Worley Blog

2022 THIRD PARTY LOGISTICS STUDY

Posted on: October 13th, 2021 by Clifford F. Lynch

 

Every fall for the past 26 years, Dr. John Langley of Penn Sate has published the annual Third-Party Logistics Study. I have followed this report since the very beginning, and have always found it to be a comprehensive analysis of current relationships between Logistics Service Providers (LSP) and their customers. This year’s analysis, sponsored by Penn State, Penske, and NTT Data, was no exception, and once again reflected on the impact of Covid – 19 on the supply chain.

The researchers found that the heaviest impacts on shippers were felt in international operations and transportation, sourcing, and manufacturing. LSPs experienced disruptions in international operations, manufacturing, and workforce management. 29% of each group indicated a negative impact, but 30% of shippers and 23% of LSPs reported a positive influence. Almost all respondents said they were enhancing their risk and continuity planning as a result of their experiences.  Shippers are focusing on demand and capacity forecasting, supply chain network design and/or modification, international logistics, as well as data analysis and visibility. LSPs are concentrating on labor management, visibility, warehouse operations, and domestic transportation.

As was the case last year, the five most frequently outsourced functions were domestic transportation (67%), warehousing (63%), customs brokerage (46%), international transportation (44%), and freight forwarding (49%).

Technology continues to be emphasized, and 94% of shippers believe that IT capabilities are a necessary part of LSP offerings. The most frequently mentioned technologies were control tower visibility, transportation planning, scheduling and sourcing, and cloud-based solutions.

This year’s report pointed out the growing emphasis on sustainability. A number of firms are establishing environmental, social governance (ESG) programs. www.gmail51% of shippers indicated their supply chains had such a program, and 45% of LSPs reported established policies. Both groups agreed that shippers’ efforts were more advanced than those of LSPs. The major challenge is cost.

As might be expected, there continue to be disconnects between shipper and LSP perceptions. 90% of shippers and 99% of LSPs believe relationships have been successful. 98% of LSPs believe they have contributed to service improvements. Only 73% of shippers agree. 92% of LSPs believe they are innovators. 73% of their customers concur. 96% of LSPs feel they have contributed to reduced costs; but only 64% of shippers agree.

This year, there are a number of issues facing supply chain managers. Researchers looked at the need to rebalance networks, the use of supply chain as a service, and inventory levels. More than 50% of shipper respondents believe inventories have become too lean.  This became apparent during the pandemic and shortages continue.

68% of shippers believe that supply chains have become too global and need to be re-balanced toward more local and domestic systems. Supply chain as a service is getting more attention, as firms realize the opportunities for leveraging technologies and service partners.

This year’s report contained a comprehensive discussion of cold chain planning and execution. The need for flawless performance in this area was reinforced by the recent distribution of Covid vaccines. 87% of shippers reported having a cold chain strategy, but only 62% of LSPs agreed that they really did. Meeting cold chain requirements can be a challenge for both groups.

 

The report is lengthy, but well worth reading. A free copy is available at www.3plstudy.com.