2015 THIRD-PARTY LOGISTICS STUDY

The State of Logistics Outsourcing

Results and Findings of the 19th Annual Study

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Contents

Executive Summary

10

Current State of the 3PL Market

18

Omni Channel

26

Strategic Workforce Management

34

CRM and Mobile Technologies

42

Mexico

52

Strategic Assessment

58

About the Study

62

About the Sponsors

64

Credits

66

Contacts

2015 C. John Langley, Jr., Ph.D., and Capgemini. All Rights Reserved. No part of this
document may be reproduced, displayed, modified or distributed by any process or
means without prior written permission from Capgemini. Rightshore is a trademark
belonging to Capgemini.

www.3plstudy.com

Supporting Organizations:

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Executive Summary

Current State of the 3PL Market

In the 2015 19th Annual Third Party Logistics Study, survey results showed the continuing, positive
overall nature of shipper-3PL relationships. Both parties view themselves as being successful,
and shippers are seeing positive results again this year: an average logistics cost reduction of 9%

In addition to seeing cost reductions, shippers said theyve seen average improvements in their
2015 3PL Study showed that 73% of those who use logistics
effective communication from their partners. A distinct majority92%of shippers report that their
relationships with 3PLs generally have been successful. Among 3PLs, 98% say their relationships
with shippers have been successful.

The New Landscape of OmniChannel Retailing

While there are more positive business environments in certain geographies, industry verticals
and niche types of services, the global logistics industry is one that does have its challenges.

always-open shopping opportunities, and

retailers are investing in technology, supply

Similar to last year, several ongoing factors are impacting progress toward the advanced end of
economic activity are driving highly variable and sometimes sluggish or neutral demand for

retail sales channels. While retailers understand

the importance of the omni-channel network,

are related to outsourcing compared to an average of 44% reported last year.

this years survey shows that omni-channel

supply chains are still maturing. Nearly

Again with this years study, the most frequently outsourced activities tend to be those that are

one-third of the respondents participating

in the study said they are not prepared to
handle omni-channel retailing and only
2% of respondents rated themselves as high
performing in the omni-channel space.
About half of respondents said they are not
several are either already investing in or
considering home delivery from local stores
(16%), Sunday delivery (15%), customer delivery
in which an in-store shopper delivers goods
(12%) and locker pickup (11%).

EXECUTIVE SUMMARY

Since retailers are increasingly dependent

Logistics providers face competition for

on technology for real-time visibility into

employees. Not only do they compete with other

operations, they are gradually moving all of their

3PLs, they also compete with manufacturers,

also using integrated technologies to improve

in leadership roles leave large 3PLs for better

the omni-channel network. Respondents are

opportunities in other industries.

investing in warehouse management systems

Without strategic workforce planning,

(58%), enterprise resource planning software

(54%), transportation management systems
(54%), supply chain visibility (43%), warehouse

on investment from strategic workforce

management system add-ons (33%) and RFID

management is substantial, contributing to

(21%). Respondents also said they are investing

a boost in morale, increased productivity,

in technologies that allow them to personalize

increased discretionary effort, lower turnover

as mobile apps (33%).

By obtaining and transmitting information
able to better meet customers needs and offer
their customer service, which is a priority.
About one-third of respondents32%listed
customer service as the top reason they are

Strategic Workforce Management

Throughout the Supply Chain
Strategic workforce management will be
particularly important for the 3PL industry
Nearly 50% of respondents said they are already
and the average hiring growth rate within the
than the average growth rate across other
occupations. Estimates show that 60 million

industry are changing rapidly. By 2015,

three out of four jobs within the industry are
of supply chain professionals are changing.
In the future, only having hard skills in

hard skills involving leadership qualities and

cross-functional competencies that will shape
the industry.

and higher customer satisfaction.

One study found that a one standard
deviation increase in investment in aligning
and integrating human resources practices is
associated with a 7.5% decrease in employee
turnover and, on a per employee basis, $27,044
more in sales, $18,641 more in market value and

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

survey revealed that 40% of shippers indicated

that their bid processes place emphasis on 3PLs

Although there are a number of opportunities

technologies in the 3PL sales process, getting
to welcome these new technologies is sometimes
easier said than done.

