The State of 3PL

Global 3PL (third-party logistics) revenues have been on the rise. Recent data from Armstrong and Associates show that total global revenues grew by 13.7% between 2010 and 2011, from $541.6 billion to $616.1 billion. In regards to specific regions, Latin America had relatively low 3PL revenue total but had the highest growth rate (43.6%). Developing regions such as the Middle East/Africa had a combined 3PL growth rate of 54%. The Asia-Pacific area had the highest total 3PL revenues in 2011, which was $191.1 billion. Surprisingly, North America reported a relatively low growth rate of approximately 7%. Europe was the only region to show a decline in growth, as revenues shrunk by nearly 3%.

As global revenues are on the rise, 3PL collaboration is on the decline. In 2010, more than half (56%) of shippers in the U.S. reported to having gain-sharing arrangements with 3PL companies. These numbers are similar in Latin American and Asia-Pacific countries. Globally, only 41% of shippers reported collaboration as being important for lowering logistics costs and improving service characteristics. In 2012, only 15% of non-3PL companies reported shipping as a core competency at their firm. This percentage has consistently declined since 2006.

The economy and supply chains have been hit hard due to unpredictable and severe weather disruptions. Business Continuity Institute reports that economic losses from supply chain disruptions increased 465% from 2009 to 2011, which totaled nearly $350 billion. Other factors that are affecting 3PL companies’ supply chain disruptions include supply chain extensions, lower inventory stock, and centralized distribution. However, data from a Capgemini study showed that shipper respondents report adverse weather as the biggest source of supply chain disruption.

3PL and non-3PL companies are looking to create a sustainable business model to be able to adapt and change to the ever-changing market dynamics. Organizations must sync their employees with their business strategy in order to gain a competitive advantage. Therefore, talent management is vital in creating a logistics strategy. The future state of 3PL companies is uncertain, but trends show that revenue has continued to grow globally over the last few years. If collaboration between shippers and 3PL can start to increase, 3PL companies can be optimistic about the future.

Source:

http://bpooutcomes.com/cg-3pl-overview/

 

 

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