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Global 3PL Industry

The document discusses the 3PL industry, providing statistics on the size and segmentation of the global and US 3PL market, with the US and China representing the largest country markets. It also outlines the types of services 3PL providers offer, including transportation, warehousing, and contract carriage, as well as how the 3PL industry is segmented by region, end use, and service line.

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ISyE 6338 Supply Chain Strategies • Anish Gupta • Zhaowei Li • Yingjia Tao • Mukul Raghav • Tanguy Passini • Lingxiao Zhang 3PL Industry (Broadly Asset Light)
• Introduction • Industry Statistics • Comparison of two firms based on SC strategy • Sources of Innovation • Best Practices & Adjacent Industries • Key challenges • Summary CONTENTS 2
WHAT IS 3PL? 3
WHAT IS 3PL? Source: https://www.chrobinson.com/blog/logistics/what-is-a-3pl-and-how-can-they-benefit-your-business/ https://www.shopify.com/enterprise/third-party-logistics-3pl 3PL is the practice of an organization outsourcing some or all its inventory management, distribution and order fulfillment operations to a third party Transportation of goods, both domestically and internationally, are the most common services outsourced, closely followed by warehousing. 3PL Charges you on the basis of • Storage • Picking • Packaging • Postage/shipping Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary 4
5 3PL’s have a back office staff that have SOP’s in place to help the carrier vetting process, work with carriers on invoice variances through auditing services, and manage the entire freight claims process 3PL providers provide large shipping discounts through economies of scale. 3PL’s are able to achieve much lower operating costs per load due to their ability to leverage their entire business for substantial discounts with trucking companies. Third-party logistics companies have contracts with thousands of carriers and know the lanes where these partner carriers need freight. WHY 3PL? 3PL providers are able to reduce the amount of infrastructure investments in equipment, software, facilities and personnel. A single phone call or email to a logistics coordinator enables them to select the best value carrier for every shipment. Most third-party logistics companies have on-line tracking to give shippers visibility of their loads. Many 3PL’s are able to integrate tracking into shipper IT systems, provide integration into ERP and WMS, automated notices, or even real-time delivery notifications by e-mail. LIABILITY ECONOMIES OF SCALE VISIBILITY OF LOADS SAVE TIME AND MONEY UTILIZE MORE CARRIERS Source: https://cerasis.com/wp-content/uploads/2016/09/3PL-eBook.pdf Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
OKAY THAT MAKES SENSE.. BUT WHAT IS ASSET LIGHT INDUSTRY ? 6
Source: https://gofreighthub.io/asset-lite-vs-asset-based-3pls/ https://www.business2community.com/strategy/advantages-of-using-a-non-asset-based-logistics-provider-0550287 Low or no Assets Dovetailing with the need Bringing more Value to the Table Focused Service 01 02 03 04 ASSET LIGHT INDUSTRY 7 Often Called Freight Brokers, They have low or no assets including trucks, warehouses and distribution centers, vans, etc. Asset based logistics providers will simply mold your logistics to fit into their established infrastructure; an Asset light provider will design its infrastructure around you. Provides knowledge and expertise, rather than Hardware The value of an asset light 3PL is largely dependent on the strength of their network. With strong networks, their ability to negotiate will allow them to pass on savings to their customers. Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
ADVANTAGES & DISADVANTAGES OF NON-ASSET BASED 3PL 8 Customization and Flexibility Conflicts of InterestHard Costs of Procurement Stability and Financial Solvency Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
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4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners 01 4PL organization acts as a single interface between the client and multiple logistics service providers 02 All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; 03 It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure. 04 CSCMP DEFINES 4PL AS FOLLOWS 4PLs have also been referred to as "Lead Logistics Providers" WE HEARD ABOUT 3PL, BUT WHAT IS 4PL? Source: CSCMP Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Source: https://cerasis.com/wp-content/uploads/2016/09/3PL-eBook.pdfLAYERS OF LOGISTICS 11 1PL 2PL 3PL 4PL Shipper Carrier LSPs LLP Consultant MFC, Distributor, retail Transportation Transport Management, Warehousing, Insurance SC Integrator SERVICESACTORS Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
CHARACTERISTICS OF THE DIFFERENT TYPES OF 3PL SERVICES 12 Forwarder Based 3PL Services  Very independent middlemen with forwarder roles.  Non-asset owners that provide a wide range of logistics services.  Examples: AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, Hub Group Warehouse/Distribution Based 3PLServices  Have former warehouse and/or distribution experience.  Examples: DSC Logistics, USCO, Exel, Caterpillar Logistics Transportation Based 3PL  Services extend beyond transportation to offer a comprehensive set of logistics offerings.  Examples: Ryder, Schneider Logistics, FedEx Logistics, UPS Logistics Information-based 3PL Services  Significant growth and development in this category of Internet-based, business to-business, electronic markets for transportation and logistics services.  Examples: Transplace, Nistevo, FreightQuote.com, uShip Financial Based 3PL Services  Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory.  Examples: Cass Information Systems, CTC, GE Information Services, FleetBoston Shipper/Management Based 3PL  Focused on the management of the shipping process  Provides technology, such as a transportation management system & integrated freight management services  Examples: Cerasis, AFS Logistics, GlobalTranz, Worldwide Express Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
