Benefits of third-party logistics in South Africa

Increasingly volatile trading environments, both domestically and internationally, are driving the need for resilient and agile supply chains – and fueling the growth of sophisticated third party logistics providers (3PL).

The growing demand for 3PL comes as South Africa’s economic outlook is heading into positive territory, with stronger fiscal discipline, improved energy supply, and importantly for DSV, the country’s major ports are on a recovery path, with visible progress since mid-2025. Exporters, especially in agriculture and mining, are already benefiting from shorter delays and improved reliability.

Together, these and other developments suggest South Africa is entering a phase of cautious but genuine recovery, with opportunities for growth, investment, and job creation in the coming years.

South Africa is considered relatively under-developed in the logistics sector, and so can anticipate significant growth fueled by intra-continental trade, the growth of ecommerce and increased consumer expectations. Its 3PL industry is estimated at USD 6.39 billion in 2025, and is expected to reach USD 8.81 billion by 2030, at a CAGR of 6.64% during the forecast period (2025-2030). 

While self managed warehousing has advantages such as greater process oversight and customization when well run, it requires ongoing capital investment, is operationally complex to manage in terms of staff, skills, facilities management and regulatory compliance, and is inflexible in adapting to fluctuating demands.

So, what are the benefits which outsourcing offers?

Cost is an important consideration, as 3PLs typically have well established networks and leverage economies of scale in terms of expertise, technology, scalability, risk, compliance and value added services (VAS). While direct costs such as rent and labour might appear more costly, indirect costs such as stock losses, administration and facility maintenance charges can make a compelling business case in favour of outsourcing. If you are in a situation where your facility is too small and you have to find a new site, then outsourcing your warehousing to a 3PL becomes very favourable.

Access to expertise and technology is an increasingly important variable, and DSV invests heavily in both people and technology – such as logistics automation, drones, autostore, advanced planning – to ensure clients’ evolving needs are met.

The investment in expertise and technology leads to supply chain flexibility and scalability which are crucial to growing a business. An insourced model works when a warehouse is fully utilised. It’s too big if there is unused space, and too small if additional space is needed.

DSV’s flexible pay-per-use pricing model is highly attractive, particularly for clients whose business fluctuates with the seasons. DSV is able to plan for the upswing and bring in fully trained staff to execute promotions or other peak periods. For example, a retail client previously needed ten days or more to recover the backlog from Black Friday orders. Now, with DSV’s advanced resource planning, orders reach customers in just one or two days.

Despite its obvious benefits, though, there is no such thing as “infinite capacity” or “infinite flexibility”, and DSV’s flexible and scalable multiclient environment typically offers a 20% unplanned variation, up and down. In this environment, forecasting and planning become critical to accommodate both normal business cycles, seasonal surges and brand promotions.

3PLs are also seen as better placed to manage risk in increasingly volatile trading environments. DSV’s presence in more than 80 countries enables local offices to draw on international experiences and manage supply chain uncertainty, while business continuity capabilities in South Africa help ensure clients trade under difficult security and infrastructural challenges.

DSV’s focus on inventory accuracy and eliminating waste has helped many clients. One retail client had experienced stock losses running at 1.5% a year prior to partnering with DSV, and this has fallen to 0.005% now.

The need for flexibility is evident in the growth of Value-added services (VAS), which includes packaging, labeling, tracking inventory, order picking and delivery, and returning value to customers in the supply chain.

DSV is active in retail, technology, healthcare and the automotive sectors, all of which have called for innovative VAS interventions to enhance production processes, cut costs and meet market needs. DSV’s VAS interventions range from engraving customer names on bottles of perfume, preloading firmware on cellphones, undertaking initial software uploads on copiers to individually unpacking, price stickering and repacking every box of a popular line of a consumer product.

Insourcing or outsourcing? Getting it right

Organisational strategy and culture influence decisions regarding insourcing or outsourcing, although heightened price sensitivity is dampening sales in markets experiencing significant margin pressure.

Given the current market conditions, start-ups and mid-size firms typically go in-house or opt for lower-cost transport providers, while DSV’s focus is on multinational firms and local businesses which have complex needs and high compliance demands. Global customers, especially, want a “safe pair of hands” to run their operations and some are hesitant to make the large logistics investment on their own.

Then again, as the economy enters a growth phase, the calculus may shift as the advantages of outsourcing gain traction. With established workflows and a deep understanding of their purpose, growing companies can leverage 3PLs to control costs, access niche expertise, and redirect internal resources toward innovation and value creation. Outsourcing at this stage is less about offloading burdens and more about optimising the business model for agility and sustained competitiveness.

Looking ahead

As South Africa moves to increased digitalisation, automation, and global connectivity, businesses are recognising that leveraging established 3PL networks is key to unlocking competitive advantage in a rapidly evolving market. South Africa’s unique geographic position and its diverse economic sectors, from mining and agriculture to retail and healthcare, demands efficient, flexible logistics solutions.

The ability to scale operations quickly to expand into new markets or respond to seasonal demands will become increasingly critical as businesses adapt to shifts in global trade patterns and regional economic integration. DSV’s range of local and global capabilities allows firms in South Africa to tap into best practices, diversify risk, and remain agile in the face of volatility.