3PL Update: Analysts suggest global/domestic lines may be blurring

As the market sector rebounds, the providers are compared to Flags of Convenience

By ·

Is the line between the top third-party logistics providers blurring? Analysts we recently spoke with think so. Richard Armstrong, chairman of Stoughton, WI-based Armstrong & Associates, noted that the industry mirrors what has occurred in the ocean carrier sector over the years.

“Does it really matter if you book cargo on a vessel that is based in Denmark?” he asked in an interview with SCMR. “It’s carrying containers from Korean and Japanese shippers, and may even be sailing under a flag of convenience. The national identity is gone, and the idea of doing business in a single national market is nonsense.”

He also noted that U.S.-based multinational shipper, McDonalds, makes more money in foreign markets overseas.

“So that’s what’s happening to the paradigm,” he says. “Most of the really big 3PLs are following the same model. To be purely domestic is to remain stuck in one place, and no one is going to sacrifice potential revenues to do that.”

At the same time, however, Richard Armstrong insisted that some 3PLs are stronger in one region than another—and by that measure – the “domestic” category is still valid.

“But since the greatest growth is going to take place in India and China in the coming years, we are concerned about 3PL service in the U.S.,” he said. “If it is all outsourced, this country will be a fading power…like Great Britain in the 20th Century.”

London-based, Eyefortransport (EFT), may take issue with the historical allusion of this statement, but certainly not with the insight. Research done by the analysts for its “North American 3PL Market Report” suggest that a modest rebound must take place this year to keep this U.S. and its hemispheric neighbors in the game.

The report focuses on the opinions of logistics service providers (3PLs/4PLs), manufacturers or retailers, and supply chain technology providers, and offers comparative views between these groups of respondents.  The report also pays particular attention to the state of the global economy, and other shipper concerns.

“The end of 2009 going into 2010 has been a time of challenges and opportunities in the supply chain and logistics industry,” said Katharine O’Reilly, EFT’s senior vice president of research. “On the one hand the fall-out from the recession continues to rock all industries—yet on the other hand—the green shoots of recovery, and the opportunity to gain new market share and develop new, innovative strategies and relationships has opened up sections that were previously closed due to the relative stability.”


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!

Article Topics

All Topics
Latest Whitepaper
Unlock the Value of Your Supply Chain Through Embedded Analytics
Learn how embedded analytics can provide deeper supply chain intelligence and help you extract maximum value from data for your supply chain operations
Download Today!
From the May 2017 Issue
Everyone is talking about terms like digitization, Industry 4.0 and digital supply chain management, but what sort of technologies fall under these broad terms, and how will they change the management capabilities at our disposal? To find out, we talked to some noted supply chain analysts, consultants and technology executives and gathered six digital trends to watch.
Transportation Trends and Best Practices: The Battle for the Last Mile
2017 Technology Roundtable: Are we closer to “Intelligent” Logistics?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Going Beyond Rate Negotiations for Logistics Cost Savings
The pressure to reduce cost is a fundamental part of every organization today leaving many supply chain professionals constantly renegotiating rates. This webcast examines four areas that may hold untapped savings potentials and even help organizations negotiate better rates.
Register Today!
EDITORS' PICKS
The Evolution of the Digital Supply Chain
Everyone is talking about terms like digitization, Industry 4.0 and digital supply chain management,...
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...

LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...
ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...