13 Transactional Outsourcing Tactical Outsourcing Strategic Outsourcing Based on transactions, with no long-term contracts and no bonding between the 3PL and the outsourcing company Outsourcing on a long-term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency LEVELS OF OUTSOURCING IN 3PL SERVICES Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Price and Packaging` Geographic location Scalability (would be catering to your business if it grows) FACTORS SOURCING A 3PL Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Industry Statistics 15
16 GLOBAL 3PL MARKET Source: https://www.technavio.com/report/global-third-party-logistics-market-2018-2022 https://www.mordorintelligence.com/industry-reports/global-3pl-market Global 3PL market 2018-2022 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
17 GLOBAL 3PL INDUSTRY AT A GLANCE - 2019 Source: IBISWorld Industry Report OD5504 Third-Party Logistics in the US Country Revenue (billion $) Global share (%) United States 184.3 21.2% China 180.3 20.7% Japan 43.9 5.1% Germany 34.4 4.0% France 26 3.0% United Kingdom 24.4 2.8% India 24.1 2.8% Brazil 21.7 2.5% Italy 20.1 2.3% Russia 19.2 2.2% All other 290.6 33.4% TOTAL 869 100.0% 21.2% 20.7% 5.1% 4.0%3.0% 2.8%2.8% 2.5% 2.3% 2.2% 33.4% 3PL Global share (%) United States China Japan Germany France United Kingdom India Brazil Italy Russia All other Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRY SIZE –US • While the United States has the largest 3PL market of any single country, when considered regionally the Asia-Pacific market is around 50 percent larger than the North American market • Overall, the global 3PL industry generated 950.7 billion U.S. dollars in revenue in 2018 and has been growing faster than the U.S. market, increasing by around 75 percent since 2010. Gross revenue generated by the U.S. third-party logistics industry from 2000 to 2018 (in billion U.S. dollars) 18 Source: 2016 https://www.statista.com/statistics/638368/us-third-party-logistics-market/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRY PERFORMANCE 19 Over the five years to 2024, industry revenue is anticipated to climb at an annualized rate of 3.6% to $232.1 billion. Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRY PERFORMANCE 20 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRY SEGMENTATION 21 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRY PERFORMANCE - KEY EXTERNAL DRIVERS 22 Industrial production index Total trade value Consumer Spending E-commerce sales Measures the annual output of the US transportation sector. Mining, manufacturing, electric and gas industries. These industries’ products are shipped throughout the United States and to countries abroad, thus requiring Companies in the industry provide services for imported and exported goods. As a result, an increase in total trade value leads to greater industry demand consumer spending increases, companies, such as retailers, require 3PL services such as order fulfillment and warehousing Rising online sales bolster demand for industry services because goods bought online are typically smaller and shipped more frequently, which creates demand for industry solutions Freight transportation services index Source: IBISWorld Industry Report OD5504 Third-Party Logistics in the US Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
3PL/4PL Service Providers: Factors That Are Most Important to Shipper 23 Source: 2019 THIRD-PARTY LOGISTICS STUDY From The State of Logistics Outsourcing Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
COMPETETIVE ENVIRONMENT Top 10 Global 3PL companies by revenue Source: https://www.3plogistics.com/3pl-market-info-resources/3pl-market-information/ Top 10 US 3PL companies by revenue Rank Third-Party Logistics Provider (3PL) 2018 Logistics Gross Revenue (US$ Millions) 1 DHL Supply Chain & Global Forwarding 28,120 2 Kuehne + Nagel 25,320 3 DB Schenker 19,968 4 Nippon Express 18,781 5 C.H. Robinson 16,631 6 DSV 12,411 7 XPO Logistics 10,850 8 Sinotrans 10,549 9 UPS Supply Chain Solutions 9,814 10 J.B. Hunt (JBI, DCS & ICS) 8,214 Rank Third-Party Logistics Provider (3PL) 2018 Logistics Gross Revenue (US$ Millions) 1 C.H. Robinson 16,631 2 XPO Logistics 10,850 3 UPS Supply Chain Solutions 9,814 4 J.B. Hunt (JBI, DCS & ICS) 8,214 5 Expeditors 8,138 6 Kuehne + Nagel (Americas) 6,594 7 DHL Supply Chain North America 4,178 8 Coyote Logistics 4,000 9 Ryder Supply Chain Solutions 3,731 10 Hub Group 3,684 24 Source: https://www.3plogistics.com/3pl-market-info-resources/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
• 75% of 3PL firms have a revenue of less than $ 3 Billions • Highly competitive environment • Revenues (US $ Millions): • Top 10: > 8,000 • Top 11-20: > 5,000 • Top 21-30: > 3,000 • Others: < 3,000 Global Logistics Revenue distribution across 3PL companies COMPETETIVE ENVIRONMENT 25 Source:https://www.3plogistics.com/3pl-market-info-resources/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRIAL SEGMENTATION Generally, 3PL can be segmented on the basis of service, transport, end use, and region: 26 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRIAL SEGMENTATION REGIONAL OUTLOOK Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market 27 North America O U.S. O Canada Europe O Germany O U.K. O France O Poland O Hungary Africa Mid East Asia Pacific O China O India O Japan O Australia O Thailand O Vietnam O South Korea Latin America O Brazil O Mexico 37.7% 26.5% 21.1% 4.9% 4.1% 2.9% 2.8% Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRIAL SEGMENTATION END-USE OUTLOOK Global 3PL market share by end-use, 2018 22.3% 22.1% 23.1% 20.6% 11.9% Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market 28 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRIAL SEGMENTATION - SERVICE OUTLOOK Generally, 3PL can be segmented on the basis of service, transport, end use, and region: • Dedicated Contract Carriage (DCC) • Domestic Transportation Management (DTM) • International Transportation Management (ITM) • Warehousing & Distribution (W&D) • Value Added Logistics Services (VALs) Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market ITM W&D 29 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INDUSTRIAL SEGMENTATION TRANSPORT OUTLOOK Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market 30 Figure 1 Figure 2 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
