3pl trends and evolution
Post on 20-May-2015
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3PL Trends &
Evolution
By Laura Olson
3PL Industry is Consolidating1
• Prior to 2013, there was only one broker in North America with revenues exceeding $1 billion (C.H. Robinson). Today the total number of 3PLs is declining and several have exceeded the $1 billion revenue mark
• Trend is fueled by private equity fund investment. 3PLs and freight brokerages have loyal shippers and large numbers of contracted carriers and are excellent targets.
Forbes
2
• Evolving from smaller 3PLs focused on transportation and warehousing, now 3PLs are expanding their service offerings into full service supply chain management
• Larger 3PLs are attracting employees with degrees in supply chain management from major universities
Increasing Level of Sophistication
Forbes
3
Pure Brokers
Large 3PLs
Adding value added services
Adding brokerage
• Definitions of 3PL and brokers are blurring with less distinction between the two. Now seeing some crossover of services provided
Nature of 3PLs Is Changing
Forbes
4 Increased Collaboration
• Increased incidence of reported “gainsharing” between shippers and 3PLs
• Increased interest of shippers in collaborating with other companies, including competitors to improve logistics costs and services
Capgemini
5 Extension of the 3PL
Inbound Logistics Study
• 3PL partnerships are expanding well past the typical warehousing and transportation agreements
• Shippers want service providers that act as an extension of their enterprise
• 3PL extension requires greater information sharing
• 3PLs want a vested interest in customers’ supply chain performance
6 Non-Asset 3PL Growth
• 47% of Inbound Logistics survey respondents identified themselves as non-asset based service providers and 42% report operating as both asset and non-asset based providers
• Brokers use technology as a competitive differentiator
• Driver shortage increases the value of brokers
Inbound Logistics Study
7 Spin Offs
• Most notably automotive manufacturers and healthcare companies are spinning off internal logistics departments, distribution networks & dedicated fleets to enter the 3PL arena
• Manufacturers with unutilized warehouse space and transportation resources are also starting 3PL operations to maximize the use of their assets
Inbound Logistics Study
8 3PL Customer Service is Key
• Number one reason shippers cited for failed partnerships (50% of those surveyed): poor customer service
• 3PLs often specialize by function, vertical and mode. Common for shippers to use more than one 3PL and benchmark performance of multiple providers
• 64% of those shippers surveyed reported that they value customer service over cost when evaluating the value of a 3PL
Inbound Logistics Study
9 Increased Reliance on 3PLs for IT
• Increased number of shippers are counting on 3PLs to fill technology strategy and implementation needs
• 94% of 3PLs use EDI
Shippers
3PLs
Greatest challenge: cutting transport costs
84% of 3PLs use TMS93% OF 3PLs provide LTL
Inbound Logistics Study
10
Transformative Changes
• Biggest changes forcing retailers and wholesalers to re-align distribution pipelines:
• Omni channel retailing• Direct-to-consumer fulfillment
Inbound Logistics Study
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