• Latest
  • Trending
  • All
State of the 3PL Union

State of the 3PL Union

November 10, 2019

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

April 16, 2020
Weakest link in supply chain threatens car industry revival

Weakest link in supply chain threatens car industry revival

April 16, 2020
New case reported at Lexington LEX2 warehouse

New case reported at Lexington LEX2 warehouse

April 15, 2020
These inventory trackers will notify you when hard-to-find items are back in stock

These inventory trackers will notify you when hard-to-find items are back in stock

April 15, 2020

Last Mile Delivery Market Analysis, Revenue, Share, Growth Rate & Forecast To 2025

April 15, 2020
Antonov An-225 Mriya: world’s largest cargo plane, history, details

Antonov An-225 Mriya: world’s largest cargo plane, history, details

April 15, 2020
Coronavirus | Punjab all set for wheat procurement within lockdown norms

Coronavirus | Punjab all set for wheat procurement within lockdown norms

April 14, 2020
Copperstate Farms Launches International Cannabis Brand DNA Genetics in Arizona Market

Copperstate Farms Launches International Cannabis Brand DNA Genetics in Arizona Market

April 14, 2020
Mzee Moi’s Ksh10B Gift to Gideon

Mzee Moi’s Ksh10B Gift to Gideon

April 14, 2020
Covid Knights: Corporate social purpose in the time of COVID-19

Covid Knights: Corporate social purpose in the time of COVID-19

April 14, 2020
How Tesla And BMW Are Leading A Supply Chain Renaissance With Blockchain

How Tesla And BMW Are Leading A Supply Chain Renaissance With Blockchain

April 14, 2020
Last Mile Delivery Market Worth Observing Growth | UPS, FedEx, SF Express

Last Mile Delivery Market Worth Observing Growth | UPS, FedEx, SF Express

April 14, 2020
  • Supply Chain
  • Logistics
  • Warehousing
  • Procurement
  • Shipping
  • More
    • Strategic Sourcing
    • Spend Analysis
    • Inventory
    • Contact Us
No Result
View All Result
United States International Supply Chain Commission
United States International Supply Chain Commission
Home Logistics

State of the 3PL Union

by usiscc
November 10, 2019
in Logistics
0
State of the 3PL Union
494
SHARES
1.4k
VIEWS
Share on FacebookShare on Twitter

Each year in late June, we get the State of Logistics Report from CSCMP, which I summarize under the banner of “The State of the Logistics Union.”

Each year in early fall, we get the annual 3PL study, released each year at the CSCMP conference. And so it was again this year with the 2020 study, now in its amazing 24th year, all under the leadership of my friend Dr. John Langley of Penn State.

So this week you get my summary of the 3PL report (we read more so you can read less), which I might as well title the State of the 3PLU union, as it really is a fine compendium of many data points from the logistics service provider sector.







Gilmore Says….






This year, 94% of shippers believe 3PL IT capabilities are a very important factor in success, while only 56% are satisfied with those capabilities.







What do you say?

Click here to send us your comments
 

In addition to Langley’s leadership, this year’s report was sponsored by consulting firm Infosys, Penn State and Penske Logistics. Without the sponsors the report wouldn’t happen, so they are worthy of some public recognition.

Since I knew I could get a copy of the report later I didn’t attend the CSCMP presentation, but I did duck my head into the large session room and it was well attended as is it is every CSCMP. The interest in logistics outsourcing obviously remains high, and nothing pulls the current situation together like this study.

The report is based in part on survey responses from 588 shippers and 3PLs worldwide – down a bit from last year. 46% of those were 3PLs/4PLs, 37% were shippers that use 3PLs, and 17% were shippers that do not use 3PLs – valued for their perspective on why they don’t outsource any aspect of logistics.

This year 65% of respondents were from North America, with 8% from Asia and 15% from Europe.

As has been the case for many years, the report again this year focuses on a set of questions and related discussion across a set of issues that mostly stay the same every year (e.g., the famous “IT Gap” – see below), along with a new set of focus topics for this year that get some pages in the repor, usually supported by some additional survey data.

In this year’s study, those focus topics are: the use of analytics in 3PL-shipper relationships; supply chain finance; and the “greening” of the supply chain – a good selection of subjects, in my opinion.

I will summarize today the main general data points and insights, and visit the specialty topics in a future column.

The report found that on average total company logistics expenditures as a percentage of sales revenue was the same 11% this year as in the 2018 results. In calendar year 2018, most data points showed significant increases in logistics costs, so this the lack of change is a bit surprising, but respondents taking the survey in earlier in this year may have been factoring in some of 2019, during which transportation costs have been headed down.

The percent of total logistics expenditures directed to outsourcing was slightly higher at 52% in the current study, versus the 51% and 50% reported in the previous two years.