REGULATORY ENVIRONMENT 31 Source https://www.licenselogix.com/business-case-studies/third-party-logistics-license License regimes In this report, we will introduce regulatory environment of 3PL on the basis of • License regimes • Laws • Taxes Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
32 License Regimes Laws Taxes Many different licensing regimes apply to 3PLs depending upon the nature of the goods moved. Regulatory bodies have a vested interest in ensuring product safety and enforce these regulations through licensure requirements to protect the safe handling of certain kinds of goods. Licensure in this industry exists at all levels of government. The Drug Supply Chain Security Act (DSCSA), which was signed into law on November 27, 2013, outlines new requirements to develop and enhance drug supply chain security over the next 10 years. This includes requirements for prescription drug wholesale distributors and third-party logistics providers involved in the drug distribution chain. Retailers that engage a third-party fulfillment center may need to register their businesses for sales tax in states where their fulfillment company has warehouse locations. REGULATORY ENVIRONMENT Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
LABOR ENVIRONMENT-OVERVIEW 33 Almost 37% of the demand for drivers is to substitute the aging drivers, and the average age of a truck driver today is 55 years old or more. Even those now entering the industry are older than those entering in the past Within the U.S., 70% of freight tonnage is moved on a truck, and without drivers, that freight is likely to stand still. The American Trucking Associations estimates a driver shortage of 35,000 to 40,000 in 2015 and that number jumps to 240,000 in 2020. Going forward, the demand for supply chain jobs is likely to increase, however the supply of labor is expected to shrink. 01 02 03 04 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Labor Crisis: A proactive approach to filling Logistics Jobs • A tight labor market driven by the uptick in e-commerce, increased omni-channel distribution pressures • Recent developments in the Logistics industry reveal the increase in Women leadership 34 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
TOP FIVE COUNTRIES FACING THE GREATEST WAGE INCREASE PER WORKER BY 2030 35 Source: 2019 THIRD-PARTY LOGISTICS STUDY From The State of Logistics Outsourcing Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Comparison of firms in the Industry 36
COMPARISON OF FIRMS IN INDUSTRY Source: https://www.kn-portal.com/about_us/about_us/ Source: https://www.nipponexpress.com/about/corporate/ 37 2018 logistics revenue: $ 25,320 Millions 2018 logistics revenue: $ 18,781 Millions 2018 logistics revenue: $ 16,631 Millions 1,300 offices in over 100 countries, with around 82,000 employees 706 locations in 45 countries with 22,841 personnel 240 locations in 39 countries with 8,300 employees Number 2 global 3PL company by revenue (2018) Number 4 global 3PL company by revenue (2018) Number 1 US 3PL company by revenue (2018) Number 1 global sea freight forwarder Main business: Rail freight forwarding Number 5 Global 3PL company by revenue (2018) Number 2 global air cargo forwarder Other major business: Truck transportation Mainly Truck transportation business Source: https://www.3plogistics.com/3pl-case-studies/c-h-robinson-worldwide/ c-h-robinson-worldwide-extends-its-asian-market-reach/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
2018 REVENUE DISTRIBUTION Source: https://2018-annual-report.kuehne-nagel.com/ Source: https://www.nipponexpress.com/about/corporate/ 38 Sea freight 34% Air freight 23% Overland 17% Contracts Logistics 25% Sea freight 11% Air freight 17% Overland 39% Contracts Logistics 10% Other 22% Sea freight 12% Air freight 4% Overland 72% Contracts Logistics 12% Source:https://investor.chrobinson.com/News-and-Events/ Press-Releases/press-release-details/2019/ CH-Robinson-Reports-2018-Fourth-Quarter-and-Full-Year-Results/default.aspx Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Geographical distribution 39 Source: https://www.kn-portal.com/about_us/about_us/ Source: https://www.nipponexpress.com/about/corporate/ Source: https://seekingalpha.com/article/3986615-will-c-h-robinson-become-dividend-aristocrat Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Sources of Innovation 40
SOURCES OF INNOVATION 3PLGovernance People Process Technology Innovation solutions 41 https://www.scmworld.com/five-key-enablers-foster-continuous-improvement-with-3pl-providers/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
SOURCES OF INNOVATION—Defining innovation in logistics 42 2000-2020s DigitizationIndustrialization Distributed Manufacturing Robotics & Automation E-Commerce Omni- Channel Disruptive Innovations Micro- Manufacturing IoT & Big Data 3D Printing Uberization of logistics B2B Transformation 1980-2000s Freight/ Transportation Industry Consolidation Value-Added Services Global Trade Warehousing Cross Docking Track & Trace https://jda.com/-/media/jda/knowledge-center/thought-leadership/scdigest_report_final.ashx Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
