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Global Third-Party Logistics Market Size is Estimated at US$ 2,144 Billion by 2032

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Global Third-Party Logistics Market Size is Estimated at US$ 2,144 Billion by 2032

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The global third-party logistics market is poised to achieve a valuation of US$ 2,144 billion by 2032, with a Compound Annual Growth Rate (CAGR) of 7.6% projected for the period spanning 2022 to 2032. The primary drivers of this growth are the increasing adoption of smart technology and the heightened awareness of e-commerce.

According to Fact.MR, the global third-party logistics market is expected to surpass a value of US$ 1,031 billion in 2022. The surge in industrial activities and the enhancement of foreign trade operations, which demand efficient transportation and storage systems, will drive the demand for third-party logistics services.

Moreover, the rising need for essential medicines and vaccines, along with a growing emphasis on outsourcing logistics services, will stimulate the adoption of third-party logistics within the healthcare sector.

The advent of e-commerce platforms across various sectors, including healthcare, railway, automotive, and more, has led to an increased demand for streamlined supply chain management to enhance revenue. Consequently, end-users are turning to smart third-party logistics solutions to ensure productivity and profitable returns.

As per the study, the manufacturing segment is expected to be the dominant force in the global market, particularly due to rapid expansion in the United States, Mexico, and India. The adoption of third-party logistics for manufacturing automotive products and enhancing customer service is fostering a favorable market environment. In response, key players are targeting the North America and South Asia markets to capitalize on the growing applications in the manufacturing industry.

For example, in April 2021, Flipkart, a leading e-commerce platform in India, announced a partnership with Mahindra Logistics Limited to streamline the deployment of electric vehicles within its logistics fleet.

Key Takeaways:

·         The global third party logistic market is expected to be worth US$ 955 billion in 2021.

·         North America is expected to have the highest market share in 2022, amounting for 40% of the overall share.

·         Based on service, the domestic transportation management (DTM) segment is anticipated to hold 32% share through 2032.

·         In terms of end-use, the manufacturing segment is anticipated to account for 24% of the revenue share in 2022.

·         Asia Pacific third party logistics market is expected to grow at 10% CAGR owing to the growing focus on transportation and logistics infrastructure.

Growth Drivers:

·         The incorporation of advanced technologies such as machine learning, artificial intelligence, and the internet of things into third-party logistics will boost the market.

·         Rising emphasis on shipping cost reduction, seasonal variation management, lowering reliance on firm assets, and timely delivery management will boost the industry.

Restraints:

·         The adoption of third-party logistics is expected to be hampered by stringent government laws and regulations governing shipping activities.

·         The producer’s lack of control over logistics and warehousing operations is expected to hinder market expansion.

Competitive Landscape:

To enhance their worldwide footprint, key businesses are working on various methods such as mergers and acquisitions, partnerships, collaborations, and joint ventures. Furthermore, in order to maintain their market position, prominent firms are expanding their product ranges by creating production facilities.

For instance,

·         In October 2021, Nippon Express enhanced its presence in the Republic of Serbia by opening the Belgrade Branch. This development intends to broaden logistics services in order to suit the changing logistical demands of Central and Eastern Europe.

·         In 2021, DHL, the global logistics giant, has formed a relationship with Embark, a major firm in North America that develops autonomous trucking technology. DHL intends to put these trucks into its operations based on this strategy once the software is publicly available in 2024. The primary goal is to maximize value while reaping the projected benefits of speed, safety, and sustainability.

Key Companies Profiled by Fact.MR

·         Kuehne + Nagel

·         Yusen Logistics Co. Ltd.

·         Burris Logistics

·         CEVA Logistics

·         United Parcel Service of America, Inc.

·         BDP International

·         FedEx

·         DSV

·         DB Schenker Logistics

·         XPO Logistics, Inc.

·         C.H. Robinson Worldwide, Inc.

·         Nippon Express

·         J.B. Hunt Transport, Inc.

More Valuable Insights on Third Party Logistics Market

In the latest study, Fact.MR offers a detailed study on global third party logistics market for the forecast period of 2022 to 2032. This study also highlights key drivers promoting the sales of third party logistics through detailed segmentation as follows:

By End Use:

·         Automotive

·         Manufacturing

·         Healthcare

·         Retail

·         Other

By Transport:

·         Airway

·         Railway

·         Roadway

·         Waterway

By Service:

·         Value Added Logistics Services (VALs)

·         Domestic Transportation Management (DTM)

·         Warehousing &Distribution (W&D)

·         Dedicated Contract Carriage (DCC)/Freight forwarding

·         International Transportation Management (ITM)

By Region:

·         North America

·         MEA

·         Latin America

·         Europe

·         Asia-Pacific

Key Questions Covered in the Third Party Logistics Market Report

·         What is the projected value of the third party logistics market in 2022?

·         At what rate will the global third party logistics market grow until 2032?

·         Which are the factors hampering the growth in the third party logistics market?

·         Which region is expected to lead in the global third party logistics market 2022-2032?

·         Which are the factors driving the third party logistics market during the forecast period?

·         What is the expected market value of the third party logistics market during the forecast period?

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Latest Global and Regional Logistics Costs and Third-Party Logistics Market Trends and Outlook

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Armstrong & Associates, Inc. (A&A), an internationally recognized leader for third-party logistics market information and consulting, releases its latest market research report “Downshift: Latest Global and Regional Logistics Costs and Third-Party Logistics Market Trends and Outlook.”

