Tuesday 17th Jul 2018 - Logistics Manager Magazine

3PLs set to benefit from logistics outsourcing

Davies Turner Air Cargo has been accredited under a new scheme aimed at tackling air freight crime at London’s Heathrow Airport. Accreditation followed a vigorous inspection of the company’s security regime by the Chief Accreditation and Crime Prevention Officer with the Metropolitan Police at the airport. The Airfreight Industry Minimum Security Standards (AIMSS) scheme was launched at the end of last year. It aims to establish a common standard of security across the air cargo industry, as well as helping companies to provide a more secure service for their customers.

A locking technology developed by Instrumentel could mean the end of losses sustained in the supply chain process. Called IntraLock, the system provides a high level of security to containers by means of a battery-less electronic lock and coded key. The “smart” container lock will only actuate within a designated area by a trained individual. The system also allows for point-to-point asset tracking, ensuring the accountability of all those involved in the supply chain process.

The sourcing of goods has shifted to points remote from their final markets while their unrestricted and rapid movement has added complexity to the supply chain. According to independent market analyst Datamonitor, the logistical burden means manufacturers and retailers will increasingly look to outsource logistics functions to third parties.

Datamonitor’s latest research, European Logistics Market Map, estimates that Euro 175.5Bn (£121.7Bn) of the total logistics spend in 2008 across the EU15 will be on outsourced logistics services. However, several key trends in the logistics industry have emerged which will have to be addressed if logistics service providers (LSPs) are to win this new business.

These include:

  • Expansion of the global air cargo and express delivery sectors, especially in China.
  • The pattern of growth through acquisition or partnership to either gain quick access to new markets or to increase critical mass in order to compete effectively.

The logistics industry is still highly fragmented, and as a result companies may have to deal with multiple LSPs within the supply chain, all with their own specific area of expertise. However, the LLP removes this problem by managing the various parties while providing a single interface with the client. As such, the greater the breadth of service that an LLP can manage, the greater the chance it has of winning customers. Some LSPs even take this one step further and combine to form LLPs.

Production physically moving further away from its end-user market has meant an increase in both transport costs and time. At the same time, just-in-time production and a constant emphasis on keeping working capital costs low means that building up large amounts of buffer stock within regions is not a valid strategy.

Meanwhile, managing the supply chain as a whole has increased in complexity, as inbound goods originating from all regions need to be co-ordinated or merged in transit. As a result, the need for visibility across the system and the ability to track shipments has also increased. Technology will play a vital role in the industry. RFID, the electronic tagging of goods, is beginning to penetrate the market, with Wal-Mart insisting that all suppliers use the system. If this spreads, LSPs will have to learn to integrate this approach effectively into their supply chain tracking in order to monitor efficiency and satisfy future customers. This will increase security of shipments from this aspect, but a widening geographic sourcing strategy could also increase suppliers’ exposure to potentially less secure environments, especially in terms of import and export points.