SOURCES OF INNOVATION—Specific performances Self-Driving Vehicles Changing Logistics Electric vehicles UPS is spreading its net wide to make electric vehicle delivery sustainable worldwide. 3PL provider has also pre- ordered 125 electric trucks from Tesla and Daimler AG's battery-powered light- duty trucks as part of its alternative fuel strategy. The Workhorse order adds to its list of electric vehicle suppliers building UPS' "fleet of the future”. According to DHL, a global third-party logistics (3PL) company, the logistics field will be a leader in adopting automated vehicles. These autonomous vehicles are not only limited to trucks that can make line haul deliveries or take care of the unpredictable last-mile delivery, but include driver-less forklifts that can increase the number of pallets and shipments that are already at the warehouse. This decreases the chances for delays while aiding in loading trucks sooner. With automated forklifts outputting maximum efficiency at the warehouse and autonomous trucks being able to make deliveries without having to adhere to DOT regulations that restrict the amount of time a driver can be on the road, the entire process becomes more streamlined. Ultimately, this will decrease delays, making sure deliveries are made quickly, and according to DHL’s report, the automated guided vehicles could lower cost of freight by 40% per kilometer. The overall benefits will have the potential to lead to higher projected savings and higher customer satisfaction. 43 https://www.allynintl.com/cs/news-publications/entry/self-driving-vehicles-changing-logistics https://www.supplychaindive.com/news/UPS-orders-950-Workhorse-delivery-vans/527816/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Best Practices & Adjacent Industry 44
BEST PRACTICES THROUGHOUT THE INDUSTRY 45 Source: PWC Study Digitalization in the Logistics Industry01 Last Mile Delivery02 Reverse Logistics03 Physical Internet (Pi)04 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INTERRELATIONSHIP WITH OTHER INDUSTRIES —8 industries majorly benefit from the 3PL Home Improvement Retail Hotels Construction Pharmaceuticals and Healthcare 3PL Hi-Tech Food and Dairy 46 https://3pllinks.com/8-industries-can-benefit-third-party-logistics-services/ Forest Industry Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INTERELATIONSHIP WITH OTHER INDUSTRIES — industries based on 3PL 47 02 03 01 Specialize in the transportation between locations. Traditional parcel transportation providers include DHL, FedEx, UPS, and the USPS. Financial or information based third-party logistics company provide industry-specific insight and can optimize complex global supply chains. They also provide internal controls related to freight auditing, cost accounting, and inventory management. This is the most common type of 3PL—they store, ship, and handle returns. Innovative warehouses can help you offer Amazon Prime-like shipping in two days. If you’re expanding globally, international warehouse can help build a global supply chain. Transportation based 3PL 01 Financial and information based 3PL . 02 Warehouse and distribution based 3PL 03 3PL Source: https://www.shopify.com/enterprise/third-party-logistics-3pl Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
INTERELATIONSHIP WITH OTHER INDUSTRIES — Cold chain logistics & Rail freight transportation Cold chain logistics Reduce Costs and Save Time Benefit from company’s Network Discover Value Through Experience Achieve Flexibility Rail freight transportation Order cars Track car supply Monitoring Entering shipping instructions Auditing and paying invoices Transloading processes Measurement and reporting 48 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
$10 Price: $10 Shipping: $10 Total: $20 Price: $10 Shipping: Free Total: $10
Key Challenges 50
KEY CHALLENGES 51 Manufacturing industries are facing far greater expectations around efficiency and performance than ever before. Their customers expect faster time-to-market, reduced defect rates and customized products DIGITAL CULTURE NEW SHOPPING PATTERNS EFFICIENCY & TRANSPARENCY Shippers aren’t generally part of a branded retail experience. Most private end-consumers are what we call ‘shipper-agnostic’: they don’t care who delivers their goods, as long as they get them reliably, quickly and cheaply. Lack of digital culture and training is the biggest challenge which is being faced by the logistics companies. Source: PWC Study Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
Finding New Talent Lack of Good Reporting Systems Increased Emphasis on Rules and Regulations Lack of Collaboration Meeting the Shippers Specific Requirements Lack of Infrastructure CHALLENGES IN 3PL Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
SWOT Analysis S • Good Management • People • Technology (IT, Tracking etc.) • Market presence • Low Costs • Economies of Scale T • Geographic scope • Industry • Competition • Trade issues and barriers • Political and economical stability W O • Varying market demand • Rising fuel prices • Labor shortage • Unskilled Labor (Lack of digital training) • Communication Problem • New Trends in Technology • Regional Coverage • Collaboration • Hyper connected networks (PI) • M&A • Growth of 3PL market Source: https://www.ltdmgmt.com/082003.php Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
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Global 3PL Industry

  • 1.
    ISyE 6338 SupplyChain Strategies • Anish Gupta • Zhaowei Li • Yingjia Tao • Mukul Raghav • Tanguy Passini • Lingxiao Zhang 3PL Industry (Broadly Asset Light)
  • 2.
    • Introduction • IndustryStatistics • Comparison of two firms based on SC strategy • Sources of Innovation • Best Practices & Adjacent Industries • Key challenges • Summary CONTENTS 2
  • 3.
