Third Party Logistics

As shippers consider entry into an outsourcing arrangement for freight management, they quickly discover a range of pricing options from various service providers. These service providers have a variety of business models that drive their market offers, and shippers need to understand what these models are so they can evaluate not just the offer, but the potential for long-term satisfaction with the contract.

The Great Recession didn’t slow it down, and now economic woes throughout Europe don’t seem to be impeding its progress. The global third-party logistics (3PL) industry just keeps rolling along, as merger and acquisition (M&A) activity heats up and the world’s providers report decent revenue growth.

A flurry of major service provider deals captured mainstream headlines in recent months, but the consequence of this activity has yet to be measured by domestic and international shippers. Meanwhile, the EU flounders, Asia remains strong, and emerging nations may represent the next great opportunity for the major 3PL players.

Damco, a third-party logistics (3PL) subsidiary of A.P. Moller-Maersk Group, recently rolled out a new Web-based service that it said enables shippers to increase flexibility, respond quicker to changes, and reduce manual work.

The solar panel maker is reliant on efficient manufacturing practices, but when it came to inbound shipping and distribution across borders, those operations began to suffer as the company grew. Here’s how this progressive shipper partnered with its 3PL to re-engineer its logistics model to save 25 percent on its inbound costs.

Consider this post-holiday scenario: You go to return something you received for Christmas, and when you finally get to the front of the exchange line after waiting 20 minutes, a smirking face behind the counter condescendingly tells you that “all you needed to do is pick out the right size and exchange it at the regular checkout counter.”

The foremost specialty chemicals and materials company brought on a transformational logistics leader, shed its transportation and warehouse assets, and ramped up a rapid worldwide expansion. Here’s how it happened.

This new offering is “designed to deliver optimized solutions that remove waste, create new efficiencies, and introduce Lean continuous improvement processes to transportation network operations.”

By continually working to expand its 3PL relationship, this fast-growing manufacturer has been able to concentrate on the bigger picture—expanding into new markets, launching new products, gaining efficiencies in its operations, and reducing manufacturing and labor costs.

Global third-party logistics (3PL) services provider MIQ Logistics announced earlier this month that it has acquired The Logistics Corporation Ltd. (TLC) to augment its service offerings in the United Kingdom and Europe.

As she prepares her 22nd annual “State of Logistics” report, supply chain expert, Rosalyn Wilson, provided an exclusive forecast for the third-party logistics sector with Supply Chain Management Review -- LM's sister publication.

According to all reports, the third-party logistics industry is surging again, but experts agree that growth will reach a plateau in the coming years due to a number of looming economic uncertainties. Here’s an overview of how the market is currently shaping up.

Third-party logistics providers are growing at multiples of Gross Domestic Product, and should be able to sustain this pace through 2011, said a prominent industry analyst.

When it comes to things that can impact supply chain operations and business processes for shippers and logistics and transportation services providers, it is fair to say there is not a shortage of issues to keep an eye on.