Global third-party logistics providers (3PLs) are not a dime a dozen; in fact, there are only a few truly global supply chain managers—and they are a part of large, diverse global transportation networks.
By Richard Armstrong, Armstrong and Associates
May 31, 2017
Global third-party logistics providers (3PLs) are not a dime a dozen; in fact, there are only a few truly global supply chain managers—and they are a part of large, diverse global transportation networks. Most of the major players, such as UPS, FedEx, DHL and DB Schenker, all have IT platforms interfacing with their customers to provide global visibility from origins to destinations; they’re experts at Customs clearance around the globe; and they’re active in all transportation modes and regularly adjust between ocean, air, trucking and same-day delivery to best accommodate individual orders.
However, global shippers need to keep in mind that supply chain management capabilities—even those managed by the most expansive global 3PLs—vary greatly between countries. The biggest challenge is often managing expectations within a region’s physical limitations.
Managing geographical expectations
Advanced economies generally have better highways, ports and railways as well as better communication systems and technology. Political changes can especially complicate matters, but those issues are normally limited to emerging market and developing economy countries.
As a general rule, logistics costs as a percent of GDP are lower in advanced economies and higher in emerging market/developing countries. Not surprisingly, the countries with the largest economies dominate infrastructure statistics.
The United States has the most miles of highways, railways and pipelines. Meanwhile, China, with the second largest economy, has the third largest amount of highways and railways. India is second in the total miles of roadways; however, only 2% to 3% of India’s roadways are modern highways. Even some of these, like Highway 9 from Mumbai to Pune, have uneven surfaces and transportation obstacles.
These persistent infrastructure challenges create opportunities for modern, sophisticated 3PLs. Global shippers who seek to succeed in today’s landscape should remember the following: Even when a global supply chain is managed by an experienced and expansive global 3PL, many regions and countries have limitations such as infrastructure, technology and carrier service levels. It’s important to manage expectations based on your areas of operation and seek out “true” global 3PLs that know the lay of the land.