Customer Relationship Management

and Use of Mobile and Cloud
Technologies in 3PL Sales Processes
looking for ways to improve their sales
turning to contemporary technologies to assist
with this challenging assignment.

Mexico Rising as Manufacturing

and Logistics Hub

Strategic Assessment
Evolution of the 3PL Business Model:

improving, which is creating opportunities for

New Competition

3PLs as logistics services play a crucial role in

from companies, and companies are investing
as compared with similar ventures globally.

in alternative solutions to meet these needs

any other country, a strategic geographic

location, and is renowned as a low-cost
additional ways to leverage the money they are

significantly enhance and streamline the

Although there are more generic sales-related

Just under half of study respondents40%

said they have already moved some of

cases, companies are offering these services to

new customers or competitors and may create
a solution that can be spun off or provided as a

to sources as the most important factors

driving the change. Study respondents
is currently available.

spending to increase revenue streams. In some

said their businesses are primarily moving

service to others in a similar or even the same

industry.
As customers continue to demand more from
retailers and ultimately from 3PLs, it is likely
that investments on both ends of the supply

for the 3PLs and their customers. Overall, the

However, a lack of quality infrastructure and

certain regulatory aspects continue to challenge

chain will be either shared across companies or

developed into alternative service offerings for
a wider customer base to improve the return on
investment. If companies continue to creatively
and embark on new partnerships, these new

and bottlenecks in commercial operations.

of information available, particularly real-time

information regarding topics such as shipment
visibility, etc.

solutions have the potential to alter the way

EXECUTIVE SUMMARY

The Intensifying Truck Driver Shortage

New supply chain models and mobile
devices are making just-in-time ordering
and fulfillment all the more possible, but
professional truck drivers remain one of the
most critical links within the supply chain.
As the economic rebound continues, freight
demand is increasing as are concerns over

ongoing topic of conversation and academic

concern for many in the supply chain for
years, and the driver shortage is continuing
Supply Chain Risk Management

to intensify.

Working Corporate Social Responsibility

Into the Supply Chain

If freight demand grows as it is projected to,

prominent position on the boardroom agenda
at an increasing number of organizations.
Recognizing the importance of risk management
is significantly enhancing the effective
management of supply chains worldwide, and
the development of processes, metrics and tools
for supply chain risk management has become
one of the highest priorities for supply chain

the driver shortage could balloon to nearly

driver shortage will have on the supply chain is
and other intermediaries operating private
3PL providers as a solution, but this may be
companies will also begin making upstream
patterns, relying on intermodal transportation

risk management services among those

they promote and provide clients. Given the
current interest in risk management and the

do business in a sustainable manner, is

growing in importance. A growing number
of companies are concerned not just with
natural resources, but also human rights, labor
practices, environmental impact, business

just kicking the can down the road. It is likely

adjustments, such as shifting distribution

a growing level of commitment to including

comprises all facets of how companies should

and shipping larger quantities at one time.

Regardless, professional drivers remain vitally
important to provide the last-mile delivery of
goods.

and includes a stronger emphasis on issue

resolution, risk reduction and nimble reaction
to problems, accompanied by innovation (e.g.,
green materials, carbon footprint optimization),
capacity building, stakeholder engagement
media relations.

emphasis most 3PLs are placing on developing

new products and services to create value for
their customers, this appears to be a prime

supply chains, including logistics and

area for collaboration between 3PLs and

distribution operations, and there is increasing

their customers.

demand for better checks and balances on

role along the supply chain, all the way from
material sourcing to production and global
transportation. As companies increasingly
address talent management and the individuals
who oversee sustainability.

