2020 3PL Study hits on key themes in the logistics sector for shippers and carriers alike

As the supply chain continues to focus on key familiar themes, while other ones continue to emerge, there is a clear focus on things 3PLs need to provide for their shipper customers, including being expedient, cost-focused, and green.

That was a clear theme in the 2020 24th Annual  Third-Party Logistics Study, which was released last week at the Council of Supply Chain Management Professionals (CSCMP) Edge Conference in Anaheim, Calif. by Infosys Consulting, Penn State University, 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 always, the shipper-3PL relationship metric served as a key dynamic in the study, with 93% of shippers indicating that the relationships they have with 3PLs have generally been successful, with 99% of 3PLs indicating they agree that their customer relationships have seen success overall.

Taking that a step further, the study found that 83% of shippers and 98% of 3PLs feel that 3PL usage has led to improving services to what it called the ultimate customers. And it added that 66% of 3PL users, or shippers, and 93% of 3PLs concur 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,” the study noted. “As the amount of available data increases, shippers and their logistics partners will need to be able to take the available information and make it relevant. 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.”

The outsourcing of logistics services continues to gain traction, with the services being outsourced being more transactional, operational, and repetitive, including: domestic transportation (73%), warehousing (73%), international transportation (65%), customs brokerage (54%), and freight forwarding (52%).

Other key findings from the 2020 25th Annual  Third-Party Logistics Study follow below:

• Top 3PLs have already built out a robust tech infrastructure that contains the right tools for the job and best practices already realized by being field tested with an array of customers;
• Some of the biggest supply chain concerns today include: e-commerce growth; economic uncertainty following what is arguably the longest bull market run in the history of the stock market; the truck driver shortage; disruptive technologies (e.g., drones, automated vehicles, cloud-based capabilities); relationship necessities, namely supply chain alignment strategies; and competitive challenges;
• How analytics fit into the supply chain. The five most common referred-to types are: descriptive (explain what is happening); diagnostic (understand why); predictive (forecasting); prescriptive (suggest what should be done) and using cognitive/artificial intelligence/machine learning, to identify patterns of activity. 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. The issues rest with the ways to create clean and useful data, and insufficient resources to best utilize analytics (are there data scientists on the team?). This has created a large analytics gap that warrants further study;
• Why is there an analytics gap? According to the study a big roadblock is when the shipper and 3PL are not in total agreement on a strategic plan on the best use of analytics: what is the need and how to best serve it? It could be a battle of the old vs. the new. Many shippers currently employ legacy systems that are difficult to connect with today's hardware and software. In general the supply chain, like many areas of the business world, may be slow to adopt new approaches;
• As geopolitical volatility affects global operations, supply chain finance is becoming critical. The survey revealed that 26% of shippers employ a supply chain finance professional at the vice president level; 31% report having someone with the director title. For shippers their top supply chain finance costs are freight payment audit (72%), total landed cost (57%) and letters of credit (37%). For 3PLs, top supply chain finance costs are freight payment audit (71%), letters of credit (39%) and open accounts (36%). The study also unearthed that 70% of shippers manage their impact of global political decisions internally; 20% aren't managing it at all; and 19% use 3PLs to do so; and
• The greening of the supply chain continues on. Why do shippers and 3PLs feel the need to introduce more sustainability into their supply chains? The top reasons are regulatory requirements, public perception and cost savings. For shippers these are the leading uses: optimization, such as route and load (76%); tracking and reporting emissions (42%); voluntary programs (38%) like the U.S. Environmental Protection Agency (EPA) SmartWay program; and the use of alternative fuels (16%). For 3PLs, the lists reads as follows: optimization (78%); voluntary programs (63%); tracking and reporting emissions (39%); and using alternative fuels (19%). Today's heavy-duty Class 8 trucks get better fuel efficiency when they're outfitted with effective aerodynamic packages, employing late model trucks with cutting-edge engines that lead to better miles per gallon results, and have truck drivers that are better trained. Electric vehicle technology is a hot topic