According to A&A’s latest report, 2021 Global Third-Party Logistics Market revenues surged 31.5% to $1.4 trillion, as generally more developed countries with high COVID‐19 vaccination rates further opened and consumer spending increased further. Third-party logistics was a key beneficiary of supply chain management price inflation. This rapid growth trend continued through the first half of 2022. Then in the third quarter of 2022, ocean shipping rates and domestic transportation rates began to disinflate in those developed countries with higher COVID-19 vaccination rates as consumer demand and supply chain operations stabilized. China to U.S. and European ocean shipping rates have declined as much as 90% since the peak in early 2022.

Logistics is a cyclical industry and demand destruction will negatively impact its growth in 2023. On the plus side, 2022 ended with China reversing its Zero-COVID policy and many Southeastern Asia countries have opened up. This will drive increased demand in Asia going into 2023 and provide a tailwind to the overall global 3PL industry. It is essentially a COVID-recovery lag and will bring much of the developing world into a higher growth mode versus its developed brethren which saw extraordinary growth in 2021 and 2022.

The global logistics market presents a large opportunity for Third-Party Logistics Providers (3PLs) with spends on logistics of $11.3 trillion in 2021. Further, increases in supply chain complexity have driven many companies to engage the help of 3PLs as logistics and regulatory specialists. In turn, 3PLs with expertise in international transportation management and warehousing and distribution are providing economies with the operational ‘backbone’ supporting global trade. In addition, the COVID-19 pandemic has made companies further realize the complexity in supply chains, and as a result, the demand for end‐to‐end outsourcing continues to rise and organizations are increasingly open to engaging 3PLs to manage their logistics and supply chain requirements.

In addition to providing Global Third-Party Logistics Market and Logistics Cost estimates from 2016-2025, the report also covers revenues and growth rates by region and country and by 3PL segments including the Global Spare/Service Parts Logistics and Time-Critical Delivery Markets for the same years, the Top 50 Global 3PLs and their competitive differentiation, among other trends and changing 3PL requirements to further minimize supply chain risk.

ABOUT ARMSTRONG & ASSOCIATES, INC.

Armstrong & Associates, Inc. (A&A) was established in 1980 to meet the needs of a newly deregulated domestic transportation market. Since then, through its leading Third-Party Logistics (3PL) market research and history of helping companies outsource logistics functions, A&A has become an internationally recognized key resource for 3PL market information and consulting.

A&A’s mission is to have leading proprietary supply chain knowledge and market research not available anywhere else. As proof of our continued work in supporting our mission, A&A’s 3PL market research is frequently cited in media articles, publications, and securities filings by publicly traded 3PLs. In addition, A&A’s email newsletter currently has over 88,000 subscribers globally.

A&A’s market research complements its consulting activities by providing continually updated data for analysis. Based upon its unsurpassed knowledge of the 3PL market and the operations of leading 3PLs, A&A has provided strategic planning consulting services to over 40 3PLs, supported 24 closed investment transactions, and provided advice to numerous companies looking to benchmark existing 3PL operations or outsource logistics functions.

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UAE Third-Party Logistics Market to Worth US$ 6,529.7 Million By 2030

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UAE third-party logistics market is projected to attain a market valuation of US$ 6,529.7 Million by 2030 at a CAGR of 6.5% during the forecast period 2023-2030.

The UAE Third-Party Logistics market is thriving and offers endless opportunities for international businesses looking to tap into the Middle East and North Africa (MENA) market. The country’s strategic location, advanced infrastructure, and supportive government policies make it a prime destination for companies seeking cost-effective and efficient supply chain management solutions.

The growth of e-commerce and the increasing use of technology in logistics operations have driven the demand for 3PL services in the UAE. This, in turn, has led to the expansion of the industry and a steady growth in the market. The UAE Third-Party Logistics market is also keeping up with the global trends by embracing automation, technology, and green logistics solutions. This is in line with the government’s focus on providing customized and value-added services to customers.

Import and Export Activities Play Key Role in the Growth of UAE Third-Party Logistics Market

According to the United Nations Commodity Trade Statistics Database (UN Comtrade), the United Arab Emirates (UAE) is one of the largest trading nations in the world. The country’s transportation sector plays a critical role in facilitating the import and export of goods.  In 2021, the UAE’s imports and exports volume were valued at around $365 billion and $303 billion respectively. The top import partners for the UAE were China, India, the United States, and Japan, while the top export partners were India, China, Switzerland, and Singapore.

In terms of transportation, the UAE has a well-developed infrastructure, including ports, airports, and road networks, which allows for the efficient movement of goods. Dubai and Jebel Ali are the main ports in the UAE, handling a large volume of trade. Dubai International Airport is the busiest airport in the world in terms of international passenger traffic, and it also plays an important role in cargo transportation.

UAE Third-Party Logistics Market to Witness Strong Growth Thanks to Favorable Government Policies and Efforts

The United Arab Emirates (UAE) government has implemented a number of policies aimed at promoting the growth of the third-party logistics market in the country. Some of these policies include:

  • Strategic Location: The UAE’s strategic location at the crossroads of Europe, Asia, and Africa has made it an important hub for trade and logistics in the region. The government has invested heavily in the development of ports, airports, and road networks to support the movement of goods.
  • Free Zones: The UAE has established a number of free zones, such as the Dubai Logistics City, which offer benefits such as 100% foreign ownership, 100% import and export tax exemptions, and no currency restrictions. These free zones have attracted many international logistics companies in the UAE third-party logistics market to set up operations in the country.
  • E-commerce: The government has implemented policies to support the growth of e-commerce in the country, which has increased the demand for 3PL services. For example, the government has established the Dubai E-Commerce Strategic Plan 2021, which aims to create a conducive environment for e-commerce businesses.
  • Technology and Automation: The government has been encouraging the use of technology and automation in logistics operations. This includes the development of smart ports and the implementation of digital platforms to improve supply chain efficiency.
  • Green logistics: Government has been encouraging and providing incentives for the use of green logistics solutions like electric vehicles, solar-powered warehouses, and energy-efficient equipment.