  • 4.
    WHAT IS 3PL? Source:https://www.chrobinson.com/blog/logistics/what-is-a-3pl-and-how-can-they-benefit-your-business/ https://www.shopify.com/enterprise/third-party-logistics-3pl 3PL is the practice of an organization outsourcing some or all its inventory management, distribution and order fulfillment operations to a third party Transportation of goods, both domestically and internationally, are the most common services outsourced, closely followed by warehousing. 3PL Charges you on the basis of • Storage • Picking • Packaging • Postage/shipping Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary 4
  • 5.
    5 3PL’s have aback office staff that have SOP’s in place to help the carrier vetting process, work with carriers on invoice variances through auditing services, and manage the entire freight claims process 3PL providers provide large shipping discounts through economies of scale. 3PL’s are able to achieve much lower operating costs per load due to their ability to leverage their entire business for substantial discounts with trucking companies. Third-party logistics companies have contracts with thousands of carriers and know the lanes where these partner carriers need freight. WHY 3PL? 3PL providers are able to reduce the amount of infrastructure investments in equipment, software, facilities and personnel. A single phone call or email to a logistics coordinator enables them to select the best value carrier for every shipment. Most third-party logistics companies have on-line tracking to give shippers visibility of their loads. Many 3PL’s are able to integrate tracking into shipper IT systems, provide integration into ERP and WMS, automated notices, or even real-time delivery notifications by e-mail. LIABILITY ECONOMIES OF SCALE VISIBILITY OF LOADS SAVE TIME AND MONEY UTILIZE MORE CARRIERS Source: https://cerasis.com/wp-content/uploads/2016/09/3PL-eBook.pdf Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 6.
    OKAY THAT MAKESSENSE.. BUT WHAT IS ASSET LIGHT INDUSTRY ? 6
  • 7.
    Source: https://gofreighthub.io/asset-lite-vs-asset-based-3pls/ https://www.business2community.com/strategy/advantages-of-using-a-non-asset-based-logistics-provider-0550287 Low orno Assets Dovetailing with the need Bringing more Value to the Table Focused Service 01 02 03 04 ASSET LIGHT INDUSTRY 7 Often Called Freight Brokers, They have low or no assets including trucks, warehouses and distribution centers, vans, etc. Asset based logistics providers will simply mold your logistics to fit into their established infrastructure; an Asset light provider will design its infrastructure around you. Provides knowledge and expertise, rather than Hardware The value of an asset light 3PL is largely dependent on the strength of their network. With strong networks, their ability to negotiate will allow them to pass on savings to their customers. Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 8.
    ADVANTAGES & DISADVANTAGESOF NON-ASSET BASED 3PL 8 Customization and Flexibility Conflicts of InterestHard Costs of Procurement Stability and Financial Solvency Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 9.
  • 10.
    4PL organization is oftena separate entity established as a joint venture or long-term contract between a primary client and one or more partners 01 4PL organization acts as a single interface between the client and multiple logistics service providers 02 All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; 03 It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure. 04 CSCMP DEFINES 4PL AS FOLLOWS 4PLs have also been referred to as "Lead Logistics Providers" WE HEARD ABOUT 3PL, BUT WHAT IS 4PL? Source: CSCMP Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 11.
    Source: https://cerasis.com/wp-content/uploads/2016/09/3PL-eBook.pdfLAYERS OFLOGISTICS 11 1PL 2PL 3PL 4PL Shipper Carrier LSPs LLP Consultant MFC, Distributor, retail Transportation Transport Management, Warehousing, Insurance SC Integrator SERVICESACTORS Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 12.
    CHARACTERISTICS OF THEDIFFERENT TYPES OF 3PL SERVICES 12 Forwarder Based 3PL Services  Very independent middlemen with forwarder roles.  Non-asset owners that provide a wide range of logistics services.  Examples: AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, Hub Group Warehouse/Distribution Based 3PLServices  Have former warehouse and/or distribution experience.  Examples: DSC Logistics, USCO, Exel, Caterpillar Logistics Transportation Based 3PL  Services extend beyond transportation to offer a comprehensive set of logistics offerings.  Examples: Ryder, Schneider Logistics, FedEx Logistics, UPS Logistics Information-based 3PL Services  Significant growth and development in this category of Internet-based, business to-business, electronic markets for transportation and logistics services.  Examples: Transplace, Nistevo, FreightQuote.com, uShip Financial Based 3PL Services  Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory.  Examples: Cass Information Systems, CTC, GE Information Services, FleetBoston Shipper/Management Based 3PL  Focused on the management of the shipping process  Provides technology, such as a transportation management system & integrated freight management services  Examples: Cerasis, AFS Logistics, GlobalTranz, Worldwide Express Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 13.
    13 Transactional Outsourcing Tactical Outsourcing StrategicOutsourcing Based on transactions, with no long-term contracts and no bonding between the 3PL and the outsourcing company Outsourcing on a long-term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency LEVELS OF OUTSOURCING IN 3PL SERVICES Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 14.
    Price and Packaging` Geographic location Scalability(would be catering to your business if it grows) FACTORS SOURCING A 3PL Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 15.
  • 16.