Over the same time frame, the percentage of shippers’ transportation spend managed by 3PLs was back at 55%, same as in the 2017 report, after which it somehow decreased to 50% last year. I said at the time it must be a statistical aberration, and with this year’s data that appears to be the case.

Meanwhile the percentage of shippers’ warehousing spend managed by 3PLs rose sharply to 42% from a drop to 35% lasg year and 39% two years ago.

All that meaning the data last year in part showing declining use of 3PLs was simply a blip.

A very interesting chart in the report shows responses from shippers and 3PLs to a series of questions relative to their relationships – and as can be seen, there are some different perceptions between the two groups.

 

Source: 2020 3PL Study

 

The top line in the table showing more than 90% of both shippers and 3PLs believe their relations have been successful is obviously a positive sign for the outsourcing sector.

But as an example discrepancy, almost all 3PLs (96%) believe using 3PLs drives lower logistics costs for shippers, while only 67% of shippers themselves feel that way. Similarly, 66% of 3PL users say that 3PLs provide new and innovative ways to improve logistics effectiveness (down from 73% last year), versus a much higher 93% of 3PLs that believe they are providing that value.

But the largest discrepancy came on the topic of whether shippers are collaborating with other companies, even competitors, to achieve logistics cost and service improvements. A strong 86% of 3PLs agreed, versus just 40% of shippers.

I don’t have any explanation for that delta.

Other survey data highlights include:

• 57% of shippers indicate they are increasing their use of outsourced logistics services this year, down from 68% last year. Might be another temporary blip. Conversely, 31% of shippers indicate that they are returning to insourcing many of their logistics activities, up from 28% last year.

• 60% of 3PL users report reducing or consolidating the number of 3PLs they use, about the same as reported last year. Perhaps this long term trend has reached some sort of plateau.

• Why do non-3PL users eschew outsourcing? 32% feel that control over the outsourced functions would diminish; 21% are concerned that cost reductions would not be realized; 15% feel they have more logistics expertise than most 3PL providers; and 13% think it would be too difficult to integrate their IT systems with those of a 3PL.

SCDigest is always interested in the dreaded “IT Gap,” which the report has been following for many years. That gap refers to the percentage difference between how shippers place 3PL IT capabilities in terms importance (always very high, usually in the low 90s in terms of percentage), versus their view of actual 3PL IT capabilities, always with a much lower score.

For years the IT Gap had been shrinking, but for reasons that are unclear, it spiked back up in two years ago, and stayed about the same last year and again this year, as shown in the graphic below.

 

 

Source: 2020 3PL Study

 

This year, 94% of shippers believe 3PL IT capabilities are a very important factor in success, while only 56% are satisfied with those capabilities.

The report says that gap has stabilized, but I note it has also taken a step back from 2016.

My view: some 3PLs still try to get by with aging, often home-grown technology that is simply far out of date. There is some complexity here, because if in the middle of a contract with a given shipper or multiple shippers, introducing new technology raises some issues. Even the shipper may not want to upset the apple cart.

But I also believe that many 3PLs that have deployed modern technologies often do not fully use those capabilities or present them in a way most convincing to shippers.

I am out of space. The full report available for free download with registration here.

A look at the focus issues discussed this important research report in another First Thoughts column right here.

Any reaction to this data from the 3PL report? Let us know your thoughts at the Feedback section below.


Your Comments/Feedback



Share198Tweet124Share49
usiscc

usiscc

  • Trending
  • Comments
  • Latest

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

April 16, 2020
Antonov An-225 Mriya: world’s largest cargo plane, history, details

Antonov An-225 Mriya: world’s largest cargo plane, history, details

April 15, 2020
3 keys to mitigating severe supply shortages from coronavirus disruption

3 keys to mitigating severe supply shortages from coronavirus disruption

March 18, 2020

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

0
Global Industry Analysis, Size, Share, Growth, Trends, and Forecasts 2016–2024 – ZMR News Reports

Global Industry Analysis, Size, Share, Growth, Trends, and Forecasts 2016–2024 – ZMR News Reports

0
PHOTOS: Ottawa firefighters respond to warehouse fire

PHOTOS: Ottawa firefighters respond to warehouse fire

0

Global Strategic Sourcing Software Market 2017-2026| SAP Ariba, Coupa, Scout RFP, Zycus, Procurify – Galus Australis

April 16, 2020
Weakest link in supply chain threatens car industry revival

Weakest link in supply chain threatens car industry revival

April 16, 2020
New case reported at Lexington LEX2 warehouse

New case reported at Lexington LEX2 warehouse

April 15, 2020
  • Privacy Policy
  • Terms of Use
  • Disclaimer
  • DMCA
  • Contact Us

Copyright © 2020 usiscc.org.

No Result
View All Result
  • Supply Chain
  • Logistics
  • Warehousing
  • Procurement
  • Shipping
  • More
    • Strategic Sourcing
    • Spend Analysis
    • Inventory
    • Contact Us

Copyright © 2020 usiscc.org.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.