2014 State of Logistics: 3PL—Omni-channel fulfillment to reshape market

The 25th Annual State of Logistics Report states that revenues for the third-party logistics provider (3PL) sector rose 3.2 percent in 2013, much lower than the 5.9 percent growth the market saw in 2012.

By ·

The 25th Annual State of Logistics Report states that revenues for the third-party logistics provider (3PL) sector rose 3.2 percent in 2013, much lower than the 5.9 percent growth the market saw in 2012.

“The industry has been faced with slow growth globally, and a general reticence to make new investments,” says analyst Rosalyn Wilson, the lead author of the annual report. “The exception has been the continued strength of the domestic 3PL market, where shippers are engaging 3PLs to ensure that they have the capacity when it’s needed.”

Citing the work of 3PL market analyst firm Armstrong & Associates, the annual report states that the 3PL sector can be sliced into four segments, each representing a subset of the industry. While still the smallest segment, the domestic transportation management segment has been the fastest growing.

And last year was no exception, with gross revenues up 7.1 percent—just a little lower than 2012’s 9.2 percent. With capacity a rising issue, the dedicated contract carriage segment continued to gain ground, rising 3.6 percent in 2013. Freight forwarder revenue rose 4.2 percent as well, adds Wilson.

Meanwhile, Capgemini Consulting, a prominent IT think tank and 3PL outsourcing advisor, contends that omni-channel fulfillment challenges, especially in the retail sector, are reshaping the current 3PL marketplace. The distinction between forwarder and lead logistics provider, as a consequence, may become even more blurred over the course of this year.

“A customer-driven supply chain may eliminate some legacy roles,” says Shanton Wilcox, vice president at Capgemini. “The last mile logistics now includes responsibility for the customer experience, shifting priorities, and attention across the supply chain.”

Likewise, Wilcox says, customer demand is pushing delivery interfaces up the supply chain and nearer to the point of manufacturing. Retailers are moving to virtual inventory management, accounting for product at all phases of movement as opposed to limiting sales by physical warehouse inventory rules.

“Overall, fulfillment is being driven by the savviest consumer, with creative and diverse solutions entering the third-party logistics market space to meet those omni-channel needs,” says Wilcox.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
Refining TMS Integration Outside the Four Walls of the Warehouse
How shippers can use a modern transportation management system (TMS) to successfully integrate across the supply chain ecosystem and create a truly digital network.
Download Today!
From the October 2017 Logistics Management Magazine Issue
A leading distributor of professional salon products in the U.S. forms unique partnerships with its key LTLs to lower transport costs, reduce its carbon footprint and improve service to its 565 store locations.
Q4 2017 Rail/Intermodal Roundtable: Improvements apparent; work remains
LM Viewpoint: Collaboration, Now more than ever
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
EDITORS' PICKS
SalonCentric: One Beautiful Network
A leading distributor of professional salon products in the U.S. forms unique partnerships with its...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...