1. Transportation Outsourcing

2. International
Logistics
“ “Outsourcing really means finding new suppliers and
new ways to secure the delivery of raw materials,
goods, components and services. (It means that
you) use the knowledge, experience and creativity
of new suppliers which you did not use previously.
Rothery and Robertson (1996)

3. Benefits of transportation outsourcing
 Reduce cost
 Focus on core competence
 Improve competitiveness
 Improve operating performance
 Compensating for a lack of internal expertise

4. Insource our Outsource decision
Reasons to Insource: Reasons to Outsource:
Core competences Acquire quality source of services
Competitive issues Lack of capacity
Inadequate supply Lack of logistics knowledge
No capable suppliers Management focus
Lower production cost Avoid major investments
Specialization Reduce logistics costs

5. What to outsource?
4PL
 Transport
Planning
 Haulier
Procurement
 Driver/Vehicle
 Operations
In Sourced
In SourcedOut Sourced
Contractor
 Driver/Vehicle
 Operations
3PL
 Transport
Planning
 Driver/Vehicle
 Operations
Sub-contracting
 Driver/Vehicle
Own Fleet

6. Cons & Pros of owning fleet
 Greater degree of fixed
cost
 Demand for CAPEX
 True costs often hidden
 Perception as “free”
resource
 Legislation
 Not necessarily a core
competence
 Control of service
 Ownership of last step to
customer
 Availability of specialized
equipment
 Geographical flexibility
 No external transport
profit to pay
 Service flexibility
Own Fleet
Cons
Pros

7.  Extra level of
profit/margin to pay
 Arms length control
 Variety between providers
 Exposed to haulier deserts
 Specialized equipment can
be hard to obtain
 Providers own growth
 Highly variable cost
resource
 No CAPEX, costs are off
balance sheet
 Core competency of
provider
 Scalable and responsive if
volume/mix changes
Out-
Sourced
Cons
Pros
Cons & Pros of outsourcing

8. Outsourcing cost
cost to outsource
Potential cost
effect
(current internal
costs + Internal costs
to achieve desired
improvement)
 Tendering
 Contract
Management
 Services
 Contingency for
poor performance
 Capital
 Employee &
Admin
 Equipment &
Maintenance
 Buildings
 Fuel
 Benchmarking
 Improving
personal skills
 Improving
infrastructure

9. Service provider choice
 Volume discounts
 Information technology
 Infrastructure
 Management team
 Customer success
 Financial stability
 On demand transportation

10. 7 don’t at outsourcing :
 Considering outsourcing itself as the strategy
 Outsourcing what you don't understand
 No involvement
 Neglecting to document requirements
 Expecting too much from the service provider
 Overlooking lesser-known providers
 Expecting problems not to occur

11. Thank You