New findings from the 20th Annual Third-Party Logistics (3PL) Study reveal both shippers and third-party logistics providers continue to be invested in collaborative and positive relationships.
The 2016 Annual Third-Party Logistics (3PL) Study, which examines the global outsourced marketplace of shippers and 3PLs in the logistics industry, is a joint effort of Capgemini Consulting, Penn State University; Korn Ferry; and Penske Logistics.
The report is based on a survey of more than 260 shippers and logistics service providers in North America, Europe, Asia-Pacific and Latin America. The study found that 87 percent of shippers and 96 percent of 3PLs have agreed-upon performance expectations, and 80 percent of shippers and 81 percent of 3PLs have formal performance reviews.
Change is also being observed in the ways shippers and 3PLs are working together as competition within the logistics industry ramps up. Tightened capacity along with increased consolidation among logistics service providers has resulted in fewer partners for 3PLs and increased prices. As a result, 44 percent of survey respondents reported that they have enhanced relationships to guarantee shipping lanes and on-time shipments while 40 percent have increased rates. Among shippers, 29 percent said assets have not been available to move shipments when needed while 29 percent have engaged with a larger number of 3PLs to get access to capacity.
Bob Daymon, Vice President of Transportation Management for global logistics and supply chain management provider Penske Logistics, observes that the spirit of collaboration between 3PLs and shippers has led to increased efficiencies in the supply chain with these enhanced relationships resulting in operational cost savings and ensuring reliable coverage and better rates.
To differentiate themselves, 3PLs are working to provide sustained value, innovative solutions and information to facilitate data-driven decisions. Technology and data are being used to assist shippers with selecting the right shipment modes to maximise efficiency and reduce costs. Among 3PL respondents, 60 percent are using technology to increase visibility within orders, shipments and inventory; 40 percent for planning within transportation management; and 48 percent for scheduling within transportation management.
To meet increasing customer requirements, 58 percent of respondents said they are investing in new capabilities for themselves, 40 percent said they are leveraging new capabilities from other companies in different industries, and 15 percent said they are leveraging new capabilities from competitors.
Shanton Wilcox, Vice President and North America Logistics and Fulfilment Lead at Capgemini Consulting, notes that these factors should create an interesting competitive environment, spurring significant changes to the 3PL business model. While social, crowd-sourcing and flexible fulfilment will converge to create opportunities for alternative logistics service providers, the challenge will be how traditional, asset-based providers respond to these circumstances.
Workforce innovation and agility will be particularly important for the 3PL industry given the unprecedented labour and talent shortage in the logistics industry. The majority of 3PLs (79 percent) said they are unprepared for the impact of labour shortage on their supply chain. However, more than half of the shippers (53 percent) felt they could rely on their 3PLs to address the effect of labour shortage on their business.
According to Neil Collins, Global Leader of Logistics, Distribution and Transportation for Korn Ferry, the pre-eminent authority on leadership and talent, the employee skill sets and traits that logistics companies need are shifting as new technologies and distribution approaches transform the industry. With wage issues and job alternatives increasing competition for talent, companies are forced to make a fundamental shift in how they recruit today's workforce for tomorrow's needs.