Trends and Strategic Focus Areas for Third-Party Logistics Providers in 2025

The growing need for outsourcing

According to a recent global industry analysis report, the 3PL market is projected to experience consistent growth, with estimates suggesting it will reach $2.4 billion by 2032. This growth is fueled by several key factors, including the expansion of e-commerce, which now accounts for 70% of many 3PLs' business portfolios. The rise of omni-channel retail has also created new challenges, like reverse logistics. In response, more retailers and wholesalers are outsourcing logistics to manage the increasing complexity of order requirements and mitigate the associated risk, as highlighted by insights from CBRE.

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Additionally, the need for specialized cold chain logistics has been on the rise, driven by the increasing demand for temperature-sensitive medications and complex regulations. The pharmaceutical 3PL market is expected to nearly double over the next decade, primarily due to the demand for specialty therapeutics and personalized medicines.

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Businesses are increasingly reassessing their approaches by relying on 3PL providers for warehousing space and logistics infrastructure. Outsourcing is also way to reduce capital expenditure by switching supply chain costs, which are often seen as a cost center, to operational expenses. But despite the promising growth forecast, the ongoing uncertainty in 2025 — influenced directly or indirectly by economic and political factors — is redefining 3PL focus areas and strategies.

Role of AI and automation in 3PL fulfillment

As the demand for 3PL services grows, competition intensifies, pushing 3PL providers to prioritize process optimization, efficiency enhancement, and cost reduction through technology. The adoption of artificial intelligence (AI) and automation in areas such as real-time inventory tracking, picking, sorting, data-driven warehouse management, and predictive analytics is not new.

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However, in 2025, expect to see even broader adoption as these technologies become even more essential for sustaining 3PL businesses. These technologies will be deployed at scale as the industry recognizes their value and gains a better understanding of their impact on inflation, sustainability costs, and labor shortages. According to Kenco’s 2025 Supply Chain Report, these are the top three challenges impacting bottom lines and driving supply chain executives’ 2025 innovation strategies. DHL’s deployment of accelerated digitalization technologies at 91% of their sites supports those findings.

But be mindful that having advanced technologies is just the first step. To retain clients, 3PL providers must also have the expertise to implement and manage these technologies. When vetting technology vendors, ensure that the solutions can be managed by your team without frequent external technical support, which could potentially impact service level agreements (SLAs).

Data visibility matters

As 3PL providers increasingly adopt automation technology, they are collecting a massive amount of high-quality data, in real time. Meanwhile, the industry is seeking a unified source of truth to enable data-driven decisions. In fact, according to the research done by IBM Institute for Business Value, 51% of supply chain executives consider responding to real-time demand volatility a top operational priority over the next three years.  

The wealth of data, combined with advanced analytics, is becoming the cornerstone of logistics operations. This paradigm shift toward leveraging big data and uncovering insights allows 3PL providers to deliver crucial services to their clients:

• Reveal trends and patterns in customer order behavior
• Identify inefficiencies
• Optimize fulfillment workflow productivity and strategies
• Make faster decisions

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Prepare for the unprepared

The Russo-Ukrainian war and American trade tariff increases have created unprecedented political volatility. In response to the resulting supply chain disruptions, companies are diversifying their source of imports and looking more at nearshoring and onshoring manufacturing.

This strategy requires having warehouse locations in multiple locations. Given the uncertainty of product sourcing, retailers and wholesalers are outsourcing the storage and distribution of goods to 3PL providers rather than entering into multiple leases themselves.
Businesses lean on 3PLs to manage logistics operations more effectively without the substantial upfront capital investment or risk.

To improve their ability to meet clients' demands without relying solely on the length of customer contracts, 3PLs need to optimize their offerings with a long-term vision and strategic agility. Reducing client dependency and protecting against future risks can be achieved by investing in technologies that can grow capacity seamlessly, at any given point in time, and can be utilized across multiple clients to spread costs. This approach helps 3PLs ensure demand responsiveness, transform cost centers into profit centers, and prepare for resilience.

Sustainable logistics

Sustainability is a hot topic everywhere, and logistics is no exception. In fact, major 3PL providers like DHL and DSV have committed to achieving net-zero carbon emissions by 2050. It’s not just the big players. 3PLs of all sizes are facing increasing pressure for green practices from clients and their environmentally conscious customers. As a major carbon-emitting industry, 3PLs must align with their environmental goals.

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This can be achieved through various measures, including investing in eco-friendly packaging, carbon-neutral shipping options, delivery route optimization, and implementing energy-efficient warehouse solutions. Fortunately, these efforts not only address environmental challenges but also lead to significant cost savings in energy, labor, and real estate, ultimately reducing long-term operating costs.