State of Logistics: Third-party logistics providers (3PL)

Continued pressure to function globally

By ·

According to the leading analysts in third-party logistics (3PL) space, the concept of “mega cities” in developing countries with above average per capita income rates of growth such as Shanghai, Bangkok, Mumbai, Hanoi, Jakarta, and Sao Paulo will drive consumer demand for finished goods globally.

Today, forward-looking U.S. based 3PLs such as Jacobson, Menlo Worldwide, UPS, and OHL have invested heavily in expanding international operations to meet the new challenges.

“Today, China has about 90 cities with more than 250,000 middle class consumers,” observes Alan Amling, global director for contract logistics marketing at UPS. “By 2020, China will have more than 400 cities with a quarter million middle class residents—and 50 will have more than a million.”

Amling notes that as companies position to capitalize on this demand, their 3PL partners will need to ensure that they have the right infrastructure and expertise in place to facilitate these business strategies.

“A key value that 3PLs can provide shippers as we move forward is market knowledge across multiple regions and industries,” says Amling. “Another value is to help companies take advantage of the growth opportunities they decide to pursue.”

Not only do some global 3PLs have existing infrastructure in global markets, but they also have the in-country expertise to help companies navigate trade regulations, get products to end customers, and provide post-sales services. Should that keep domestic 3PLs from going global? Amling doesn’t think so.

“If the 3PL strategy is to provide an end-to-end experience for shippers, they have to enter this arena,” says Amling. “As supply chains become more global and more complex, we’re seeing a trend toward companies reducing the number of 3PLs they use, but expecting these 3PLs to do more.”

That said, there’s a lot of opportunity in the market, and putting up a global network may not be the right move for all 3PLs. He notes that there will continue to be opportunity for local and regional providers to be integral components of company supply chains. Amling asks: “The real question is with 95 percent of the world’s consumers now outside the U.S., can domestic shippers afford to avoid going global?”


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
Lead your organization through the driver shortage and over-the-road regulations.
Potential transportation disruptions are looming as increased over-the-road regulations are set to go into effect in 2017. Experts believe these regulations will further impact the already challenged driver pool as well as reduce driver productivity.
Download Today!
From the January 2017 Issue
Following LM tradition, we start off the New Year with our annual “Rate Outlook” cover story and subsequent Webcast
Moore on Pricing: The other TMS functional options
2017 Rate Outlook: Where are freight transportation rates headed?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Rate Outlook: Where are freight transportation rates headed?
Join our panel of top oil and transportation analysts for an exclusive look at where rates are headed and the issues driving those rate increases over the coming year.
Register Today!
EDITORS' PICKS
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...

Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....