics companies, which are currently forced to set up small warehouses across multiple cities, to set up large multi-modal logistics parks along with industrial centres which can function as freight and distribution hubs.

The maritime industry is a vital element of a growing economy like India. SAGAR (Security and Growth for All in the Region) and Sagarmala are the two principal policies by the GoI, aimed toward boosting the domestic maritime industry while at the same time engaging in maritime outreach with the other coasts of the Indian Ocean Region.

Sagarmala is a determined national initiative aimed at bringing change in India's logistics performance by cracking the full potential of India's coastline and waterways.

3PL in India Industry Overview

The market is relatively fragmented with a large number of local and international players, including DHL Supply Chain, Future Supply Chain and All Cargo Logistics Limited as its key players. India is evolving to be an emerging market in the warehousing sector attracting significant investments in the past 2 years from global and private equity players.

In September 2019, the French company FM Logistics announced the investment of USD 30 million for the development of a 31-acre multi-client logistics facility in Jhajjar, Haryana. The warehouse is expected to have a storage capacity of 1,00,000 pallet positions and a dedicated area for co-packing and other value-added services.

In February 2020, Groupe ADP announced the purchase of 49% stake in GMR Airports - a unit of India's GMR Infrastructure (GIL), for an amount of Rs 107.8 billion.

DP World and National Investment Infrastructure Fund (NIIF) invested an amount of USD 400 million to acquire Continental Warehousing Corp (Nhava Seva), one of the largest companies in the logistics sector in India.

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