Annual 3PL study released at CSCMP Edge highlights a need to get ‘back to basics’

As the supply chain continues to deal with a whole host of obstacles, including various disruptions, labor challenges, and strategic misalignments, there is a need for things to get back to basics for both 3PLs and shippers.

That was the key theme of the annual 2023 27th Annual Third-Party Logistics Study, which was released this week at the Council of Supply Chain Management Professionals (CSCMP) Edge Conference in Nashville. This study was created in conjunction with NTT Data, supply chain professor and researcher Dr. C. John Langley and Penske Logistics.

The study’s findings were based on feedback from several hundred usable responses from shippers, or users of 3PL services, and non-users of 3PL services, as well as 3PL sector respondents.

As usual, the study was replete with interesting data points, highlighting the differences in how 3PLs and shippers approach the same issues.

From a relationship perspective, the study found that 83% of shipper respondents described their relationships with shippers as successful, amid ongoing challenges, strategic misalignments, or unexpected challenges, which marked a decline from a rate that in the past has come in at around 90% or higher. 3PLs, however, pointed to their relationships with shippers being more successful, coming in at 99%. But even with a lower rate this year, the study observed that 71% of shippers indicated that using 3PLs has been beneficial in improving customer service, in line with 73% from a year ago. What’s more, it added that 71% of shippers and 92% of 3PLs maintain that “3PLs provide new and innovative ways to improve logistics effectiveness.”

Other key data points highlighted in the study included:

• Domestic transportation remains the most frequently outsourced activity, at 69% (up from 67% last year), with freight forwarding up to 60% from 44%, and international transportation up to 52% from 44%, with warehousing down to 43% from 63%; and
• Shippers said that 14 of the 19 IT capabilities in the study were must-haves, with transportation management-planning (62%), transportation management-scheduling (57%), and warehouse/distribution center management (48%) leading the way

The study identified various themes that it viewed as front and center for shipper/3PL relationships, such as getting back to basics, which focused on various principles—including customer focus, supply chain relationships, data and analytics, innovation and transformation, survivability and sustainability, talent and end-to-end supply chain—serving as what it called facilitators of current and future supply chain success.

It also looked at understanding the talent crisis, a key issue for 3PLs and shippers alike, with 56% of 3PLs and 78% of shippers saying labor shortages are impacting their respective supply chain operations. What’s more, 29% of 3PLs and 27% of shippers view this situation as a long-term issue and that there has been a permanent shift, whereas 22% of shippers and 13% of 3PLs say “there is not a talent crisis, or, if there is, it will be resolved within the year.”

The potential of reverse logistics also was addressed, in that it presents opportunities to cut costs and increase efficiency, according to the study. The findings stated that 75% of consumer-focused shippers and 43% of business-exclusive shippers regard it as “being very or extremely important to consumer loyalty,” coupled with 65% of consumer-focused shippers and 60% of business-exclusive shippers pointing to growing customers’ returns expectations.

At the CSCMP Edge conference this week, Dr. Langley said that the 2023 edition of the study has more content than any of its previous 26 editions.

Addressing how 83% of shippers said their relationships with 3PLs are successful, with 99% of 3PLs pointing to successful relationships with shippers, he said that was not unusual, as it is a trend the study always sees, with 3PLs rating themselves higher on attributes that are of a positive nature.

“83% is notable, because it is 7% less than the 90%-plus that we normally see,” he said. “I think it is a little too early to say this a trend. We are looking at the volatility and disruption in our supply chain. The good news is if you are a shipper, your upper management now knows more about how important the work you do is every day. The disruption changes, coupled with striving for greater efficiency, in spite of difficulties and innovation, was key in [the study’s] findings.”

To read the complete 2023 27th Annual Third-Party Logistics Study, go to www.3PLstudy.com.