Future 3PL Factors to Consider

3PL Guest Post 3 comments

A growing number of companies are relying on 3PL providers to manage some or all of their supply chain networks. For example, a majority of companies in the computer industry rely on 3PLs. The industry has changed considerably, from freight forwarding in the 70s, increasing service offerings in the 80s and 90s, to web-based 3PLs working in a more consultancy role. Now, new factors such as sustainability, new regulations, and rapidly advancing technologies are once again changing the relationship between clients and logistics companies.

The new Compliance, Safety, Accountability (CSA) program made by the Federal Motor Carrier Safety Administration has made the recruitment and training of professional drivers, along with maintenance, more complicated. One example of the effects of this is the FMCSA’s recent shutdown of 26 bus operations, most of which had serious violations. Still, many providers are fighting against the CSA, citing unfair regulations created from the safety measurement systems that come from the program. Congressional studies are currently underway, but it will be until 2013 until the results come out.

This is also where an increased societal importance on the environment comes into play. Many 3PL companies have started initiatives to offset their effect on the planet. Logistics Quarterly awarded those that showed leadership in their efforts in eliminating waste and redundancy.

New equipment and technology options have been a constant challenge to 3PLs. While they have considerably improved efficiency, the constant demand and labor changes make it difficult for many companies to effectively use these new tools. Handheld computers are just one example of new equipment that is helping maintenance management companies and transportation service providers in conjunction with 3PLs. Easy to use online platforms such as SaaS-based WMS systems is another. IT, however, is on the mind of both 3PL companies and providers and is the main reason companies outsource logistics. Without a strong framework, both will lose their competitiveness.

Despite the continuing economic uncertainties worldwide, US logistics is moderately growing after the hit it took in 2009. China has been the focal point for outsourced 3PL, but recent research has shown that 3PL growth in India is anticipated to grow at about a 22% rate during 2012 to 2015. This also hinges on the rapid growth of computer hardware industry as the market for their services.

There are many factors that are increasing supply chain complexity in slowing down the growth of the global 3PL market. Providers of these services need to expand services or find way to streamline the costs involved in the process. This in turn will enable more businesses to move their supply chain function to 3rd party logistics companies, and continue the positive trends that are happening today.

Jesus Garay is a freelance writer writing on behalf of Spectrum Logistics, a premier logistics company based in the Southeast United States. They provide global and domestic solutions for warehousing as well as tanker and many other services. To learn more, visit http://www.spectrumlogistics.us/ for additional information.

  • Paul Kovie November 14, 2013, 10:07 am

    The use of 3PL’s is often a smart choice for both manufacturers and distributors. Besides employing the latest technologies and supply chain practices, they can also help with issues such as seasonality and human resources. As companies look to squeeze every last dime out of their supply chains, growth in 3PL usage will continue to happen around the globe.

  • Julian Bradder September 5, 2014, 8:15 am

    It seems inevitable that the concentration of technology investment in the 3PL sector means that through virtue of the sheer economics, the use of them will only grow. Such investments and technological complexity for the client side really doesn’t make sense.

    Nevertheless contrast 22% 3PL growth rates in India with 2.5% in Europe over the coming 3 and a half years.

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