THIRD PARTY LOGISTICS:THIRD PARTY LOGISTICS:

PRESENTED BY:AMAR ASHISH(UPES)

33rdrd PARTY LOGISTICS PARTY LOGISTICS

Best definition is probably a combination:Best definition is probably a combination:• Businesses that provide one or many of the Businesses that provide one or many of the

following logistics services:following logistics services:

Transportation ManagementTransportation Management

Public/Contract WarehousingPublic/Contract Warehousing

Distribution ManagementDistribution Management

Freight ConsolidationFreight Consolidation

Introduction:

   

3PL: A STRONG CASE FOR REVENUES TO 3PL: A STRONG CASE FOR REVENUES TO TREBLE BY 2014-15TREBLE BY 2014-15

Strong Macro-economic growth.Strong Macro-economic growth.

The 3PL industry’s revenue in India is expected to The 3PL industry’s revenue in India is expected to increase to Rs. 190-195 billion by by 2014-15 increase to Rs. 190-195 billion by by 2014-15 from Rs. 57-60 billion in 2009-10.from Rs. 57-60 billion in 2009-10.

India’s GDP expected to grow by 8-8.5 percent India’s GDP expected to grow by 8-8.5 percent over 2009-10 to 2014-15 driven by a strong over 2009-10 to 2014-15 driven by a strong growth in industry and services.growth in industry and services.

Source: Source: http://www.crisil.com/research/research.jsp

REGION WISE 3PL MARKET:REGION WISE 3PL MARKET:NORTH:

Gurgaon, Faridabad, Kanpur, Palwal and Ghaziabad, some of the emerging locations are Bilaspur, Sonipat, and Panipat

SOUTH:Chennai, Coimbatore, Madurai, Hyderabad, Vishakhapatnam, Vijayawada, Bangalore, Mysore and Kochi

WEST:Mumbai, Pune, Nasik, Nagpur, Ahmadabad, Kandla Port, Bhavnagar, Porbandar, Jaipur and Indore.

EAST:Kolkata Durgapur Muzzaffarpur Hajipur &Darjeeling.

3PL GROWTH DRIVERS IN INDIA:3PL GROWTH DRIVERS IN INDIA:

Facilitators for growth of

3PL

Strong GDP growth Increased FDI inflows

Consolidation of raw materials from the vendors

Better infrastructure

Goods and service tax (GST) Logistics parks/ FTWZs

Organized structure of the logistics industry.

Entry of MNC 3PL players in India.

Increasing presence of MNCs in India.

Increasing need to focus on core competency.

Functions of 3PL players:Functions of 3PL players: To manage the overall logistics operationsTo manage the overall logistics operations

Spanning inventory management.Spanning inventory management.

Supply chain optimization and value-added services such as Supply chain optimization and value-added services such as managing vendors and distributors.managing vendors and distributors.

By outsourcing logistics, companies can not only concentrate on By outsourcing logistics, companies can not only concentrate on their core business operations but also achieve cost-efficiency and their core business operations but also achieve cost-efficiency and improve delivery.improve delivery.

Obstacles for 3PL in India:Obstacles for 3PL in India: Inefficient Logistics operations.Inefficient Logistics operations.

Multiple tax structures.Multiple tax structures.

Inadequate logistic infrastructure.Inadequate logistic infrastructure.

And unorganized nature of the transport industry.And unorganized nature of the transport industry.

Potential for cost reduction:Potential for cost reduction: In a 3PL service model, a specialized 3Pl player acts like as In a 3PL service model, a specialized 3Pl player acts like as

an interface between a client company and its vendors and an interface between a client company and its vendors and manages the supply chain operations.manages the supply chain operations.

Given its advantages of scale, the 3PL model enable client Given its advantages of scale, the 3PL model enable client companies to reduce logistics cost.companies to reduce logistics cost.

Current state of 3PL industry:Current state of 3PL industry:

Initially a transaction-based service, has gradually evolved Initially a transaction-based service, has gradually evolved into more strategic function that is integral to company’s into more strategic function that is integral to company’s operations.operations.

Encouraged by the visible benefits of 3PL services, Indian Encouraged by the visible benefits of 3PL services, Indian companies also began outsourcing their logistics operations companies also began outsourcing their logistics operations to dedicated 3PL players promoting domestic logistics to dedicated 3PL players promoting domestic logistics players to offer 3PL services. players to offer 3PL services.

Although 3PL services in India remain confined to the more Although 3PL services in India remain confined to the more basic transportation and warehouse management, players basic transportation and warehouse management, players are expected to include value added services such as are expected to include value added services such as repackaging and reverse logistics.repackaging and reverse logistics.

Industry wise 3PL potential: 2009-10 to 2014-15Industry wise 3PL potential: 2009-10 to 2014-15

Lo

gis

tics

co

st

Low

Textiles

Pharmacy

Cars

Consumer durables

Organized retail

Two wheelers

IT Hardware

3PL Potential HIGH

Source: http://www.crisil.com/research/research.jsp

FMCG

HIGH

LOW

CONCLUSION:CONCLUSION:

The third party logistics in India is expected to grow at a The third party logistics in India is expected to grow at a compounded annual growth rate of 27 percent to Rs. 190-compounded annual growth rate of 27 percent to Rs. 190-195 billion over 2009-10 to 2014-15.195 billion over 2009-10 to 2014-15.

The key drivers that will strengthen the case for 3PL The key drivers that will strengthen the case for 3PL adoption are – the potential for corporates to improve the adoption are – the potential for corporates to improve the efficiency of their increasingly complex supply chain, the efficiency of their increasingly complex supply chain, the Government’s thrust on developing logistics infrastructure, Government’s thrust on developing logistics infrastructure, and a favorable regulatory environment. and a favorable regulatory environment.

Source: Source: http://www.crisil.com/research/research.jsp