Overall, these policies have had a positive impact on the 3PL industry in the UAE. The country’s strategic location, advanced infrastructure, and supportive government policies have made it a popular destination for international businesses seeking to tap into the Middle East and North Africa (MENA) market. Additionally, the increased demand for UAE third-party logistics market due to the growth of e-commerce and the use of technology in logistics operations has led to the expansion of the industry in the country.

B2B Segment Generates Over 58% Revenue of UAE Third-Party Logistics Market

The UAE’s third-party logistics (3PL) industry is thriving and is expected to continue growing at a steady pace in the coming years. The Business-to-Business (B2B) segment, which includes services such as warehousing, transportation, and distribution, is a major contributor to this growth. In fact, this segment alone generates over 58% of the revenue for the industry.

The growth of B2B logistics services is driven by the increasing demand for cost-effective and efficient supply chain management solutions among manufacturers, wholesalers, and other businesses. The rise of e-commerce has also played a key role in this growth, as businesses seek to manage their online sales operations. The UAE’s strategic location, advanced infrastructure, and supportive government policies have made it a popular destination for international businesses looking to tap into the Middle East and North Africa (MENA) UAE third-party logistics market.

According to the World Bank, the UAE’s logistics performance index (LPI) is ranked 25th globally, showing a steady improvement over the years. This index measures the efficiency of the logistics chain and the ease of arranging competitively priced services. Furthermore, the country’s strong logistics performance is due to the well-developed transportation infrastructure and the supportive policies put in place to enhance the logistics sector.

Roadways Handles Over 45% of the UAE Third-Party Logistics Market

The UAE’s third-party logistics market is diverse and offers a wide range of services to businesses looking to streamline their supply chain operations. One of the most significant segments of this market is roadways, which holds a 45% share of the market.

The roadways segment is crucial for businesses operating in the UAE, as it enables the efficient movement of goods across the country. The UAE has a well-developed road network, with easy access to ports and airports, making it an ideal location for businesses looking to transport their goods locally and internationally.

The UAE government has also been investing in the development of road infrastructure to support the third-party logistics market. This includes the construction of new roads, bridges, and highways, and the upgrading of existing ones. This has made the UAE an attractive destination for businesses looking for cost-effective and efficient transportation solutions.

The Roadways segment is especially beneficial for businesses that operate across the country, as it provides a reliable and cost-effective way to move their goods from one location to another. Additionally, the use of advanced technologies, such as GPS tracking and electronic documentation, allows for real-time monitoring of shipments, which helps businesses to optimize their supply chain operations.

Navigating the Evolving Landscape of UAE Third-Party Logistics Market: Top Trends and Opportunities

As the UAE economy continues to thrive, the third-party logistics industry is experiencing significant growth. Businesses in the region are recognizing the value of outsourcing their logistics needs to specialized providers, known as 3PLs. These companies offer a range of services, from warehousing and transportation to customs clearance and final-mile delivery. Here are some key trends that are shaping the industry:

  • End-to-End Solutions: Companies are seeking comprehensive logistics solutions that streamline their supply chain and reduce the need to manage multiple providers. This trend is driving demand for 3PLs that can offer an end-to-end service, covering everything from order fulfillment to delivery.
  • Cost-Efficiency: In an increasingly competitive marketplace, businesses are looking to cut costs wherever possible. 3PLs that can offer cost-effective solutions, such as utilizing technology to optimize routes and improve decision-making, are in high demand in the UAE third-party logistics market.
  • Long-Term Contracts: As businesses gain confidence in the capabilities of 3PLs, they are increasingly opting for long-term contracts as opposed to project-based or short-term arrangements. This indicates a growing level of trust in the industry and its ability to deliver on its promises.
  • Improved Service Levels: As the third-party logistics industry continues to evolve, service levels are improving across the board. This is leading to greater satisfaction among customers and more opportunities for growth in the industry.

Some of the Top Market Players Are:

  • SAG logistic
  • DHL International GmbH
  • FedEx
  • RAK Logistics
  • Emirates Logistics LLC
  • Global Shipping & Logistics Company
  • Al-futtiam Logistics
  • Freightworks
  • Ceva Logistics
  • Mohebi Logistics
  • Consolidated Shipping Services group
  • KUEHNE+NAGEL INC.
  • Other Prominent Players

About Astute Analytica

Astute Analytica is a global analytics and advisory company which has built a solid reputation in a short period, thanks to the tangible outcomes we have delivered to our clients. We pride ourselves in generating unparalleled, in depth and uncannily accurate estimates and projections for our very demanding clients spread across different verticals. We have a long list of satisfied and repeat clients from a wide spectrum including technology, healthcare, chemicals, semiconductors, FMCG, and many more. These happy customers come to us from all across the Globe. They are able to make well calibrated decisions and leverage highly lucrative opportunities while surmounting the fierce challenges all because we analyze for them the complex business environment, segment wise existing and emerging possibilities, technology formations, growth estimates, and even the strategic choices available. In short, a complete package. All this is possible because we have a highly qualified, competent, and experienced team of professionals comprising of business analysts, economists, consultants, and technology experts. In our list of priorities, you-our patron-come at the top. You can be sure of best cost-effective, value-added package from us, should you decide to engage with us.

