Annual 3PL study takes a deep dive into myriad facets of outsourced logistics

As shippers supply chain needs continue to evolve over time, so do the capabilities of those providing third-party logistics (3PL) services. This was a major takeaway of the recently released 2012 Third-Party Logistics Study: The State of Logistics Outsourcing,” by Capgemini Consulting, Penn State, Panalpina, and Heidrick & Struggles.

Findings from the study’s were released at last week’s Council of Supply Chain Management Professionals Annual Conference in Philadelphia, and data was based on feedback from 2,258 logistics executives and shippers (1,561 shippers and 697 3PLs) in North America, Europe, Asia-Pacific, and Latin America.

Chief among this year’s findings was that 64 percent of the study’s respondents are using more 3PL-based services, with 42 percent of total logistics expenditures allocated for outsourcing—matching last year’s data—and another 58 percent citing how they are reducing or consolidating their 3PL partners, reflecting how the uncertain nature of the global economy continues to impact buyers of logistics services.

“The current state of the 3PL market as based on this data shows that it is kind of a fragile business these days,” said John Langley, clinical professor of supply chain management at Penn State University. “There are various forces impacting supply chains.”

This year’s study looked at various subsets of 3PL services, including growth in emerging markets while traditional markets are slowing; challenges facing 3PLs in the electronics sector, and the importance of talent management for 3PLs.

Some of the key findings based on respondent feedback for these areas were:
-80 percent of shippers and 77 percent of 3PLs surveyed conduct business with or within and emerging economy that are experiencing rapid growth through industrialization;
-59 percent of electronics shippers view price pressure to reduce operating costs as their top challenge, with 28 percent maintaining 3PLs can help them in this regard; and
-shippers and 3PLs most highly value operational execution (51 percent and 60 percent, respectively) followed by people management and development skills (54 percent and 43 percent, respectively), among others.

The survey once again also focused on what it describes as an “IT Gap,” which it defines as shipper’s opinions on whether they feel information technologies are a necessary element of 3PL expertise and whether they are satisfied with their 3PL providers’ IT capabilities.

The IT gap in the earlier years of this study was wide, but in recent years it has narrowed, with 93 percent viewing IT as a necessary element of 3PL expertise and 54 percent of shippers indicating they are satisfied with 3PL IT capabilities.

“We have observed over the last few years that the IT gap appears to be closing,” said Langley. “And we are fairly confident that the ability of 3PLs to manage…IT services has been enhanced every year, coupled with the ability of shippers to handle available technologies has also improved. The bar keeps getting higher and higher and the idea that the IT gap may never completely close is acceptable.”

When looking at the outsourced logistics services, shippers turn to 3PLs for, the survey found that the top five were: international transportation (78 percent); domestic transportation (71 percent); warehousing (62 percent); freight forwarding (57 percent); and customs brokerage (48 percent).