How to choose a 3PL
The 3PL market has been growing exponentially over the last few years and is now a $120 billion plus market in the U.S. More and more companies are making the decision to outsource all or a portion of their logistics operations to third party companies. However, according to an article on Industryweek.com, the decision to outsource should not be taken lightly.
“The logistics landscape is littered with failed relationships between 3PLs and manufacturing companies. In many cases, the seeds for these failed ventures are sown early in the process. Outsourcing may not even be a legitimate option for many organizations, but for those who think it may be, beginning the process with your eyes wide open is the first key to success.”
John Blanchard, team leader of transportation services with supply chain consulting firm TranSystems/ESYNC offers the following advice when deciding to outsource to a 3PL.
1. Outline areas of opportunity
2. Critically assess your strengths and weaknesses
3. Decide what is on the table
4. Identify a shortlist of providers that meet your requirements
5. Consider the human element carefully
Read the entire article for detailed information on each topic.
Air cargo slump continues
IATA just released their international traffic data for April and air cargo continued to show lackluster numbers for the month.
Via IATA.org:
* The sluggish air freight volume growth of 3.7% in April was weaker than the 4.4% average increase recorded during the first quarter reflecting the impact of the economic slowdown.
* The EU-US Open Skies agreement provided a modest boost to US airlines which recorded 6% growth in April due to extra transatlantic capacity.
* Middle Eastern airlines recorded a 15.8% increase in April due to additional capacity and strong trade in the markets they serve.
Kalitta Air cargo plane breaks in two at Brussels airport
Apparently the plane, a Boeing 747, broke in two at the end of the runway during an aborted takeoff at Brussel’s International Airport. Fortunately none of the five crew were injured. The reason for the crash is still under investigation.
Pictures of the damaged Kalitta Air cargo plane.
3PL Selection Factors
Why did you choose your 3PL?
Was it really only about price? What sets one logistics provider apart from the other? What factors led to you choosing a certain 3PL provider over another?
These are a few questions that I have struggled with over the years in finding factors that set one 3PL provider over another. 3PL’s typically offer similar services, have comparable rate structures, and operate in similar geographic locations. So what is that really sets a provider apart from the other?
Is it really only about price?
In my experience, there are two types of customers. One that is focused solely on the concept of price, in other words, how much is going to cost me? I find that these customers are typically the first ones to complain when a shipment goes awry and will change providers at the drop of a dime.
The other is the customer that recognizes the overall value add that a company can bring to the table. They recognize the importance of good I.T. systems. They value customer service. They understand the importance of developing a partnership with their providers. They understand that shipment problems will occasionally arise and value the pro-activity of a partner who quickly resolves shipment problems. This type of customer recognizes that although price is a major factor, it is not the only factor. They are willing to pay a little more for the piece of mind that their provider is working hard for them.
What sets one logistics provider apart from another?
Is it really the concept that bigger is better? Is it their overall product market share, global scope, menu of logistics services, overall logsitics spend, rates, I.T resources? The list could go on and on. I recognize that the items I just mentioned absolutely play a critical role in differentiation from a competitor; however, I would suggest that the biggest differentiator is CUSTOMER SERVICE. Afterall, 3PL providers are in the business of service. They typically do not own their own airplanes, ocean vessels, trucks, etc. so the best way to establish that differentiation is through the level of service they provide. How good is your provider’s local operation in responding to your needs? How quickly does your sales executive follow up when you request information, rates, etc? When issues arise, does your provider try to hide the details and brush them aside or are they open and honest in their dealings with you?
What factors led to your selection of your current 3PL provider?
I would be interested to hear what factors you as a shipper take when selecting a 3PL provider. What is the main reason for putting your business out for RFQ? Does your decision hinge on price, service, scope, systems, geographic reach, or some other determinant factor or is it a combination of factors?
Drop us a line and let us know.