There are expectations that the Asia Pacific’s market growth will be affected by both the Chinese and the South Korean market’s 2021-26 CAGR
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E-commerce Logistics Market Grew by 19.9% in 2021, Says Ti’s Latest Report

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Transport Intelligence’s (Ti) latest report, Global e-commerce logistics 2022, shows that rapid growth in the market continues with growth of 19.9% in 2021, though growth has slowed from 2020’s Covid-19 induced peak.

  • The global e-commerce logistics market grew by 19.9% in to reach a value €441.47bn in 2021.
  • Global e-commerce logistics market to grow at a CAGR of 11.8% from 2021-2026
  • Cross-border e-commerce market forecasted to grow at a CAGR of 10.65% to 2026
  • Global e-fulfilment market made up 46.8% of the total for e-commerce logistics, with last mile making up the remaining 53.2% in 2021
  • E-fulfilment service providers have broadened their service offerings to capture more of the e-commerce value chain

Ti’s latest data shows that, regionally, in 2021 Asia Pacific is still the biggest e-commerce logistics market, followed by North America and Europe. However, in 2026, Ti forecasts that North America will be the biggest e-commerce logistics market, with the US, Canada and Mexico all experiencing nominal 2021-26 CAGR above the global average.

There are expectations that the Asia Pacific’s market growth will be affected by both the Chinese and the South Korean market’s 2021-26 CAGR slowing down below not only the global average but the regional average of 7.1% too. Their percentage of online retail sales as a percentage of total sales, at 28.0% and 24.5% respectively, are testimony of mature markets. In addition, the parcel pricing war we’ve seen in China has hampered overall growth. However, the two countries will remain amongst the biggest e-commerce logistics markets globally on the back of a high number of e-shoppers.

A similar situation is likely to happen with the UK’s e-commerce market, with online sales as a percentage of total retail sales standing at 26.6% as of December 2021 as reported by the UK Office of National Statistics. The UK’s e-commerce logistics market is also expected to be affected by Brexit too over the next five years, but it will maintain its place as the third e-commerce logistics market globally after the United States and China.

Ti’s new research also shows for the first time the growth of the developing cross-border e-commerce logistics market, which is forecast to grow at a CAGR of 10.65% from 2021-2026. This growth is expected to continue as consumers seek luxury goods that may not be available within their own countries. However headwinds remain, particularly in terms of compliance with tax and customs regimes surrounding cross-border movements.

The new report also highlights how the e-commerce logistics market is broken down between e-fulfilment and last mile delivery services. In 2021 the global e-fulfilment market was valued at €235.42bn and represented a total of 46.8% of the market. Whereas the larger last mile market had a total value of €253.10bn and constituted the other 53.2% of the market.

Ti’s latest report also drills down further in to the e-fulfilment market, highlighting the structural changes which have taken hold since the beginning of the pandemic. Showing how fulfilment service providers from LSPs to software providers have broadened their service offering to capture more of the e-commerce value chain.

Ti’s Head of Commercial Development, Michael Clover, said: “In 2021 e-commerce has been one of the key growth sectors for logistics and we’ve seen some spectacular revenue growth from individual service providers. Overall growth has slowed since 2020, with growth levelling off as the extraordinary conditions for e-commerce growth brought about by the pandemic unwind, but growth is still above pre-pandemic levels. The forecast out to 2026 portrays a maturing market where online retail penetration levels are sustained in the most mature markets between 25-30% and other markets move up to this level.”

tive insights Turkey is a growth market and key cargo hub for the UK, particularly for textiles and fashion, automotive cargo and Fast-Moving Consumer Goods
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Kerry Logistics Network Reacts To Growing Demand with New 1S2 Service Between UK and Turkey

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Kerry Logistics Network Limited (‘KLN’; Stock Code 0636.HK) has launched a new One Stop Solution (1S2) for imports and exports between the UK and Turkey across all modes in response to strong demand.

“Turkey is a growth market and key cargo hub for the UK, particularly for textiles and fashion, automotive cargo and Fast-Moving Consumer Goods (FMCG) which have seen a strong surge in demand as companies search for alternative sourcing locations outside of Asia,” said Emma Rowlands, Strategic Sales Director, Kerry Logistics UK.

“We have locations throughout the UK and expert trade teams located in Istanbul, Ankara, Izmir, and Bursa. We have been operating in Turkey for 30 years, which makes us perfectly suited for the growth we are experiencing,” Rowlands added.

“Customers are increasingly looking for diversity, flexibility, and multimodal solutions that can be consistently maintained into and out of Turkey, which is why we have created the 1S2 to meet these needs.”

Already ranked IATA’s primary Agent in Turkey, KLN’s 1S2 has been developed to cater to growing multimodal demands and offers: Full Container Load (FCL) and Less than Container Load (LCL) fast transit services to all UK ports; daily Full Truck Load and Less than Truck Load across the European Union (EU); bonded and non-bonded, consolidation, value-added and Quality Control (QC) warehousing solutions; as well as in-house Customs clearance.

In combination with the 1S2, KLN offers a clearance service both on commercial and low value channels which is applicable for e-commerce.

