The role third-party logistics providers (3PLs) play in the supply chain world is rapidly growing in importance, and as a result, so is the 3PL industry. But don't take our word for it—just look at how the presence of 3PLs in the Quest for Quality has changed in recent years.

First of all, they weren't even included in the survey until 1998. That year, only two companies made the list, and it probably comes as no surprise that they were the logistics arms of FedEx and United Parcel Service. In fact, since 1998 the winners' list often has included those two companies, along with guest appearances by one or two competitors—and there were never more than four winners in all.

Last year broke the mold, though, when six companies made the list. But it's this year that the vitality of the 3PL world becomes clear, with nine companies stepping up to the podium. Interestingly, only three of this year's winners—FedEx Supply Chain Services, UPS Supply Chain Solutions, and C.H. Robinson Worldwide—also won last year.

Based on the services they provide, 3PLs are rated on different criteria than other types of providers in the Quest. They're judged on carrier selection and negotiation, order fulfillment, transportation/distribution, inventory management, and logistics information systems. As with the other categories, each attribute is assigned a "weight" based on its relative importance to survey respondents. As was true last year, respondents judged transportation/distribution management to be the most important attribute for a 3PL, with a rating of 3.7. Next came carrier selection and negotiation (3.3), followed by order fulfillment (3.2), logistics information systems (2.8), and inventory management (2.0).

For the most part, average attribute scores for 3PLs were down this year. Only carrier selection and negotiation saw an upturn, rising to 7.13 from last year's 6.63. All other categories fell off, most notably order fulfillment, which fell a half point from 7.53 to 6.85. Overall, the customer-satisfaction score moved down more than a full point, from 33.48 to 32.12.

FedEx Supply Chain Services logged its second consecutive first-place finish, although its 35.55 weighted score was down noticeably from 2002's 37.07. Second-place Landstar Logistics introduced itself to the list with a score of 34.64. Perennial fave UPS Supply Chain Solutions (formerly UPS Logistics) took third with 34.16, a slight drop from its previous 34.84. Menlo Worldwide Logistics posted a rookie score of 33.44, followed by fellow first-timer Transplace at 33.02. C.H. Robinson Worldwide was the last of our returning champions, scoring 32.84, down from 2002's 33.51. Ryder Integrated Logistics, last seen here in 1999, stepped up with 32.52 points. Other winners were BAX Global with 32.40 and USF Logistics Services with a score of 32.26.

Take a close look at the winners, and you may notice an interesting fact. Each of them is a spin-off from one or more long-established, asset-based transportation companies. FedEx Supply Chain Services and UPS Supply Chain Solutions, of course, are subsidiaries of the parcel express giants. BAX Global made its name in integrated, multimodal transportation. Menlo Worldwide Logistics is a subsidiary of CNF Inc., which also owns trucking and other transportation service providers.

C.H. Robinson Worldwide's parent company is best known as an intermodal marketing company, but it also offers trucking services. Ryder Integrated Logistics originally focused on managing private truck fleets. Landstar Logistics and USF Logistics Services both spring from multifaceted trucking concerns. And Transplace was created from the merger of the logistics divisions of Swift Transportation, Covenant Transport, J.B. Hunt, M.S. Carriers, U.S. Xpress, and Werner Enterprises.

Survey respondents were asked which activities they outsource now and which they outsourced two years ago. For the most part the numbers stayed the same, but the percentage of respondents that use 3PLs to handle rate negotiations rose by five points. The number of shippers that rely on 3PLs for carrier selection and management, meanwhile, increased by 8 percent. And as more proof that 3PLs are becoming increasingly important to shippers, 71 percent of respondents who use 3PLs said they have not terminated a contract with their providers in the past two years.