In today's rapidly changing global business environment, supply chain management faces unprecedented challenges and opportunities. As companies seek to optimize logistics operations while improving efficiency and reducing costs, third-party logistics (3PL) services are playing an increasingly vital role. The 24th Annual Third-Party Logistics Study, released in 2020, provides valuable insights into industry trends and offers guidance for developing more effective logistics strategies.
Research Background and Methodology
This comprehensive study was jointly published by Infosys Consulting, Penn State University, and Penske Logistics to assess the current state and future direction of the 3PL industry. Researchers analyzed hundreds of valid questionnaires from shippers (3PL users), non-users, and 3PL providers to understand perceptions, needs, and expectations regarding 3PL services. The study particularly focused on shipper-3PL relationships and how these partnerships impact overall supply chain efficiency and customer satisfaction.
Shipper-3PL Relationships: A Win-Win Partnership
The research reveals overwhelmingly positive collaboration between shippers and 3PL providers. Remarkably, 93% of shippers consider their 3PL partnerships successful, while 99% of 3PL providers report significant achievements in client relationships. Furthermore, 83% of shippers and 98% of 3PL providers agree that using 3PL services enhances end-customer service levels. About two-thirds (66%) of shippers and nearly all (93%) 3PL providers concur that these services bring innovative solutions for logistics efficiency.
These findings demonstrate that 3PL services have become essential tools for supply chain optimization and customer satisfaction enhancement. By partnering with specialized 3PL providers, companies can focus on core business operations while reducing costs and gaining access to more efficient, flexible logistics solutions.
Digital Transformation: The Core of 3PL Competitiveness
The study emphasizes that in the digital era, technological capabilities have become central to 3PL providers' competitive advantage. Researchers note: "Shippers increasingly recognize that when they lack necessary technological capabilities to achieve their goals, they should partner with organizations that possess these competencies." With growing volumes of available data, both shippers and their logistics partners need enhanced capabilities to effectively utilize this information.
While 94% of shippers consider IT capabilities an essential component of 3PL expertise, only 56% express satisfaction with their providers' current technological offerings. This gap indicates that 3PL providers must continue investing in technology to improve data analysis, visualization, and automation capabilities.
Key technological focus areas for 3PL providers include:
- Cloud Computing: Enabling flexible, scalable data storage, processing, and sharing
- Big Data Analytics: Extracting supply chain insights to optimize transportation routes, inventory management, and demand forecasting
- Internet of Things (IoT): Enabling real-time monitoring of goods, vehicles, and equipment to enhance transparency and traceability
- Artificial Intelligence (AI) and Machine Learning (ML): Facilitating automated decision-making, intelligent optimization, and predictive maintenance
The Continued Growth and Evolution of Outsourced Services
Logistics outsourcing continues to expand, with companies increasingly delegating transactional, operational, and repetitive tasks. Current outsourcing trends show:
- Domestic transportation (73%): Including road, rail, and air freight
- Warehousing (73%): Covering inventory management and order fulfillment
- International transportation (65%): Including ocean, air, and multimodal shipping
- Customs brokerage (54%): Handling import/export documentation
- Freight forwarding (52%): Arranging shipments and selecting carriers
As supply chains grow more complex, demand for 3PL services continues evolving beyond traditional transportation and warehousing to include value-added services like supply chain design, demand forecasting, risk management, and customer service.
Major Challenges Facing Supply Chains
The study identifies several critical supply chain challenges:
- Rapid e-commerce growth demanding faster delivery and greater flexibility
- Global economic uncertainty causing demand fluctuations and trade disruptions
- Persistent truck driver shortages leading to increased costs and delays
- Disruptive technologies like drones and autonomous vehicles transforming logistics
- The need for better supply chain alignment through information sharing
- Intense competition driving continuous optimization demands
Data Analytics: Unlocking Supply Chain Insights
Data analysis plays an increasingly vital role in supply chain management. The five most commonly used analytical approaches include:
- Descriptive analytics: Explaining current situations
- Diagnostic analytics: Understanding root causes
- Predictive analytics: Forecasting future scenarios
- Prescriptive analytics: Recommending actions
- Cognitive/AI/ML analytics: Identifying activity patterns
While 95% of shippers and 99% of 3PL providers recognize analytics as essential to 3PL expertise, only about one-quarter express satisfaction with current capabilities. This gap primarily stems from insufficient data quality and limited analytical resources.
Supply Chain Finance: Mitigating Geopolitical Risks
With increasing geopolitical instability, supply chain finance grows more critical. The study shows that 26% of shippers employ VP-level supply chain finance specialists, while 31% have director-level professionals. Primary financial concerns include freight payment auditing (72% of shippers), total landed costs (57%), and letters of credit (37%).
Interestingly, 70% of shippers manage global political impacts independently, while 20% take no action, and only 19% rely on 3PL providers for such management.
Green Logistics: The Path to Sustainability
Environmental concerns are driving greener supply chain initiatives, primarily motivated by regulations, public perception, and cost savings. Common sustainability measures include:
Shipper initiatives:
- Route and load optimization (76%)
- Emission tracking and reporting (42%)
- Participation in voluntary programs like EPA SmartWay (38%)
- Alternative fuel adoption (16%)
3PL provider initiatives:
- Optimization efforts (78%)
- Voluntary program participation (63%)
- Emission tracking (39%)
- Alternative fuel use (19%)
Strategic Recommendations
The 2020 3PL study highlights several strategic imperatives for competitive success:
- Strengthen collaborative partnerships with 3PL providers
- Invest in digital transformation and advanced analytics
- Embrace emerging technologies like autonomous vehicles
- Enhance supply chain financial management
- Implement comprehensive sustainability programs
By adopting these strategies, organizations can optimize supply chains, reduce costs, improve service levels, and achieve sustainable growth in an increasingly complex business environment.