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

2015 Third-Party Logistics Study

About the Study Respondents

Industry representation

100 respondents

Automotive

40%

44%

16%
Chemicals

User

3PL/4PL

Non-user

Organization anticipates
sales for 2014

20 billion or more

37%

17%

US$1 billion less than US$25

billion / 750 million less

US$25 billion or more /

20 billion or more

26%

8%

US$1 billion less than US$25

billion / 750 million less
than 20 billion

11%

750 million

55%

Less than US$500 million /

375 million

3%
Telecom

Healthcare

Other

9%
7%

10%
3%
17%

Title within company

Shippers

Providers
5%

President/Chief Corporate
Executive Officer Officer

10%

42%

Vice President/ Director/

Sr. Vice President Managing
Director/General
Manager

29%

US$500 million less than US$1

billion / 375 million less than

Oil and Gas

Food and Beverage

12%

3%

Providers

14%

Retail

US$1 billion less than US$25

billion / 750 million
less than 20 billion

Manufacturing

Consumer Products

15%

31%

10%

4%

than 20 billion

US$500 million less than US$1

billion / 375 million less than
750 million

7%

Construction/ Building
Materials/ Lumber
Products

Shippers
US$25 billion or more /

4%

Hi-Tech

Manager

5%

6%

Supervisor

Other (including consultant,

student, educator, researcher
and writer)

23%

7%

President/Chief Corporate
Executive Officer Officer

20%

31%

Vice President/ Director/Managing

Sr. Vice President Director/General
Manager

12%

Manager

5%

1%

Supervisor

Other (including consultant,

student, educator, researcher
and writer)

EXECUTIVE SUMMARY

2015 Third-Party Logistics Study

Current State.

Financial aspects of users logistics and 3PL expenditures

t

Total logistics expenditures as a % of sales revenue 7%
t

% of total logistics expenditures directed to outsourcing 36%
t

% of transportation spend managed by third parties 51%
t

% of warehouse operations spend managed by third parties 36%

Benefits from use of 3PL services

Logistics cost reduction 9%

Inventory cost reduction 5%

Logistics fixed-asset reduction 15%

Order fill rate from 60% to 66%

Order accuracy from 61% to 66%

What tools a 3PL needs to be successful (top 6 from user vs top 6 from provider)
Shippers

Provider

1. Transportation management (execution)

2. EDI
3. Transportation management (planning)
4. Warehouse/DC management

1.
2.
3.
4.

5. Visibility (order, shipment, inventory, etc.)

5. Visibility (order, shipment, inventory, etc.)

6. Web portals for booking, order tracking,

inventory, etc.

6. Web portals for booking, order tracking,

inventory, etc.

EDI
Transportation management (execution)
Customer order management
Transportation management (planning)

IT gap narrows
120%
100%

89%

85%

91%

90%

92%

92%

92%

88%

94%

93%

94%

98%

96%

80%

40%

42%
27%

33%

40%

35%

42%

37%

54%

53%

55%

60%

42%

20%
0%

02

03

04

05

06

07

08

IT Capabilities Necessary Element of 3PL Expertise

09

10

11

12

13

14
Year
Shippers Satisfied with 3PL IT Capabilities

www.3plstudy.com

54%

60%

10

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Current State of the 3PL Market

Changes and Innovation Lie Ahead but Much of the Industry Operates at a Slow Heavy Pace

Current State of the 3PL Market

11

Although 3PL providers generally will provide

the progress toward the advanced end of the

continues to be affected by a number of

a more positive evaluation of themselves than

maturity model for shipper-3PL relationships.

factors. Principal among these are the levels

will their customers, the 2015 study again

of economic activity in regions and countries

of the world and the volatility or lack thereof.

further perspectives on where progress is being

their relationships as successful.

made and where it may be constrained.

Also, the supply of asset-based capacities of

various types, along with the underlying

2015 19 th

demand for services related to the use of those

Annual Third Party Logistics Study provide

with recent Annual 3PL Studies, readers are

current perspectives on the nature of these

cautioned when comparing results from this

and availability of capacity to meet the needs

relationships, why they are generally successful

year with those in past reports as a result of

of customers.

and some of the ways in which they could

Although there are other factors of concern,

be improved. Aside from these generally

base. Please see the About the Study section of

positive perspectives, discussions at some of

this report for more information on the research

the research workshops this year suggested

process and the study respondents.

that management structures in many shipper

have shifted freight movements from air to

organizations have not yet been transformed

ocean. Aside from more positive business

environments in certain geographies, industry

business. One participant indicated that many

3PL Usage Reflects Global Trends

Global markets continue to be impacted by
volatility and low-growth in many economies

verticals and niche types of services, the global

logistics industry is one that is currently not

and little inertia for change. While there were

throughout the world, thus driving highly

without its challenges.

many compliments relating to 3PL providers,

variable and sometimes sluggish or neutral

the discussions suggested that the providers

demand for outsourced logistics services.

