The Redseer report anticipates a substantial growth in the shipment volume handled by third-party logistics (3PL) companies in India, projecting it to increase from 2 billion to approximately 13 billion to 17 billion between 2022 and 2030, representing a six-fold to eight-fold surge.
This growth is primarily driven by e-commerce platforms like Meesho currently commanding more than 40% of the market share. Meesho predominantly collaborates with logistics providers like Delhivery, Xpressbees, and Ecom Express, known for their advanced analytics and customized services.
For example, Delhivery recently acquired Algorythm Tech for $1.8 million, enhancing its capabilities in end-to-end supply chain planning and execution through AI-powered software. However, established logistics companies like BlueDart continue to be preferred by industry giants like Amazon.
The surge in shipment volume is closely linked to the increasing demand for e-commerce products in smaller Indian cities, particularly in Tier 2 cities, as indicated in the report.
Additionally, it is expected that the cost per shipment will decrease as these 3PL firms scale up. Presently, India’s average cost per shipment stands at 60 rupees ($0.72), which is five times higher than China’s. The report estimates that by 2030, this cost is likely to decrease to 47 rupees ($0.56).
With the growing demand, India’s 3PL players have the opportunity to achieve cost savings by consolidating demand in remote areas, collaborating with local delivery vendors, and offsetting expenses through more profitable operations in metropolitan areas.
However, it’s important to note that 3PL companies should anticipate challenges such as disputes over package weight, lengthy resolution processes, and an increase in damaged packages.