Additionally, trade compliance, customs advisory and other consulting services are available for businesses looking to enter the Turkish market.

About Kerry logistics

Kerry Logistics Network Limited is a listed company engaged in third party logistics, freight services, warehouse operations, and supply chain solutions. It was listed on 19 December 2013, raising over US$280 million, as a spin-off of Kerry Properties Limited. Kerry Logistics is headquartered in Kwai Chung, Hong Kong.

The growth of the nation’s main port has now moved Colombo to the 22nd largest port in the world, according to the Sri Lanka Ports Authority
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Colombo Port Continues Growth in 2021 TEU Levels

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Colombo Port in Sri Lanka has processed 7.25 million TEU in 2021, a near 6 per cent growth on 2020 levels.

The growth of the nation’s main port has now moved Colombo to the 22nd largest port in the world, according to the Sri Lanka Ports Authority (SLPA).

SLPA chief Prasantha Jayamanna told the local Daily FT that the improvement was welcome, adding that President Gotabaya Rajapaksa has requested elevating the port’s position to within top 15 by 2025.

The Colombo Port saw volume increases of 5.8 per cent from the previous year, with transshipment volumes growing by 4.2 per cent to 5.85 million TEU.

SLPA terminals specifically saw a 5 per cent growth to 2.2 million TEU for the calendar year.

There are currently three container terminals at the Colombo Port — the Jaya container terminal (JCT) operated by the SLPA, the South Asian gateway terminal (SAGT), and Colombo international container terminal (CICT), which is operated and managed by China Merchants Port.

Earlier this year Colombo Port began phase two of its Eastern Terminal extension which will allow it to handle the largest container vessels.

Construction began on 12 January 2022 under the patronage of President H.E. Gotabaya Rajapaksa and Prime Minister Hon. Mahinda Rajapaksa. This extension will see the length of the terminal increase to 1,320 metres.

The project is scheduled to be completed on 4 July 2022. Once completed, the facility will consist of 12 giant cranes and 40 normal cranes, to be supplied by China’s Shanghai Zhenhua Heavy Industries Company (ZPMC).

Ports Minister Hon. Rohitha Abeygunawardena has said the development will cost around $1 billion, set to be financed by local funds.

“An extent of 420m of the Eastern Terminal has already been completed so far. Once completed, the terminal, which will be 1,320m in length, contributes the SLPA to handle 14 million BTU annually. At present the SLPA handles 7 million BTU annually,” said the Minister.

The construction contract of this project was awarded to the Sri Lankan-based Access Engineering and the China Harbour Engineering Company (CHEC).

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A Comprehensive Guide to Picking a Third-Party Logistics (3PL) Partner for Your Business

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The right third-party logistics partner can help your organization improve customer service, control costs, and increase efficiency. It’s important to properly vet possible logistics partners to ensure your brand and services are well represented and the partner can deliver according to your needs.

Establish Communication

Logistics have gotten more sophisticated in recent years, and logistics partners need to maintain high levels of communication and data sharing between the provider and the company. It’s important to find a third-party logistics provider that you can trust and one that shares your brand’s culture and values.

Do Your Due Diligence

Not all logistics providers are created equal. If you’re selecting a new provider or changing to a different provider, it’s important to look for logistics partners with the resources and capabilities you need to reach your business goals. Providers should also be able to integrate with your existing systems, or be willing to work with you to find an agreeable solution.

Ideally, look for outstanding service across financial history, brand stability, experience working in your industry, experience in specific geographic regions, owned vs. rented assets, and compliance with regulations.

Along with talking to the providers themselves, do outside research and read reviews from other companies that worked with them. If possible, ask the provider to connect you with satisfied customers. If they stand behind their service, they will be happy to showcase happy customers.

Look for Diverse Offerings

Logistics providers typically specialize in a few domains, including commodity services, industry services, and logistics services. Their offerings can range from sourcing, shipping, transporting, and customs management to multi-function supply chain management and oversight for specific industries or specialization in particular sections of the supply chain.

Service add-ons are valuable to both parties. A single provider can supply several services to make your supply chain scalable and seamless. You can look for value-added amenities like IT asset management, quality control, and high-tech logistics solutions. Some common service add-ons may include rush order or emergency order handling, product kitting, reverse logistics programs, and returned material authorization agreements.

Choose Partners with Advanced Technology

A third-party logistics provider’s IT infrastructure is vital to your needs and their own. Your possible provider should own and operate the contemporary technology needed for their side of the partnership, including warehouse management systems, fleet tracking systems, and inventory analytics and controls. You could also look for order fulfillment systems, freight theft or damage management, and wares tracking using RFID or EDI.

The logistics industry is undergoing rapid change. It’s important to find providers with advanced technology solutions to address your needs as the business evolves.

Look for Customization

Depending on your industry, you may need additional customization options for your business. An experienced third-party logistics provider can help you optimize inventory and deliver excellent service for your customers. Building to order, rather than relying on stock, allows you to reduce inventory and production costs.

Opt for Omnichannel Expertise

Omnichannel is essential in the modern business world and necessary for enhanced customer experience. Your third-party logistics provider should understand the ins and outs of omnichannel commerce and how to provide that exceptional experience for customers.

Look for partners with repeatable business models, proven performance with previous customers, and experience with your business type, industry, or customer base. Depending on your needs, you may want to opt for a dedicated provider that focuses on one part of the supply chain or specific product types.

