Study Reveals Evolving Role of Shippers and Logistics Providers - Global Trade Magazine
  October 3rd, 2016 | Written by

Study Reveals Evolving Role of Shippers and Logistics Providers

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  • 3PLs have evolved from tactical service providers to collaborative partners.
  • 3PLs are taking on greater accountability and control.
  • Shippers have increased their technology expectations, and 3PLs are responding.

Today’s rapid pace of change is adding complexity to the roles of shippers and their logistics providers. As a result, many 3PLs have evolved from tactical service providers to collaborative partners that take on greater accountability and control. Shippers have also increased their technology expectations, and 3PLs are responding with increased capabilities.

Those were some of the findings in the recently-released “2017 21st Annual Third-Party Logistics Study” by Capgemini Consulting, Penn State University, and Penske Logistics.

The 2017 global report shows that shippers and their 3PLs continue to move toward meaningful partnerships and steady improvement in the strategic nature of relationships. Both parties—91 percent of 3PL users and 97 percent of 3PL providers—reported that their relationships are successful and that their work is yielding positive results. This is an increase from 2012, when 88 percent of 3PL users and 94 percent of 3PL providers reported that their relationships were successful.

The 2017 study showed that 75 percent of shippers and 93 percent of 3PL providers said the use of 3PL services has contributed to overall logistics costs reductions, and 86 percent of shippers and 98 percent of 3PL providers said the use of 3PLs has contributed to improved customer service. The majority of both groups—73 percent of shippers and 90 percent of 3PL providers—said 3PLs offer new and innovative ways to improve logistics effectiveness.

This year’s results show that as 3PL offerings mature, shippers are increasingly taking advantage of logistics providers’ expertise. As seen in previous studies, the most frequently outsourced activities continue to be those that are more transactional, operational and repetitive. Activities that are strategic, IT-intensive and customer-facing tend to be outsourced to a lesser extent. However, this year even outsourcing in those categories is increasing over historical values. In the 2017 study, 19 percent of shippers are taking advantage of supply chain consultancy services, compared to 11 percent last year and 17 percent of shippers in the 2017 study are utilizing IT services, compared to 11 percent last year.

“This year’s report paints a new picture about what successful collaborations look like,” said Frank D. Monte, principal, strategy and operations, at Capgemini Consulting. “Shippers continue to push their 3PLs to become more innovative in the areas of logistics technology and advanced analytics, while also developing the appropriate capabilities for geographic expansion. 3PLs are responding by offering advanced and relevant technology to help shippers better serve their customers.”

Fluctuating capacity, increased shipper demands and disruptions within the industry are creating a volatile decision-making environment for shippers and logistics providers trying to optimize the supply chain. Both parties are increasingly using information and analytics to drive their decisions. Nearly three-fourths of shippers (71 percent) said real-time analytics from 3PLs help them better understand shipping alternatives, and 61 percent valued 3PLs’ assessments of trade lanes and origin-destination pairs in terms of cost and service levels.

In this year’s survey, nearly all 3PLs (98 percent) said improved, data-driven decision-making is essential to the future success of supply chain activities and processes, and 93 percent of shippers agreed. Both groups—86 percent of 3PLs and 81 percent of shippers—said the effective use of big data will become a core competency of their supply chain organizations.

The types of technology that 3PLs use is becoming an advantageous, differentiating factor. Shippers continue to rely heavily on 3PLs’ IT services. While the IT Gap—the difference between what shippers feel is important and their ratings of their 3PLs’ current IT capabilities—has stabilized, further opportunities for improvement remain.

“Data-driven decision-making is certainly an increasing trend in the supply chain,” remarked Tom McKenna, Senior Vice President of Engineering and Technology for Penske Logistics. “Among the biggest challenges that come with increased visibility and more data is determining how to best use that information to drive improvements that benefit the customer.”

Shippers that invest in gaining an overall competitive advantage have shown significant interest in doing so through supply chain transformation initiatives. Successful transformation efforts rely on a wide range of people, resources and technology, and 3PLs and 4PLs are playing an important role in the transformation process due to their ability to collect and analyze information related to shippers’ operations.

Among respondents, 73 percent of shippers indicated meaningful involvement of 3PLs in processes relating to supply chain transformation. Transformation and continuous improvement will be a priority as shippers look for new and innovative ideas to reduce costs, enhance service and improve the management of complex supply chains. Going forward, there will likely be greater importance on the role of meaningful analytics and data within transformation initiatives.

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