Results of this years Annual 3PL Study again

Figure 1 provides global 3PL revenues by region

document the evolving logistics marketplace

and moving away from legacy operations

for 2012 and 2013 from Armstrong & Associates,

in which 3PLs have continued to enhance

and systems.

along with a summary of percentage changes

their ability to drive innovation and create

in these revenues reported for 2012-2013

value for their customers and clients. At the

and the two previous years, and it includes

same time, those same shipper customers

levels of global economic activity and the

have continued in many ways to become more

associated impacts on the demand and supply

region for 2006 to 2013.

of logistics and 3PL services have affected

Figure 1: Global 3PL Revenues Rise Only Modestly for 2012-2013

2012 Global 3PL

Revenues
(US$Billions)

2013 Global
3PL Revenues
(US$Billions)

Percent
Change
2012 to
2013

$ 171.2

$ 176.2

+ 2.9%

+ 6.7%

+ 7.2%

+ 4.0%

Europe

158.0

158.1

+0.01%

- 2.6%

- 2.8%

- 0.6%

Asia-Pacific

242.7

255.6

+ 5.3%

+ 23.6%

+ 21.2%

+ 10.9%

South America

43.6

44.9

+ 3.0%

+ 12.4%

+ 43.6%

+ 10.4%

Other Regions

69.6

69.0

- 0.01%

+ 6.4%

+ 54.0%

$ 685.1

$ 703.8

Region

North America

Total

Source: a) 2014 18th Annual 3PL Study and 2013 Armstrong & Associates, Inc.
b) 2013 17th Annual 3PL Study and 2012 Armstrong & Associates, Inc.

+ 2.7%

Percent
Change 2011
to 2012a

+ 9.9%

Percent
Change 2010
to 2011b

+ 13.7%

CAGR
2006-2013

12

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

and South America are both slightly above

Figure 2: 3PL Services Deliver Measurable Benefits

10%, results for North America are 4% and

2013 Study

2014 Study

2015 Study

Logistics Cost Reduction

15%

11%

9%

it is clear that growth rates are moderating

Inventory Cost Reduction

8%

6%

5%

that the cooling off of many global economies

Logistics Fixed Asset Reduction

26%

23%

15%

Changed
From

58%

66%

60%

Changed
To

65%

68%

66%

Changed
From

67%

68%

61%

Changed
To

72%

69%

66%

those for Europe are slightly in the negative.

Results

Looking at the percentage changes in global

3PL revenues by region from 2012 to 2013, and
particularly in comparison with the percentage
changes reported in the two previous years,

may be responsible for the somewhat slower or

limited growth in 3PL revenues throughout the
regions of the world.

Shipper Spending Patterns on

Logistics and 3PL Services
According to this years study results, shippers
report an average of 36% of their total logistics
compares with an average of 44% reported

Order Fill Rate

Order Accuracy

Source: 2015 19th Annual Third-Party Logistics Study.

last year and 42% reported in the previous

transportation, distribution, warehousing

of overall logistics spending represented by

outsourcing or number of activities outsourced.)

Armstrong & Associates estimated and

67% of shippers indicate

projected global 3PL revenues cited in

they are increasing their use of outsourced

Figure 1, these percentages support the notion

logistics services this year, which compares

that the slowing global economic conditions

with 72% reported last year. In comparison,

have had a negative impact on aggregate shipper

86% of 3PL providers agreed that their

spending on 3PL services as a percentage of

customers showed an increase this year in

their use of outsourced logistics services.

