2020 Third-Party Logistics Study

The State of Logistics Outsourcing

Results and Findings of the 24th Annual Third-Party Logistics Study

Infosys Consulting, Penske Logistics and Penn State University surveyed 558 professionals on leading trends in logistics and the supply chain and took a deep dive into the ways in which shippers and 3PLs can collaborate to drive value. The study also covers trends and issues that will likely be impactful for the future state of logistics outsourcing.

Key findings

  • The study shows that the vast majority of shippers—93%—report that the relationships they have with their 3PLs generally have been successful. 99% of 3PLs agree that their customer relationships generally have been successful.

  • Among respondents of the 2020 study, 83% of shippers and 98% of 3PL providers agree that the use of 3PLs has contributed to improving services to the ultimate customers. Additionally, 66% of 3PL users and 93% of 3PL providers agree that 3PLs provide new and innovative ways to improve logistics effectiveness.

  • Shippers are increasingly aware that if they do not have the technological capabilities to accomplish their goals, they should partner with those that do. As the amount of available data increases, shippers and their logistics partners will need to be able to take the information and make it relevant as many 3PLs are already making significant investments in technology that allow them to analyze shippers’ operations. The majority of shippers—94%—agree that IT capabilities are a necessary element of 3PL expertise, and 56% of shippers agree they are satisfied with 3PL IT capabilities.

  • Like in previous years, the most frequently outsourced activities tend to be those that are more transactional, operational and repetitive. The most prevalent outsourced activities are domestic transportation (73%), warehousing (73%), international transportation (65%), customs brokerage (54%), and freight forwarding (52%).

Analytics in shipper-3PL relationships gains significance

In the study, 95% of shippers and 99% of 3PLs agree that analytics are a necessary element of 3PL expertise. But, only 26% of shippers and 27% of 3PLs are satisfied with current analytic capabilities. Main concerns regarding the use of analytics include clean and useful data, and insufficient resources to best utilize analytics.

As geopolitical volatility affects global operations, supply chain finance is becoming critical

Global trade volumes continue to rise, and the supply chain is an instrumental part of how companies are building, scaling and managing their operations. As a result, supply chain finance—the ability to model and manage the financial impacts of operations decisions, within and outside of a company’s control—is a growing need.

Shippers are utilizing several supply chain finance practices, with 72%, reporting using freight payment and audit; 57% are using total landed cost; 37% are using letters of credit.

Supply chain costs are one of the top factors in shippers’ operations decisions, with 91%, reporting that they consider shipping expenses, which includes costs associated with crating, packing, handling and freight.

Among 3PLs, 92%, reported that they consider shipping costs.

Natural, political and operational disruptions are the new normal in today’s global supply chains. To mitigate these risks, companies are increasingly leveraging supply chain finance.

The greening of the supply chain continues on

Environmental sustainability is taking on greater importance globally, and those within the supply chain are no different. More and more shippers are embracing sustainability programs, and carriers and 3PLs are focusing on greening efforts to attract shippers. In addition, those within the supply chain are becoming more sophisticated in how they demonstrate and document their carbon emissions, miles per gallon, data and efficiency metrics.

The majority of shippers, 76%, said they are participating in optimization, such as route planning and load consolidation. Another 38% said they are taking part in voluntary programs.
Among shipper respondents, 42% said they are involved in tracking and reporting emissions, and 16% said they are piloting alternative fuels.
Within the next five years, 79% of shippers expect to launch optimization initiatives; 43% said they plan to invest in alternative fuels and 20% reported that they would launch initiatives related to autonomous vehicles or platooning technologies.
Among 3PLs, 77% said they expect to launch optimization initiatives; 40% said they plan to invest in alternative fuels; 27% plan to launch initiatives related to autonomous vehicles or platooning technologies.

Key Figures

%

Improved Customer Services

83% of shippers and 98% of 3PL providers agree that the use of 3PLs has contributes to improving services to the ultimate customer.

%

IT Capabilities Satisfaction

56% of shippers are satisfied with 3PL IT capabilities.

%

Analytics Satisfaction

26% of shippers and 27% of 3PLs are satisfied with current analytic capabilities.

%

Automation and Platooning

20% of shippers and 27% of 3PLs plan to launch initiatives related to autonomous vehicles or platooning technologies.

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