Market Trends of United Kingdom Third Party Logistics (3PL) Industry
Growth in Logistics Parks and Fulfilment Centers
The logistics sector is experiencing massive disruption where consumers will now be able to receive their items in time as little as one hour. The rapidly-delivered services are already familiar to most urban consumers. Leaders like Deliveroo, Ofo, and Uber have already made extreme efficiency a day-to-day reality for food and rides.
The United Kingdom is experiencing a record-breaking boom in constructing massive sheds to serve the soaring increase of internet shopping during the pandemic. Nearly 37 million square feet (3.4 million square meter) of warehouse space was slated for construction in 2021, up from 23 million square feet in 2020.
E-commerce continues to drive demand for warehouse expansion, but new warehouses are also needed to support the development of innovative technologies and sustainable energy. The UK warehousing sector is anticipated to continue strong for the foreseeable future.
As of January 2022, the East Midlands region had over 4.4 million square feet of the total 18.6 million square feet of speculative warehouse space under construction in the United Kingdom. This made the region with the most construction activity in the speculative market. Speculative development refers to construction projects that are undertaken without a commitment to a buyer or occupier.
E-Commerce Driving the Growth of the Market
The rapid growth of e-commerce is driving the demand for 3PL services in the United Kingdom. The unrelenting growth of e-commerce is fundamentally changing the third-party logistics (3PL) landscape. With the increasing consumer expectations for on-time and accurate deliveries and to stay competitive, more e-commerce retailers are outsourcing mission-critical components of their distribution and fulfillment operations to 3PL partners.
Many e-commerce retailers are small in size and need help to afford to have in-house logistic services. Therefore, services such as supply chain management, warehousing, consolidation service, and order fulfillment are outsourced to 3PL companies. However, major e-commerce retailers like Amazon and Alibaba are developing their logistics infrastructure.
Meanwhile, the growth of e-commerce and change in consumer expectations are also presenting challenges to the 3PL companies in terms of reducing parcel delivery times, increasing efficiency, adopting the latest and advanced technologies, etc. A huge transformation is taking place in last-mile delivery, with companies looking at alternatives, such as delivery lockers, pickup points, crowdsourced deliveries, drone deliveries, and autonomous vehicles. The evolution of technology is reshaping the entire supply chain and reinventing the parcel industry. Technology is becoming a crucial enabler in increasing efficiency and reaching consumer expectations.