Work with a Network of Locations

Effective logistics partners have strategic network configuration with optimized distribution centers. It’s vital to understand the third-party logistics provider’s warehousing asset ecosystem, such as rented or proprietary storage facilities. If your products will need multiple storage stops on domestic or international routes, you will need a provider that owns and manages these warehouses for quality control and security.

You should also investigate more details about the warehousing assets, including the facility sizes and capacities, scalability, and future expansion plans. Are the warehouses close to ports, airports, highways, and railways? How many trailers and containers do they typically handle in a day? Is there anything you need to be aware of regarding service during the busy seasons or in the event of high shipping demands?

Prioritize Excellence in Service

An experienced logistics partner is dedicated to service excellence and quality management. Your third-party logistics partner will have a significant impact on how your own business and customer service functions, so you want to be sure you’re choosing a provider that’s committed to delivering for you and improving their own product.

A provider with a dedication to service excellence will continue to optimize their own processes and will look for opportunities to implement better solutions whenever possible. They should be invested in their service and its success, like you are to your own company and product, and always looking to excel.

Find Brand Alignment

Your logistics partner reflects on your brand and impacts your business. To ensure your brand and your vision are represented, you need to look for a provider with a long history of success, adherence to compliance and regulations, financial stability, and a continued interest in investing in the company, facilities, equipment, systems, and resources for optimal logistics.

With the right partner on your site, you can grow into a solid relationship with a third-party logistics provider that can grow and evolve with your business. While switching to different providers occurs as business needs change, it’s much simpler to find the right provider at the start and work on developing a long-term partnership.

Key Takeaways

The supply-chain management industry has undergone radical changes in the last decade. Many third-party logistics providers emerged on the market in response to this boom and the increasing opportunities with a global marketplace. Not every provider has the tools, resources, and expertise to deliver for you, however, so do your due diligence and find a provider with a positive reputation, proven processes, and a willingness to adapt and grow. 

__________________________________________________________________

David is CEO of DB Schenker USA, a 150-year-old leading global freight forwarder and 3PL provider. David Buss is responsible for all P&L aspects in the United States, which is made up of over 7,000 employees located throughout 39 forwarding locations and 55 logistics centers.

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SIX THINGS TO CONSIDER IN PICKING THE BEST THIRD PARTY LOGISTICS OUTFIT

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Logistics is the lifeblood of commerce and e-commerce. For companies that have built their foundations and business models in the process of producing, selling, shipping and delivering goods, it is arguably the most vital cog in the entire machine.

Get logistics right, and a business can thrive. Get it wrong, however, and the effects on any company’s brand reputation and bottom line can be catastrophic.

The challenge for many firms looking to deliver goods to customers is the simple fact that they will lack the resources or know-how and are unable to effectively handle large-scale logistics in-house. To maximize commercial opportunities, products must be deliverable across large geographies, yet this is almost impossible to achieve singlehandedly.

As a result, many will turn to third-party logistics (3PL) providers–supportive organizations specializing in the provision of cost-effective fulfillment and distribution services.

Indeed, logistics is big business. According to estimates, roughly 10% of the United States’ $21 trillion annual GDP can be attributed to the industry.

Given the size of the opportunity, the market continues to become increasingly competitive, resulting in rampant logistics-centric innovation among 3PL providers who today provide a range of highly effective, bespoke services.

For those seeking the help of a 3PL, this innovation is hugely beneficial. Yet not all 3PLs are created equal. Within such a crowded environment, the challenge for many companies is finding the right provider that is capable of unlocking as many otherwise unattainable benefits as possible.

Here are six things to consider when choosing a third-party logistics provider.

Track record

While many services a company utilizes can be somewhat transactional, a 3PL-client relationship must be built on trust. Such providers will become a vitally important part of your business’s success, so it is important that you know they have a proven ability to support your specific needs. 

There are a variety of ways in which you can determine this track record:

-Are they an established player in the market?

-Do they hold accreditations from recognized industry bodies?

-Do they have case studies with example success stories working with companies similar to your own, in your regions of interest?

-What sort of results are they delivering for those clients, and how do these compare with your expectations?

-Take the time to understand a potential providers’ areas of strengths and weaknesses to ensure they are able to deliver upon their promises. 

Expertise

Despite broadly catering to the same demands, the individual offerings of 3PLs will often vary. While one provider might offer a limited number of services but specialize in your specific industry and/or geographies of interest, another might offer an expansive range of services that could help to make your supply chain more scalable, yet only do so on a generalized basis without the ability to meet a stringent set of bespoke needs. Rarely will one company’s model mirror that of another. 

Consider your specific business needs and goals, understand how logistics will best support these, and then you can work to understand what kind of 3PL provider and services you will need. In following these steps, you are more likely to benefit from 3PL services that are relevant to your organization.

Location

The footprint of a 3PL is just as important, if not more so than its services. The best providers will have a well-established network that is able to uphold a seamless logistics operation across multiple locations, either regionally or perhaps globally. 

Indeed, this is a further question: Are you looking to sell your goods locally, regionally, nationally or internationally? One 3PL may have an unrivaled footprint in one state, but not be able to compete with others who specialize in country-wide services. 

Again, consider your own needs and find a 3PL that can meet those requirements.

Compatibility

While cost will often be the primary factor worth considering for any company, it should not be the be-all and end-all. Cheaper doesn’t always mean better value. With 3PLs, it is equally worth considering the company’s cultures and values to understand how they work with your business and cater to your customers. 

-Are they willing to communicate with your company on a regular basis?

-Are they a good cultural fit?

