The 3PL providers face several challenges. Complex tax laws and poor infrastructure can potentially make logistics a less attractive proposition. Moreover, the negative attitude of non-outsourcers toward 3PL needs to be changed. In spite of these challenges, Frost & Sullivan expects very good growth for 3PL services in this sector, driven by increasing penetration and improving infrastructure and tax systems.
Growth of Multinational Companies in the CED Sector to Boost 3PL Logistics Market
The growth of multinational company operations in the Indian CED sector in the past few years has driven the use of 3PL services. Since multinational companies like LG, Samsung, and Sony, intend to achieve faster and maximum market penetration, they are increasingly depending on 3PL service providers to fulfill their logistics needs. The CED sector is growing at an encouraging rate across India due to the rising income levels and economic prosperity. The increased consumption levels and pace are resulting in the need for a faster and frequent distribution of goods for the CED companies, thus driving them to adopt advanced logistics practices. This is likely to increase the usage of 3PL services to a significant level.
The services offered for CED sector by the 3PL service providers in India had been steadily rising, driving up the adoption. "Functions which were not addressed earlier by 3PL providers are also being fulfilled now, such as domestic freight forwarding, packing, labelling, and quality check," explains the analyst. "As a result, more CED companies are adopting these services."
