Several factors are at play today when it comes to the forces that are shaping the competitive landscape in the logistics services industry. 3PLs are taking advantage of key advances in technology, significant changes in global capacities and new players entering the market. 2016 20th Annual Third-Party Logistics (3PL) Study explores the impact of these factors.
The study has been tracking the IT Gap for several years. Recent improvements in shippers satisfaction with 3PL’s IT capabilities is in some part due to cloud technologies. Cloud solution providers provide feature rich solutions with accelerated implementation timelines, standard data models and an Opex cost structure. This year’s survey shows that among respondents, the majority—60%—said they are using technology to increase visibility within orders, shipments and inventory; 40% are using technology for planning within transportation management and 48% are using it for scheduling within transportation management.
Global logistics operations change year-over-year, requiring 3PLs and shippers alike to stay abreast of impacts to their respective operations. Recently though there is an uptick in changes that have major impacts on these operations. Ranging from an aggressive M&A environment, to integration of major competitors to increase rates, to infrastructure projects that will improve cost and time on a global basis. The study shows that shippers and 3PLs are taking measures to account for these changes. Among survey respondents, 29% said assets have not been available to move shipments when needed; the same amount—29%—has engaged with a larger number of 3PLs to gain access to more capacity. The majority of respondents—44%—said they’ve enhanced relationships to guarantee shipping lanes and on-time shipments, and 40% said they’ve increased rates.
And as is the case in most years, consumer expectations continue to evolve. As Omni-Channel initiatives continue to aim at the moving target of flexible fulfillment, new competitors are starting to through their hat in the logistics marketplace. Companies in product industries or adjacent service providers like car services are making inroads into logistics services. Better known operations like Amazon, to the every-evolving operations of Uber, traditional 3PLs are facing new players. But the study shows that most shippers are using global or regional 3PLs, while some are piloting with the myriad of start-ups entering the market.
So as these forces play out over the next few years, there appears to be an opportunity for non-traditional logistics service providers to leverage cloud technologies and create a service niche that forces the hand of larger, traditional providers.