Worley Blog

ANOTHER LOOK AT LOGISTICS SERVICE PROVIDERS

Posted on: February 15th, 2021 by Clifford F. Lynch

 

For over twenty years, Armstrong & Associates and Penn State’s John Langley and his partners have examined the logistics service provider (LSP) industry. Recently, there has been a new entry into the analysis of this segment – 3PLCentral. Their report for 2021 suggests trends and best practices that LSPs need to consider, in order to be successful during the coming year.

Obviously, many of these suggestions revolve around how to adapt to the ever-evolving e-commerce market. 3PLCentral cites McKinsey’s analysis revealing we had ten years of e-commerce growth in just 90 days during the pandemic. As many others have written, the e-commerce buying habits developed during the pandemic are likely to stay with us for some time.

3PLCentral points out that those LSPs that offer omnichannel service are 250+% more likely to be fast growers in 2021. They project e-commerce revenue to be almost $564M by 2025.

Top opportunities identified for 2021 are acquiring new customers, growth related to e-commerce, automating warehouse processes, diversifying services, and adding new locations.

As our readers have found, projected e-commerce growth cannot be supported without the right technology. While LSPs have often been slow to adopt new technologies, this is changing; and 3PLCentral suggests a number of implementations that will be important in 2021. The top five of these are reporting and analytics, mobile barcode scanning, billing and invoicing, rate shopping, dock scheduling, and robotics.

No report on logistics would be complete without some mention of Big Data and the Internet of Things (IoT). 3PLCentral suggests that the IoT can aid in increasing transparency, enhancing visibility. And improving ROI on technology and customer satisfaction. The ability to capture data will help in measuring performance and managing the business. It will be key to building healthy relationships.

The Amazon Effect has been defined in a number of different ways, in this report, it is defined as “the disruption to conventional physical retail locations caused by the exponential increase in online shopping.” (I still like the Seattle Times’ tongue-in-cheek definition of “huge e-commerce company using the internet to sell stuff cheap, wiping out the competition.”) Amazon of course, dominates the online shopping market and accounts for 39% of e-commerce sales in the U.S. With 110 fulfillment centers and 300 delivery centers in the U.S., Amazon is, and will continue to be a formidable competitor. As I have written before, LSPs have an enormous opportunity to fill in the gaps for Amazon competitors. Even so, keeping up with Amazon will continue to be a major logistics challenge. Just be sure you know who and what you are competing against. *

Finally, 3PLCentral discusses Supply Chain as a Service (SCaaS). They define SCaaS as a “virtual supply chain that allows companies to generate a 4-5X return on investment by partnering with one service partner to support all or part of their supply chain needs – including procurement, production control, manufacturing, quality, warehousing, and logistics.” According to the report, SCaaS helps ‘the supply chain ecosystem bridge the gaps between people, processes, and technology.”

This is a well-written document, containing some valuable information about future challenges for LSPs. The entire report may be found at 3PLCentral.com.

*In the latest issue if FreightWaves, Mark Solomon offers an insight into Amazon’s continuing inroads into distribution and transportation.