Penske Logistics, along with Infosys, presented findings from the 2020 Third-Party Logistics Study: State of Logistics Outsourcing Report during the annual Council of Supply Chain Management Professionals (CSCMP) 2019 EDGE conference in Anaheim, California. The study is a collaboration between John Langley, a professor at Penn State University and the founder of the report, and Infosys Consulting. Penske Logistics is a sponsor.
The 2020 24th Annual Third-Party Logistics Study shows that shippers and their third-party logistics providers work together to achieve supply chain success and that they have positive interactions. The study shows that the vast majority of shippers—93%—report that the relationships they have with their 3PLs generally have been successful. A higher number—99%—of 3PLs agree that their customer relationships generally have been successful.
Among respondents participating in the 2020 study, 83% of shippers and 98% of 3PL providers agree that the use of 3PLs has contributed to improving services to the ultimate customers. Additionally, 66% of 3PL users and 93% of 3PL providers agree that 3PLs provide new and innovative ways to improve logistics effectiveness.
According to the Third-Party Logistics Study, supply chain costs are one of the top factors in shippers’ operations decisions, with 91% reporting that they consider shipping expenses, which include costs associated with crating, packing, handling and freight.
More than half, 60%, consider product cost; 59% consider customs, including duties, taxes, tariffs, VAT, broker fees and harbor fees; 52%, of shippers consider overhead costs, such as purchasing staff, due diligence cost, travel and exchange rates. Also, 42% considered the cost of risk, such as insurance, compliance, quality and safety stock cost, in their operations decisions.
Among 3PLs, 92%, reported that they consider shipping costs; 61% consider overhead costs; 55% consider the cost of risk, such as insurance, compliance, quality and safety stock cost, in their operations decisions; 47% consider product cost; and 44% consider customs.
Shippers are increasingly aware that if they do not have the technological capabilities to accomplish their goals, they should partner with those that do, Langley said. As the availability of data increases, shippers and their logistics partners will need to be able to take the information and make it relevant.
Many 3PLs are already making significant investments in technology that allow them to analyze shippers’ operations. As reported in the Third-Party Logistics Study, the majority of shippers—94%—agree that IT capabilities are a necessary element of 3PL expertise, and 56% of shippers agree they are satisfied with 3PL IT capabilities.
Technology is also playing a critical role in capturing data, which can be used to fuel analytics. Langley said the use of analytics is gaining significantly in terms of frequency of use, levels of sophistication and utilization of available computational capabilities.
Among shippers, taking part in the Third-Party Logistics Study, 39% indicated their involvement with 3PLs was significant, 36% somewhat, and 25% not at all. From the 3PL perspective, 43% indicated they had significant involvement, 43% somewhat, and 14% not at all.
Langley said 66% of shippers and 74% of 3PLs are in agreement that the use of analytics is a key to successful working relationships. Although shippers and 3PLs strongly agreed that analytics capabilities are a necessary element of 3PL expertise, they also agreed that they were only minimally satisfied with those capabilities, marking the existence of an analytics gap.
More and more shippers are embracing sustainability programs, and carriers and 3PLs are focusing on greening efforts to attract shippers, Langley said. The Third-Party Logistics Study found that public perception and cost savings are driving sustainability within logistics for shippers as well as their third-party logistics providers. At the same time, there are multiple ways shippers and 3PLs are integrating sustainable environmental processes into the traditional supply chain.
Langley said the majority of shipper respondents, 76%, said they are participating in optimization, such as route planning and load consolidation; 42% said they are involved in tracking and reporting emissions; 38% said they are taking part in voluntary programs, such as the Environmental Protection Agency’s SmartWay program; and 16% said they are piloting alternative fuels.
Among 3PLs, 78% said they are participating in optimization; 63% said they are taking part in voluntary programs; 39% are involved in tracking and reporting emissions; 19% said they are piloting alternative fuels.