-Do they demonstrate a willing commitment to data sharing that can demonstrate your ROI?

-Do they have a track record of going the extra mile for their customers?

It is worth remembering that your 3PL provider will be an extension of your business, and the quality of their offering will reflect on your own brand. Ensuring you create a truly embedded partnership with a close working relationship is, therefore, vital.

Scalability

With the support of a good 3PL, it is likely that your business will be able to grow more quickly. But does that same 3PL have the flexible and agile characteristics necessary to support that growth?

Scalability is a fourth important element to consider when selecting such a provider. If the answer to the above question is no, then you may find that you will be forced to change 3PL provider in the near future, causing unnecessary administration, stress, costs and disruptions.

Equally, it is not just about whether a 3PL can scale with your business, but what impact this might have.

-What would this mean for your costs?

-Will the services and value for money improve, reduce or stay the same? 

Place your roadmap front and center and ask yourself whether a 3PL would be able to support this. 

Innovation

As has already been mentioned, competition in the logistics space continues to spur an ever-increasing amount of innovation among 3PL providers who are deploying state-of-the-art technologies and cutting-edge services to both cut above the noise and benefit their customers on a daily basis. Some 3PLs will be more committed to innovation and technologies than others, however. 

To identify those that will value innovation and bring plethora of benefits to your business not only now but in the future, consider their current offering.

-Will their software and systems integrate with your own?

-How do they track metrics, data and deliver analytics? Can they provide this information to you easily?

-How usable and up to date are their website, dashboards and alike?

Those that can deliver positive answers to these questions will likely be companies that are committed to continually enhancing the service they bring to their customers and will likely maximize industry innovation to the benefit of your business.

Ultimately, it is important to do your research. Don’t just settle on the cheapest provider. For something as important and integrated as a 3PL, which will become an extension and representation of your own brand and business, it is important to focus on quality in all aspects. 

By considering these six simple factors, you will be well placed to find a more suitable, more relevant 3PL capable of meeting your organization’s needs. 

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3pls, Archives, Global Logistics, Global Trade Daily, Warehousing

Top 5 Ways to Crisis-Proof Your Supply Chain in 2021

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Here’s how manufacturers, distributors, and retailers can shore up their supply chains with an eye on making them more resilient and crisis-proof in 2021 (and beyond). 

If there’s one thing the world’s manufacturers, distributors, and retailers learned in 2020, it’s that there’s no such thing as being too prepared to tackle a supply chain crisis. With companies across many sectors still grappling with COVID-related material shortages and the world’s transportation networks struggling to keep up with the demand, there’s no time like the present to make your own supply chain more resilient, agile, and crisis-proof.

“The COVID pandemic caused significant disruption to 80% of supply chains around the world, with the result that nearly half (47%) of supply chain operations will be overhauled,” Kearney reports. “But as dramatic as these figures are, they still understate the size and scope of supply chain challenges.”

Offsetting Severe Disruptions

It didn’t take long for the global pandemic to throw companies around the world into crisis mode. In March of 2020, more than 80% of companies already believed that their organizations would experience some impact due to COVID-19 disruptions; by late-March, that number had grown to 95%, according to Institute for Supply Management (ISM).

“Severe supply chain disruptions were experienced in multiple regions to varying degrees,” ISM reported a few months later, noting that in early-March, 6% of firms reported “severe disruptions” across their supply chains. By the end of March, severe disruptions were being reported in North America (9% for U.S. supply chains, 6% for supply chains elsewhere in North America), Japan and Korea (by 17% of respondents for each), Europe (by 24% of respondents), and particularly China (by 38% of respondents).

5 Steps to Take now

By June 2020, Accenture was reporting that 94% of Fortune 1000 companies were experiencing supply chain disruptions due to the pandemic. “Disruptions to supply chain caused by COVID-19 were unpredictable and devastating, drawing attention to how critical supply chains are to sustaining business success and daily operations,” Supply & Demand Chain Executive (SDC) reports. “Unfortunately, the pandemic has also underscored how vulnerable supply chains are to sudden adversity.”

To help your supply chain better withstand the shocks of a future crisis, consider implementing some or all of these strategies for bolstering resilience:

1. Fully leverage connectivity and digitization. “Advancing connectivity with supply chain partners and digitizing information to generate a single version of the truth guarantees that enterprises can inform and cooperate with their entire supply chains to respond in unison,” SDC explains. “Organizations that connect their supply chain partners into a multi-enterprise business network can have access to real-time information, rapid access to capital, and enhanced shipment visibility.”

2. Strive for end-to-end visibility. The goal should be to gain insights into every aspect impacting inventory in the supply chain. This includes enterprise-level demand forecasts and purchase orders, cooperation with suppliers to ensure that availability and capacity needs are met and connected or “single-instance” applications of enterprise resource planning systems (ERPs), SDC advises. “This visibility also covers warehouse management across your distribution network, transportation tracking and visibility, in-house and outsourced production and final delivery and settlement.”

3. Improve partner collaboration. The lack of communication between trading partners led to a lot of late orders, missed shipments, and understock situations in 2020. It also forced more companies to examine the role that basic exercises like data sharing across supply chain networks can play in the overall health of those networks. “Effective collaboration with partners is critical to supply chain resiliency,” SDC says, noting that early sharing of forecasts and orders is a best practice, whether volatility exists or not.