Increased Outsourcing Continues to

Outpace Insourcing

report that they are reducing or consolidating

the number of 3PLs they usean average of

that more than half of shippers place a

priority on tightening up their rosters of
3PLs.
One observation that has been consistent for

logistics marketplace, as discussed above.

the past several years is that the percentage of

several years of Annual 3PL Studies are that some

insourcing remains less prevalent, as 26%

customers will report having increased their

of shippers report they are returning to

use of outsourced logistics services and others

insourcing at least some of their logistics

will indicate a return to insourcing some or all

activities. In comparison, 37% of 3PL

providers agree that some of their customers

on outsourced logistics services, percentage

many shippers is evident in the number who

growth of overall revenues in the global

Insourcing: Generally, returning to

increased or decreased use of outsourcing

ongoing trend toward strategic sourcing by

are returning to insourcing.

shippers reporting they increased their use of

outsourced logistics services has outstripped
by 3:1 the percentage of shippers indicating
they have returned to insourcing many of their
logistics activities.

Current State of the 3PL Market

Shipper Experiences with 3PLs:

Measures of Success
Once again, a distinct majority (92%) of shippers
report that their relationships with 3PLs
generally have been successful. Interestingly,

the magnitude of annual savings of these types

13

Shifting Expectations in Shipper3PL Relationships

supported by the results of a discussion held

during the London workshop around the
assertion that many big customers already have

both shippers and 3PL providers in the survey

process, researchers have observed that in
most instances 3PLs rate their capabilities

but predictably, an even higher percentage

of 3PLs (98%) say their relationships with
shippers have generally been successful.
Figure 2
shippers report from their use of 3PL services,

3PL Services Deliver Measurable

Benefits
Also highlighted in Figure 2 are the changes in

tend to have a lesser perception of problems

in relationships, etc. Although there are likely a
number of reasons for this disparity, the study
is always seeking to better understand how well
aligned shippers and providers are on matters

cost reduction reported by shippers was 9%,

the average inventory cost reduction was 5%,

percentages have remained somewhat stable

of importance to the overall relationship.

over the past several years studies, and they

One attribute that shows a degree of alignment

also validate continuing improvements that

is that of openness, transparency and effective

communication in 3PL-customer relationships.

70% of shipper respondents report their use

down modestly from those reported in the
previous years study.

shippers and 3PLs have been working earnestly

2015 3PL Study showed that 73% of shippers

of 3PLs has led to year-over-year incremental

received open, transparent and effective
use of 3PL services has led to year-over-year
55% last year and 56% the year before.

communication from their partners.

14

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 3: Shippers Continue to Outsource a Wide Variety of Logistics Services

Outsourced Logistics Services

Percentages
of Users

Outsourced Logistics Services

Percentages
of Users

Domestic transportation

80%

Order management and fulfillment

18

International transportation

70

Inventory management

18

Warehousing

67

Supply chain consultancy services

provided by 3PLs

15

Customs brokerage

53

Service parts logistics

14

Freight forwarding

51

Information technology (IT) services

14

Reverse logistics (defective, repair, return)

36

Fleet management

13

Freight bill auditing and payment

33

LLP (Lead Logistics Provider) / 4PL services

11

Product labeling, packaging, assembly,

kitting

30

Customer service

Cross-docking

30

Sustainability/green supply chain-related

services

Transportation management and planning

25

Source: 2015 19th Annual Third-Party Logistics Study.

For the past several years, this report has

shipper and 3PL provider customer ratings is

addressed issues relating to the use of

gainsharing and collaboration in shipper-

current and future business needs and

3PL relationships. We consider both of these

39% of this years shippers agree that they

concepts legitimate and useful elements of well-

are collaborating with other companies

structured shipper-3PL relationships:

to achieve logistics cost and service

while 75% of shipper respondents agree that

48% reported last year, while the percentage
engaged in gainsharing arrangements

of 3PL providers in agreement is a reported

for improvement.

with their 3PLs, while 58% of 3PL provider

72%. As with gainsharing, it is likely that

An interesting comment made during the

respondents indicate they have engaged in

this approach is more suitable in certain

London workshop was that companies with

gainsharing with customers. As stated in last

types of shipper-3PL relationships than in

the most responsive supply chains were either

years report, our opinion is that while the

others. Also noted in the workshops held this

new companies, or ones that were vertically

use of gainsharing is a valuable element of

integrated and had recently redesigned or

many shipper-3PL relationships, there are

the part of both shippers and providers to

other relationships where some variation of

share relevant information that is central to

supply chains. Also, a discussion thread in

a more traditional fee for service model

the process of taking the greatest advantage

the workshop held in San Francisco focused

is preferred. Although this has not been

of their relationships and the opportunity to

formalized into a research question, our

collaborate effectively.

