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Third-party logistics companies are facing a changing environment and an evolving relationship with shippers, according to a new study.
The 25th Annual Third-Party Logistics Study shows current trends have been driven by shippers’ relationships and expectations, technology and the coronavirus.
“Looking to the future of the logistics industry, there’s a greater need for meaningful and productive relationships between logistics providers and customers to ensure supply chain resiliency, with a more profound emphasis on data, analytics, technology, risk management and digital solutions,” said John Langley, director of development at the Center for Supply Chain Research at Smeal College of Business at The Pennsylvania State University.
Langley also said the report shows the extra pressure the pandemic has had on shippers and 3PL providers.
Penske Logistics, Infosys Consulting and Penn State created the study and the Council of Supply Chain Management Professionals published it during its virtual conference Sept. 23.
“Shippers and 3PLs will continue to move toward preferred and strategic partner relationships and away from transactional relationships,” the study said.
The study found a majority of shippers (91%) reported relationships they have with their 3PLs generally have been successful. Even more 3PLs agreed (99%) that their customer relationships have generally been successful.
The report said supply chains globally were tested with challenges from the coronavirus pandemic. But shippers and their third-party logistics providers collaborated to meet demand and minimize the effect of drastic swings in capacity during that time.
The study also found 88% of shippers and 99% of 3PLs agree that the use of third-party logistics has contributed to improving services. At the same time, 68% of 3PL users and 96% of 3PL providers agree that the use of third-party logistics has contributed to reducing overall costs.
Shippers continue to have high expectations for logistics and supply chain service providers. This is leading these providers to focus on digital capabilities, improved service levels and greater efficiency. Supply chains also are facing constant changes in areas such as alignment, shared values, core competencies and matching supply and demand.
One thing that remains static for 3PL providers is the information technology gap. The study found 93% of shippers agree that IT capabilities are a necessary element of 3PL expertise. But only 54% of shippers indicate they are satisfied with their 3PLs’ IT capabilities.
The most frequently cited technologies include transportation management scheduling (72%), transportation management planning (69%), transportation sourcing (51%), warehousing (51%), network modeling and optimization (45%), and the use of web portals for booking, order tracking, inventory management and billing (40%).
The coronavirus pandemic has had a significant impact on global supply chains this past year. More than half of shippers (58%) experienced a 25% reduction in supply chain operations while 6% reported total supply chain shutdowns. There were also respondents (15%) who reported that they are exceeding normal operations.
The study also found third- and even fourth-party logistics providers are operating in changing macro and micro-environments. Maintaining strong relationships with shippers will be critically important to navigating those changes.
Saluting the men and women of the trucking industry who kept America’s essential goods flowing during the coronavirus pandemic.
“When looking to the future, it will be critical for logistics providers to develop meaningful and productive relationships with their shipper customers so they will be regarded as key sources of information to identify and solve supply chain problems and challenges that lie ahead,” the report said.
It warned the future success of logistics providers will also be driven by the extent to which they understand, anticipate and get out in front of trends and innovations in the shipper supply chains.
It also showed 92% of third-party logistics users and 96% of providers agree that supply chains are evolving from linear chains or processes to complex networks or ecosystems of organizations, resources and capabilities.
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