4. Diversify your supply sources. Don’t let your single-source approach become a point of failure in a crisis. Instead, consider alternate supply sources and begin weaving them into your overall procurement plan before disaster strikes. One way to do this is by near-shoring the manufacture of certain components, or you might want to adopt a China plus one policy, whereby most of your production takes place in China while some of it happens in another country. These and other diversification strategies help lessen risk and ensure that you don’t have all of your “eggs in one basket” when the next disruption emerges.

5. Build more trust into supply chain processes. There was a time when keeping things “close to the vest” and blocking organizations from obtaining internal data, forecasts, and other information was just a part of doing business. Fast-forward to 2021 and the business landscape basically demands higher levels of trust and transparency across trading partners. This, in turn, helps those partners shield their respective supply chains—and, the ecosystem as a whole—from shocks and disruptions. “Supply chain transparency is one way to enable communication among suppliers,” Symbia Logistics points out. “With open discussions, all parties can tackle issues that impact pricing, quality, and competitiveness. If a supplier is unwilling to share data, a company has to wonder why. What is the supplier trying to hide?”

By implementing some or all of the above points, companies can shore up their domestic and global supply chains and prepare them for the impacts of the next disruption—no matter how big or small that event may be. After all, it doesn’t take a global pandemic to bring a supply chain to its knees and the next interruption could be waiting right around the next corner.

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.

This post originally appeared here. Republished with permission.

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3pls, Archives, Global Logistics, Global Trade Daily

Here’s How to Turn the Trials of Commodity Shortages into Positives for your 3PL

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As I’m sure you’re aware, there’s a global shortage of a small, yet vital component in so many of the goods we use and buy today — so-called semiconductor chips. These tiny processors are used by manufacturers to produce everything from cars and Class 8 trucks to TVs, laptops, smartphones, medical devices, and even appliances like refrigerators and toasters.

These types of commodity shortages have become a defining factor of the post-COVID economic recovery and the 2021 economy as a whole.

Remember the gasoline shortage after the recent Colonial Pipeline shutdown? How about the lingering chicken wing shortage, as bars and restaurants re-open and try to stock up? Builders have been reporting lumber shortages for months, and prices on 2×4 studs and sheets of plywood have hit all-time highs. The list goes on: diapers, chlorine, furniture, toilet paper (in the early days of the pandemic). And, obviously, a “shortage” of hirees, which our industry is all too familiar with, in its persistent shortage of available truck drivers.


 

While most of our relationships with shippers remained hearty over the past year, our Michigan-based operation relied heavily on the automakers, both inbound loads of parts for new vehicles and, of course, trailers loaded with finished cars outbound for dealers.

But amidst the microprocessor shortage, new car production, at times, came to a complete standstill as the need for semiconductor chips blocked American automakers like GM, Dodge, and Ford from building new vehicles. With those production stops, our Michigan operation, likewise, came to a standstill; leaving our trucks parked and our staff searching for answers.

Unfortunately, the outlook for that business returning is cloudy, at best. One analyst might say chip capacity will return to normal by the end of the year. Others say this drags on until 2024.

Trying to plan around this uncertainty has been a challenge. But there are a couple key lessons that can be taken from all of this:

First, logistics providers need to diversify. If you rely on one steady stream of business either at large or for one branch of your operation, you’re a sitting duck. A shortage that popped up seemingly overnight derailed that segment of our business and left us suddenly searching for answers. We had been so busy managing our automotive business here in Michigan, we didn’t take the time and effort to find new customers and forge new relationships. In the end, that lapse caught up with us.

Secondly, remember to treat negative events as opportunities to learn and grow, and possibly emerge from them better and stronger than you were before.

When it became clear the auto production setbacks would be long-term, I encouraged our team not to simply sit around and wait for things to change. Instead, we gathered team members and taught them new skills — ones they could use in their own careers and ones that could benefit the company, too.

For example, we looped in members of our team who weren’t hired to do sales, such as those in dispatch and other back-office functions, and we taught them the basics of making sales calls and reaching out to potential new customers. They were all on board to do it.

We flipped around roles and tried to think outside the box. We had dispatchers finding industries and businesses that wouldn’t be impacted by the semiconductor shortage and then making cold calls to try to drum up new lines of business.

If it worked, fantastic — we made something out of nothing. If not, at least we tried, and our employees had opportunities to continue working and to learn new skills.

Ultimately, that could be the biggest takeaway: When things are turned upside down and the world suddenly changes, go back to the basics. Start at the beginning again and figure out how to find business.

These are lessons that can apply broadly across the third-party logistics landscape and ones I would encourage shippers, brokers, and carriers to make sure they heed, too. Do what you can to diversify your lines of business, because you never know when they might suddenly be toppled. And never underestimate your team’s ability to pivot and learn new skills, as that could be the key to pushing through when you find yourself in a rut.

What are the lessons you’ve learned over the past 15 months in your logistics operation? I’d love to hear about them, to learn from your experience, and to share your insights with our team, too: rkramar@circledelivers.com

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Ryan Kramar is a Vice President of Operations at Circle Logistics. Founded in Fort Wayne in 2011, Circle is one of the fastest-growing transportation companies in the nation, servicing over $250 million in freight spend. Circle combines the dedication of a privately owned asset-based 3PL with the coverage of a public large-scale provider to create a superior modern freight experience. Circle is committed to delivering on three core promises to our customers: No Fail Service, Personalized Communication, and Innovative Solutions, and provides coverage across all modes of transportation in the continental United States and Mexico, including Dry Van, Flatbed, Reefer, LTL, Expedite, Oversize and Air.

For more information, please visit www.circledelivers.com