With a growth rate exceeding 3 times the rate of growth of the U.S. economy, the third party logistics industry is booming in the United States and around the world. 3PL growth is fueled by the improving U.S. economy and increased manufacturing levels, nearshoring of manufacturing to Mexico, new oil and gas operations in North America, new global opportunities and the need for new technologies and services. The third party logistics industry is undergoing consolidation due to an influx of private equity investment. Challenged by their need for technology and talent, third party logistics providers have begun to attract employees with degrees in supply chain management from major universities. 3PLs are evolving: freight brokers are adding value added services and many third party logistics providers have added freight brokerage to their list of services. With the increased stress on freight and transportation due to the federal regulations, shippers and 3PLs have reported increased supply chain collaboration has become the norm in order to improve logistics cost and services. Healthcare and automotive manufacturers have been spinning off internal logistics departments, distribution networks and dedicated fleets as freestanding 3PL businesses. In addition, manufacturers with unused warehouse space and logistics resources are starting 3PL businesses to maximize the use of their assets. Shippers report using more than one third party logistics provider and benchmarking their performance. To the majority of shippers, customer service is even more critical than cost. More than ever before, shippers are relying on 3PLs to fulfill their supply chain technology strategy and implementation needs. EDI, TMS and WMS are some of the top technology needed by shippers. Omni channel retailing and direct-to-consumer fulfillment are the two trends transforming the supply chain today, forcing the realignment of distribution pipelines. With more vertical centric third party logistics providers in operation, shippers typically use an average of 3PLs for logistics and supply chain functions.

1. 3PL Trends
&
Evolution
By Laura Olson

2. 3PL Industry isConsolidating1
• Prior to 2013,there was only one broker inNorth America with revenuesexceeding $1billion (C.H.
Robinson). Todaythe total numberof 3PLs is declining and several haveexceeded the $1 billion revenue
mark
• Trendis fueled by privateequity fund investment. 3PLs and freight brokerageshave loyal shippers and
large numbersof contracted carriersand are excellent targets.

3. 2
• Evolving from smaller 3PLs focused on transportation and warehousing, now 3PLs are expanding
their service offerings into full service supply chain management
• Larger 3PLs are attracting employees with degrees in supply chain management from major
universities
IncreasingLevel of Sophistication

4. 3
Pure Brokers Large 3PLs
Adding value
added services
Adding brokerage
• Definitions of 3PL and brokersare blurringwith less distinction between the two. Now seeing some
crossover of services provided
Nature of 3PLs Is Changing

5. 4 Increased Collaboration
• Increasedincidenceof reported “gainsharing” between shippers and 3PLs
• Increasedinterest of shippers incollaborating with othercompanies, including competitors to improve
logistics costs and services
Capgemini

6. 5 Extensionof the 3PL
InboundLogisticsStudy
• 3PL partnerships are expanding well past the typical warehousing and transportation agreements
• Shippers want service providers that act as anextension of their enterprise
• 3PL extension requires greater information sharing
• 3PLs want a vested interest incustomers’ supply chainperformance

7. 6 Non-Asset 3PL Growth
• 47%of Inbound Logistics survey respondents identified themselves as non-asset based service providers
and 42%report operating as both asset and non-asset based providers
• Brokers usetechnology as a competitive differentiator
• Driver shortageincreases the valueof brokers
InboundLogisticsStudy

8. 7 SpinOffs
• Most notably automotive manufacturersand healthcarecompanies are spinning off internallogistics
departments, distribution networks &dedicated fleets to enter the 3PL arena
• Manufacturerswith unutilized warehousespace and transportation resources arealso starting 3PL
operations to maximize the useof their assets
InboundLogisticsStudy

9. 8 3PL Customer Service isKey
• Numberone reason shippers cited for failed partnerships (50%of those surveyed): poor customer
service
• 3PLs often specialize by function, vertical and mode. Commonfor shippers to use morethan one 3PL
and benchmarkperformanceof multiple providers
• 64%of those shippers surveyedreported that theyvalue customer service over cost whenevaluating
the value of a 3PL
InboundLogisticsStudy

10. 9 Increased Reliance on3PLs for IT
• Increasednumberof shippers are countingon 3PLs to fill technology strategy and implementation needs
• 94%of 3PLs use EDI
Shippers 3PLs
Greatestchallenge: cutting
transportcosts
84%of3PLsuseTMS
93%OF 3PLsprovideLTL
InboundLogisticsStudy

11. 10
TransformativeChanges
• Biggest changesforcing retailers and wholesalers to re-aligndistribution pipelines:
• Omni channelretailing
• Direct-to-consumerfulfillment

12. Contact Us