3PL shipping set to increase

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Global shipping companies are set to increase their outsourced logistics spending by 10-20% over the next five years, according to a recent survey carried out by Capgemini, a leading consultant in outsourcing services.

Between 1996 through 2001, the percentage of 3PL users remained relatively constant among North American respondents (between 68% and 73%). In the years 2002 to 2005, however, the percentage of North American users has shown modest growth. Based on the three most recent years of survey data, the percent of firms using 3PL services in Western Europe has been 77%. In Asia-Pacific, the use of 3PL providers is high (84% in 2004 and 83% in 2005), but in Latin America, outsourced logistics is less prevalent than in the other regions (67% in 2004 and 72% in 2005). In South Africa, the 3PL usage rate was 74%.

This year’s survey shows continued improvements in overall 3PL service levels from suppliers. Moreover, 3PL users continue to view a collaborative partnership approach with their 3PL providers as key to improving the user-company 3PL performance. However, unlike in past surveys, pricing has become the most important attribute in selecting a 3PL provider. This is different to last year’s study where a value-added service was ranked first. In fact, the proficiency of a 3PL provider’s core services was considered this year more important than the provider’s ability to deliver value-added services. This shift from frills to core services is a major change; in past surveys, a 3PL provider’s delivery of core services was considered a “given.”

Erik van Dort, global sector leader for distribution at Capgemini, explains: “In the current 3PL landscape, there is far too much diversity when it comes to processes and IT systems. There are good reasons for this – but with consolidation ever-increasing, global coverage a must, and intense pressure to remain profitable – change is essential.” He goes onto say: “3PL providers need to invest now to streamline their operations and reduce overall operating costs so they can afford to compete more aggressively to gain market share.”

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