THIRD PARTY LOGISTICS: PRESENTED BY: AMAR ASHISH (UPES)
3rd PARTY LOGISTICS Introduction: Best definition is probably a combination: • Businesses that provide one or many of the following logistics services: Transportation Management Public/Contract Warehousing Distribution Management Freight Consolidation
3PL: A STRONG CASE FOR REVENUES TO TREBLE BY 2014-15 Strong Macro-economic growth. The 3PL industry’s revenue in India is expected to increase to Rs. 190-195 billion by by 2014-15 from Rs. 57-60 billion in 2009-10. India’s GDP expected to grow by 8-8.5 percent over 2009-10 to 2014-15 driven by a strong growth in industry and services. Source:
REGION WISE 3PL MARKET: NORTH: Gurgaon, Faridabad, Kanpur, Palwal and Ghaziabad, some of the emerging locations are Bilaspur, Sonipat, and Panipat WEST: EAST:Mumbai, Pune, Nasik, Kolkata Nagpur, Ahmadabad, Durgapur Kandla Port, Muzzaffarpur Bhavnagar, Hajipur Porbandar, Jaipur and &Darjeeling.Indore. SOUTH: Chennai, Coimbatore, Madurai, Hyderabad, Vishakhapatnam, Vijayawada, Bangalore, Mysore and Kochi
3PL GROWTH DRIVERS IN INDIA: Strong GDP growth Increased FDI inflowsConsolidation of raw materials Better infrastructure from the vendors FacilitatorsGoods and service tax (GST) for growth of Logistics parks/ FTWZs 3PLOrganized structure of the logistics industry. Increasing presence of MNCs in India.Entry of MNC 3PL players in India. Increasing need to focus on core competency.
Functions of 3PL players: To manage the overall logistics operations Spanning inventory management. Supply chain optimization and value-added services such as managing vendors and distributors. By outsourcing logistics, companies can not only concentrate on their core business operations but also achieve cost-efficiency and improve delivery.
Obstacles for 3PL in India: Inefficient Logistics operations. Multiple tax structures. Inadequate logistic infrastructure. And unorganized nature of the transport industry. Potential for cost reduction: In a 3PL service model, a specialized 3Pl player acts like as an interface between a client company and its vendors and manages the supply chain operations. Given its advantages of scale, the 3PL model enable client companies to reduce logistics cost.
Current state of 3PL industry:Initially a transaction-based service, has gradually evolved into more strategic function that is integral to company’s operations. Encouraged by the visible benefits of 3PL services, Indian companies also began outsourcing their logistics operations to dedicated 3PL players promoting domestic logistics players to offer 3PL services. Although 3PL services in India remain confined to the more basic transportation and warehouse management, players are expected to include value added services such as repackaging and reverse logistics.
Industry wise 3PL potential: 2009-10 to 2014-15HIGH IT Hardware Consumer durables FMCG Textiles Two wheelersLogistics cost Cars Pharmacy Organized retailLow LOW 3PL Potential HIGH Source: http://www.crisil.com/research/research.jsp
CONCLUSION: The third party logistics in India is expected to grow at a compounded annual growth rate of 27 percent to Rs. 190-195 billion over 2009-10 to 2014-15. The key drivers that will strengthen the case for 3PL adoption are – the potential for corporates to improve the efficiency of their increasingly complex supply chain, the Government’s thrust on developing logistics infrastructure, and a favorable regulatory environment.Source: http://www.crisil.com/research/research.jsp