    16 GLOBAL 3PL MARKET Source:https://www.technavio.com/report/global-third-party-logistics-market-2018-2022 https://www.mordorintelligence.com/industry-reports/global-3pl-market Global 3PL market 2018-2022 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 17.
    17 GLOBAL 3PL INDUSTRYAT A GLANCE - 2019 Source: IBISWorld Industry Report OD5504 Third-Party Logistics in the US Country Revenue (billion $) Global share (%) United States 184.3 21.2% China 180.3 20.7% Japan 43.9 5.1% Germany 34.4 4.0% France 26 3.0% United Kingdom 24.4 2.8% India 24.1 2.8% Brazil 21.7 2.5% Italy 20.1 2.3% Russia 19.2 2.2% All other 290.6 33.4% TOTAL 869 100.0% 21.2% 20.7% 5.1% 4.0%3.0% 2.8%2.8% 2.5% 2.3% 2.2% 33.4% 3PL Global share (%) United States China Japan Germany France United Kingdom India Brazil Italy Russia All other Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 18.
    INDUSTRY SIZE –US •While the United States has the largest 3PL market of any single country, when considered regionally the Asia-Pacific market is around 50 percent larger than the North American market • Overall, the global 3PL industry generated 950.7 billion U.S. dollars in revenue in 2018 and has been growing faster than the U.S. market, increasing by around 75 percent since 2010. Gross revenue generated by the U.S. third-party logistics industry from 2000 to 2018 (in billion U.S. dollars) 18 Source: 2016 https://www.statista.com/statistics/638368/us-third-party-logistics-market/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 19.
    INDUSTRY PERFORMANCE 19 Over thefive years to 2024, industry revenue is anticipated to climb at an annualized rate of 3.6% to $232.1 billion. Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 20.
    INDUSTRY PERFORMANCE 20 Introduction IndustryStatistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 21.
    INDUSTRY SEGMENTATION 21 Introduction IndustryStatistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 22.
    INDUSTRY PERFORMANCE -KEY EXTERNAL DRIVERS 22 Industrial production index Total trade value Consumer Spending E-commerce sales Measures the annual output of the US transportation sector. Mining, manufacturing, electric and gas industries. These industries’ products are shipped throughout the United States and to countries abroad, thus requiring Companies in the industry provide services for imported and exported goods. As a result, an increase in total trade value leads to greater industry demand consumer spending increases, companies, such as retailers, require 3PL services such as order fulfillment and warehousing Rising online sales bolster demand for industry services because goods bought online are typically smaller and shipped more frequently, which creates demand for industry solutions Freight transportation services index Source: IBISWorld Industry Report OD5504 Third-Party Logistics in the US Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 23.
    3PL/4PL Service Providers:Factors That Are Most Important to Shipper 23 Source: 2019 THIRD-PARTY LOGISTICS STUDY From The State of Logistics Outsourcing Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 24.
    COMPETETIVE ENVIRONMENT Top 10Global 3PL companies by revenue Source: https://www.3plogistics.com/3pl-market-info-resources/3pl-market-information/ Top 10 US 3PL companies by revenue Rank Third-Party Logistics Provider (3PL) 2018 Logistics Gross Revenue (US$ Millions) 1 DHL Supply Chain & Global Forwarding 28,120 2 Kuehne + Nagel 25,320 3 DB Schenker 19,968 4 Nippon Express 18,781 5 C.H. Robinson 16,631 6 DSV 12,411 7 XPO Logistics 10,850 8 Sinotrans 10,549 9 UPS Supply Chain Solutions 9,814 10 J.B. Hunt (JBI, DCS & ICS) 8,214 Rank Third-Party Logistics Provider (3PL) 2018 Logistics Gross Revenue (US$ Millions) 1 C.H. Robinson 16,631 2 XPO Logistics 10,850 3 UPS Supply Chain Solutions 9,814 4 J.B. Hunt (JBI, DCS & ICS) 8,214 5 Expeditors 8,138 6 Kuehne + Nagel (Americas) 6,594 7 DHL Supply Chain North America 4,178 8 Coyote Logistics 4,000 9 Ryder Supply Chain Solutions 3,731 10 Hub Group 3,684 24 Source: https://www.3plogistics.com/3pl-market-info-resources/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 25.
    • 75% of3PL firms have a revenue of less than $ 3 Billions • Highly competitive environment • Revenues (US $ Millions): • Top 10: > 8,000 • Top 11-20: > 5,000 • Top 21-30: > 3,000 • Others: < 3,000 Global Logistics Revenue distribution across 3PL companies COMPETETIVE ENVIRONMENT 25 Source:https://www.3plogistics.com/3pl-market-info-resources/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 26.
    INDUSTRIAL SEGMENTATION Generally, 3PLcan be segmented on the basis of service, transport, end use, and region: 26 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 27.
    INDUSTRIAL SEGMENTATION REGIONALOUTLOOK Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market 27 North America O U.S. O Canada Europe O Germany O U.K. O France O Poland O Hungary Africa Mid East Asia Pacific O China O India O Japan O Australia O Thailand O Vietnam O South Korea Latin America O Brazil O Mexico 37.7% 26.5% 21.1% 4.9% 4.1% 2.9% 2.8% Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 28.
