Team Players

Quest for Quality - Third-Party Logistics

By Staff -- Logistics Management, 8/1/2006

All indicators point to the rapid service expansion and solid revenue growth for the third-party logistics (3PL) marketplace. As a matter of fact, global expenditure on 3PL services is set to increase significantly over the next five years, says the U.K.-based research firm Datamonitor.

Meanwhile, according to a recently released report by Armstrong & Associates, in 2005 revenues for U.S.-based 3PLs passed the $100 billion mark for the first time.

The recipe for growth in this sector seems simple: As long as shippers are faced with capacity constraints and feel the pressure to improve global tracking and IT in order to run a modern supply chain, there appears to be no limit to a successful 3PL’s potential. And most shippers agree—that is, if providers are ready and willing to dig in and partner with them for the long haul, both domestically and internationally.

After sifting through a record amount of reader feedback on 3PL performance over the past year, it was relatively easy to find the common denominators. “A top 3PL offers flexibility, superior customer service, rock-solid reliability, and is willing to become a true partner to help us improve operating and freight costs,” said one satisfied shipper. “A 3PL must exhibit a willingness to do what it takes to get the job done,” said another. “The ideal partnership is having a 3PL being concerned about their customer and acting like they are an actual branch of that customer’s operations,” he added.

This year, our readers paid homage to 11 third-party logistics partners. The overall weighted average dipped a couple of points from our 2005 findings, but this year’s winners all met or exceeded an impressive score of 32.96. Transplace led the pack this year with a 42.05 weighted average, followed by Ozburn-Hessey Logistics (38.53), FedEx Supply Chain Services (36.89), Expeditors International of Washington (36.18), UPS Supply Chain Solutions (35.76), Landstar Logistics (34.61), ADP Logistics (33.78), Menlo Worldwide (33.75), Ryder Supply Chain Solutions (33.71), NYK Logistics (33.47), and BAX Global (32.96).

It should be noted that due to the nature of their business, 3PLs are rated on different criteria than are other providers in our survey. In this category, service providers are evaluated on: Carrier Selection/Negotiation, Order Fulfillment, Transportation/Distribution, Inventory Management, and Logistics Information Systems.

As a matter of fact, Logistics Information Systems was the only key attribute category in which the weighted average score actually improved this year. That number rose to 6.07, up from from 5.67 in 2005. Transplace posted a whopping 8.06 in this category this year, more than a full point higher than the other winners.