Worley Blog


Posted on: November 26th, 2018 by Clifford F. Lynch

Every fall, for 23 years, Dr. John Langley of Penn State, along with annual sponsors, has published what he has titled “Annual Third-Party Logistics Study”. It is a comprehensive report on the current relationships and the progress of logistics service providers and their customers. This year’s study was particularly interesting in that we are in a period of such rapid change in the industry. It shows, among other things, that shippers and their providers are developing increasingly meaningful relationships and working together toward the achievement of their goals. The majority of the respondents agreed that their third-party relationships have been successful.
One interesting development is that more shippers are realizing that they do not have the technology to reach their objectives and are turning to their third-party partners to provide it. This of course, places an often-expensive burden on the providers. Ninety three percent of the responding shippers felt that technology capabilities were a necessary part of 3pl offerings, but only 53% agreed that they were satisfied with their providers’ capabilities.
As has been the case with previous studies, there are continuing disconnects between shippers and their providers. Providers almost always believe that their relationships are more successful than does the shipper group. For example, 98% of the providers feel that outsourcing relationships have been successful. Only 91% of their customers agree. Ninety five percent of the providers believe they have contributed to a reduction in shippers’ overall logistics costs> Only 72% of the shippers support that notion.
The services outsourced are essentially the same as in previous years, with domestic transportation, international transportation, warehousing, freight forwarding, and customs brokerage the top five.
As always, there is a group of firms that does not outsource. The major fear is loss of control, followed by concerns about integrating IT systems, while others believe that they simply have more expertise than the providers and service commitments would not be realized.
Respondents were also asked how outsourced relationships might be improved. Forty three percent of the shippers felt that providers needed to improve the ways they shared data. Only 25% of the providers agreed. About 36% of both groups agreed there needed to be a smoother process of transitioning RFP data to actual design and performance.
This year’s report discussed a concept I have not seen mentioned before – the “last yard”. This “refers to what happens to a shipment once it is delivered to a customer or consumer and how it is routed to the specific location where it may be needed or used.” Most shippers and providers agreed there is a need for competent last yard logistics. Only 53% of the shippers, however, believed they efficiently manage this final leg, and even fewer providers – 34% agreed.
I have just scratched the surface here. The report covered several other areas such as omnichannel, e-commerce, and reverse logistics, and it is worth reading in its entirety. It may be downloaded at www.3plstudy.com.