    INDUSTRIAL SEGMENTATION END-USEOUTLOOK Global 3PL market share by end-use, 2018 22.3% 22.1% 23.1% 20.6% 11.9% Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market 28 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 29.
    INDUSTRIAL SEGMENTATION -SERVICE OUTLOOK Generally, 3PL can be segmented on the basis of service, transport, end use, and region: • Dedicated Contract Carriage (DCC) • Domestic Transportation Management (DTM) • International Transportation Management (ITM) • Warehousing & Distribution (W&D) • Value Added Logistics Services (VALs) Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market ITM W&D 29 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 30.
    INDUSTRIAL SEGMENTATION TRANSPORTOUTLOOK Source: https://www.mordorintelligence.com/industry-reports/global-3pl-market https://www.grandviewresearch.com/industry-analysis/third-party-logistics-market 30 Figure 1 Figure 2 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 31.
    REGULATORY ENVIRONMENT 31 Source https://www.licenselogix.com/business-case-studies/third-party-logistics-license Licenseregimes In this report, we will introduce regulatory environment of 3PL on the basis of • License regimes • Laws • Taxes Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 32.
    32 License Regimes LawsTaxes Many different licensing regimes apply to 3PLs depending upon the nature of the goods moved. Regulatory bodies have a vested interest in ensuring product safety and enforce these regulations through licensure requirements to protect the safe handling of certain kinds of goods. Licensure in this industry exists at all levels of government. The Drug Supply Chain Security Act (DSCSA), which was signed into law on November 27, 2013, outlines new requirements to develop and enhance drug supply chain security over the next 10 years. This includes requirements for prescription drug wholesale distributors and third-party logistics providers involved in the drug distribution chain. Retailers that engage a third-party fulfillment center may need to register their businesses for sales tax in states where their fulfillment company has warehouse locations. REGULATORY ENVIRONMENT Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 33.
    LABOR ENVIRONMENT-OVERVIEW 33 Almost 37%of the demand for drivers is to substitute the aging drivers, and the average age of a truck driver today is 55 years old or more. Even those now entering the industry are older than those entering in the past Within the U.S., 70% of freight tonnage is moved on a truck, and without drivers, that freight is likely to stand still. The American Trucking Associations estimates a driver shortage of 35,000 to 40,000 in 2015 and that number jumps to 240,000 in 2020. Going forward, the demand for supply chain jobs is likely to increase, however the supply of labor is expected to shrink. 01 02 03 04 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 34.
    Labor Crisis: Aproactive approach to filling Logistics Jobs • A tight labor market driven by the uptick in e-commerce, increased omni-channel distribution pressures • Recent developments in the Logistics industry reveal the increase in Women leadership 34 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 35.
    TOP FIVE COUNTRIESFACING THE GREATEST WAGE INCREASE PER WORKER BY 2030 35 Source: 2019 THIRD-PARTY LOGISTICS STUDY From The State of Logistics Outsourcing Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 36.
    Comparison of firmsin the Industry 36
  • 37.
    COMPARISON OF FIRMSIN INDUSTRY Source: https://www.kn-portal.com/about_us/about_us/ Source: https://www.nipponexpress.com/about/corporate/ 37 2018 logistics revenue: $ 25,320 Millions 2018 logistics revenue: $ 18,781 Millions 2018 logistics revenue: $ 16,631 Millions 1,300 offices in over 100 countries, with around 82,000 employees 706 locations in 45 countries with 22,841 personnel 240 locations in 39 countries with 8,300 employees Number 2 global 3PL company by revenue (2018) Number 4 global 3PL company by revenue (2018) Number 1 US 3PL company by revenue (2018) Number 1 global sea freight forwarder Main business: Rail freight forwarding Number 5 Global 3PL company by revenue (2018) Number 2 global air cargo forwarder Other major business: Truck transportation Mainly Truck transportation business Source: https://www.3plogistics.com/3pl-case-studies/c-h-robinson-worldwide/ c-h-robinson-worldwide-extends-its-asian-market-reach/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 38.
    2018 REVENUE DISTRIBUTION Source:https://2018-annual-report.kuehne-nagel.com/ Source: https://www.nipponexpress.com/about/corporate/ 38 Sea freight 34% Air freight 23% Overland 17% Contracts Logistics 25% Sea freight 11% Air freight 17% Overland 39% Contracts Logistics 10% Other 22% Sea freight 12% Air freight 4% Overland 72% Contracts Logistics 12% Source:https://investor.chrobinson.com/News-and-Events/ Press-Releases/press-release-details/2019/ CH-Robinson-Reports-2018-Fourth-Quarter-and-Full-Year-Results/default.aspx Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 39.
    Geographical distribution 39 Source: https://www.kn-portal.com/about_us/about_us/Source: https://www.nipponexpress.com/about/corporate/ Source: https://seekingalpha.com/article/3986615-will-c-h-robinson-become-dividend-aristocrat Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 40.
  • 41.
    SOURCES OF INNOVATION 3PLGovernance People Process Technology Innovation solutions 41 https://www.scmworld.com/five-key-enablers-foster-continuous-improvement-with-3pl-providers/ IntroductionIndustry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 42.
