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Demand for outsourced services from logistics providers, also known as 3PL (third party logistics), will grow more than 20 per cent in the region as companies streamline their core businesses to enhance efficiency, said senior industry players.
The demand is likely to grow further in the next two years as companies look for better management of their supply chain processes as away to overcome competition in the market and to build strong long lasting relations with clients.
"The past few years have seen a surge in demand for outsourced logistics services as companies seek the expertise of professionals to better manage their logistics demands," said John Tansey, General Manager for UPS in UAE.
"This demand will grow further this year driven by globalisation and competition in the market as companies opt to concentrate on their core business areas."
While most companies have in-house logistics departments, the need to expand their client bases and enter new markets is forcing them to shift their preferences in favour of outsourced logistics services.
"The 3PL concept is relatively new in the region. Previously companies thought they could handle all their logistics needs on their own, but they are increasingly realising that this has a high chance of affecting their concentration on the core business," said Tansey. Major companies dealing in electronics, vehicles, and spare parts have signed up with UPS for logistics services.
According to a recent report by Global Gateways, the regional demand for outsourced logistics will grow over 20 per cent this year with projections for further growth in two years.