Can’t get no satisfaction

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Outsourcing in the logistics market is in trouble, according to the latest European Supply Chain Director Survey 2009 by Analytiqa which reckons that 13 per cent of those taking part anticipate a decline in outsourced activity over the next five years.

Analytica is at pains to point out that there is greater customer sophistication and recognition that employing a single third party logistics provider for pan-European logistics requirements could reduce costs through economies of scale.

But, the criticism is stark: doubts have grown as to whether third party logistics providers are up to the task. “In 2003, 17 per cent of supply chain directors believed that no third party logistics provider could conduct pan-European operations, now nearly one half state that logistics providers are still not capable of handling their pan-European outsourced logistics requirements.

“These manufacturers and retailers still believe that as supply chains extend across the continent in line with its expanding geographic boundaries, let alone worldwide, they are far too complex and fragmented for a successful partnership with a European one-stop shop 3PL.”

No doubt, the recession and the inevitable pressure that this has placed on supply chain directors has had its effect on the way they think about their third party suppliers. And it suggests that there is still pressure for further consolidation in the third party logistics market. The major players clearly have ambitions to be one-stop shops for their major customers – and can already point to examples of this – but have some way to go to satisfy the demands of half of Europe’s supply chain directors.

This means that the big are going to continue getting bigger, but that is also likely to open up opportunities for some of their smaller competitors. Some companies are not comfortable with a supplier that is an order of magnitude bigger than their own business. And that could make the third party logistics market more fluid than it has been for a long time.

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