    SOURCES OF INNOVATION—Defininginnovation in logistics 42 2000-2020s DigitizationIndustrialization Distributed Manufacturing Robotics & Automation E-Commerce Omni- Channel Disruptive Innovations Micro- Manufacturing IoT & Big Data 3D Printing Uberization of logistics B2B Transformation 1980-2000s Freight/ Transportation Industry Consolidation Value-Added Services Global Trade Warehousing Cross Docking Track & Trace https://jda.com/-/media/jda/knowledge-center/thought-leadership/scdigest_report_final.ashx Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 43.
    SOURCES OF INNOVATION—Specificperformances Self-Driving Vehicles Changing Logistics Electric vehicles UPS is spreading its net wide to make electric vehicle delivery sustainable worldwide. 3PL provider has also pre- ordered 125 electric trucks from Tesla and Daimler AG's battery-powered light- duty trucks as part of its alternative fuel strategy. The Workhorse order adds to its list of electric vehicle suppliers building UPS' "fleet of the future”. According to DHL, a global third-party logistics (3PL) company, the logistics field will be a leader in adopting automated vehicles. These autonomous vehicles are not only limited to trucks that can make line haul deliveries or take care of the unpredictable last-mile delivery, but include driver-less forklifts that can increase the number of pallets and shipments that are already at the warehouse. This decreases the chances for delays while aiding in loading trucks sooner. With automated forklifts outputting maximum efficiency at the warehouse and autonomous trucks being able to make deliveries without having to adhere to DOT regulations that restrict the amount of time a driver can be on the road, the entire process becomes more streamlined. Ultimately, this will decrease delays, making sure deliveries are made quickly, and according to DHL’s report, the automated guided vehicles could lower cost of freight by 40% per kilometer. The overall benefits will have the potential to lead to higher projected savings and higher customer satisfaction. 43 https://www.allynintl.com/cs/news-publications/entry/self-driving-vehicles-changing-logistics https://www.supplychaindive.com/news/UPS-orders-950-Workhorse-delivery-vans/527816/ Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 44.
  • 45.
    BEST PRACTICES THROUGHOUTTHE INDUSTRY 45 Source: PWC Study Digitalization in the Logistics Industry01 Last Mile Delivery02 Reverse Logistics03 Physical Internet (Pi)04 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 46.
    INTERRELATIONSHIP WITH OTHERINDUSTRIES —8 industries majorly benefit from the 3PL Home Improvement Retail Hotels Construction Pharmaceuticals and Healthcare 3PL Hi-Tech Food and Dairy 46 https://3pllinks.com/8-industries-can-benefit-third-party-logistics-services/ Forest Industry Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 47.
    INTERELATIONSHIP WITH OTHERINDUSTRIES — industries based on 3PL 47 02 03 01 Specialize in the transportation between locations. Traditional parcel transportation providers include DHL, FedEx, UPS, and the USPS. Financial or information based third-party logistics company provide industry-specific insight and can optimize complex global supply chains. They also provide internal controls related to freight auditing, cost accounting, and inventory management. This is the most common type of 3PL—they store, ship, and handle returns. Innovative warehouses can help you offer Amazon Prime-like shipping in two days. If you’re expanding globally, international warehouse can help build a global supply chain. Transportation based 3PL 01 Financial and information based 3PL . 02 Warehouse and distribution based 3PL 03 3PL Source: https://www.shopify.com/enterprise/third-party-logistics-3pl Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 48.
    INTERELATIONSHIP WITH OTHERINDUSTRIES — Cold chain logistics & Rail freight transportation Cold chain logistics Reduce Costs and Save Time Benefit from company’s Network Discover Value Through Experience Achieve Flexibility Rail freight transportation Order cars Track car supply Monitoring Entering shipping instructions Auditing and paying invoices Transloading processes Measurement and reporting 48 Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 49.
    $10 Price: $10 Shipping: $10 Total:$20 Price: $10 Shipping: Free Total: $10
  • 50.
  • 51.
    KEY CHALLENGES 51 Manufacturing industriesare facing far greater expectations around efficiency and performance than ever before. Their customers expect faster time-to-market, reduced defect rates and customized products DIGITAL CULTURE NEW SHOPPING PATTERNS EFFICIENCY & TRANSPARENCY Shippers aren’t generally part of a branded retail experience. Most private end-consumers are what we call ‘shipper-agnostic’: they don’t care who delivers their goods, as long as they get them reliably, quickly and cheaply. Lack of digital culture and training is the biggest challenge which is being faced by the logistics companies. Source: PWC Study Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 52.
    Finding New Talent Lackof Good Reporting Systems Increased Emphasis on Rules and Regulations Lack of Collaboration Meeting the Shippers Specific Requirements Lack of Infrastructure CHALLENGES IN 3PL Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 53.
    SWOT Analysis S • GoodManagement • People • Technology (IT, Tracking etc.) • Market presence • Low Costs • Economies of Scale T • Geographic scope • Industry • Competition • Trade issues and barriers • Political and economical stability W O • Varying market demand • Rising fuel prices • Labor shortage • Unskilled Labor (Lack of digital training) • Communication Problem • New Trends in Technology • Regional Coverage • Collaboration • Hyper connected networks (PI) • M&A • Growth of 3PL market Source: https://www.ltdmgmt.com/082003.php Introduction Industry Statistics Sources of Innovation Comparison of 2 firms based on SC strategy Best Practices and Adjacent Industries Key Challenges Summary
  • 54.