their supply chain practices were changing

hypothesis is that the use or non-use of

serving these types of accounts need to be

customers prefer more tactical/operational

What Shippers Outsource and What

3PLs Offer

very diligent about understanding, complying

relationships with their 3PLs or relationships

Figure 3 shows the percentages of shippers

gainsharing would be related to whether

that are more strategic in nature.

there are similarities with some of the results
reported in recent years, this years data also
includes a number of instances that suggest

Current State of the 3PL Market

modest declines in the percentages of shippers

percentages also are lower than those reported

indicating they outsource certain activities and

in the previous study.

processes. Also, one perspective that received

attention in this years workshops was that
there is continuing evidence that, in many
instances, shippers will choose not to outsource

Among the many topics of interest during

workshops was that there appears to be
an evolution of demand for and increasing

15

changing purchasing patterns among shippers.

Also, the composition of this years survey
respondents may also have some impact on
the results included in Figure 3.

growing number of companies (or divisions

3PLs IT Capabilities: What are the

Front-Running Types of Information
Technologies?

Again with this years study, the most

of companies) that are viewed as commercial

It has been clear for some time that the

frequently outsourced activities tend to be

providers of 4PL services, the types of services

those that are more transactional, operational

that would be offered by a 4PL are also the same

element of the value proposition in shipper-3PL

types of services that should be evident in any

relationships. As shown in Figure 4, shippers

well-run customer supply chain organization.

indicate a greater need for activities such as

Although it is not fair to draw conclusions

transportation management, warehouse/

based on one years supply of new survey

distribution center management, EDI, visibility,

operations where they feel they can serve their

customers better.

international transportation (80% and 70%,

respectively), warehousing (67%), customs
brokerage (53%) and freight forwarding (51%).
these percentages are several points lower than
those reported in the previous study.

acceptance of the concept of 4PL services

(broadly defined). Although there are a

results, the analysis looks carefully at the

reasons why shippers generally reported lesser

oriented. In fact, there is a relatively discernable

percentages in terms of utilizing many of the

relationship between the propensity of shippers

logistics services and processes than they did

indicated in Figure 3 continue to be those that

in the previous years study. Among the reasons

types of logistics services that are outsourced

that may bear some relevance are: impacts of

to 3PLs (as summarized in Figure 3). Looking

providers of logistics services that have impacts

of a somewhat lesser priority at present, it

is apparent that these are generally related

services and customer service. Generally, these

responses to shippers feeling pressure to reduce

16

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 4: Shippers Still Focus Attention on Execution-Oriented 3PL IT Capabilities

Percentages Reported By
Region

3PL Users
2013

2014

3PLs
2015

2013

2014

2015

Transportation Management (Execution)

72%

75%

73%

84%

81%

86%

Warehouse/Distribution Center Management

64

74

65

78

71

76

Electronic Data Interchange

68

78

65

79

76

80

Transportation Management (Planning)

67

69

64

80

77

79

Visibility (Order, Shipment, Inventory, etc.)

60

76

63

75

78

76

Web Portals for Booking, Order Tracking, Inventory, etc

59

62

50

72

75

76

Bar Coding

50

50

47

60

53

55

Transportation Sourcing

45

45

48

58

52

59

Customer Order Management

41

42

41

64

66

79

Global Trade Management Tool

43

51

36

42

38

31

Advanced Analytics and Data Mining Tools

26

34

30

39

42

45

Supply Chain Event Management

26

38

30

49

53

50

Network Modeling and Optimization

30

35

29

44

55

51

Supply Chain Planning

30

36

26

59

59

53

Collaboration Tools (SharePoint, Lotus Notes, etc.)

32

43

25

41

46

46

23

59

Yard Management

17

30

21

28

35

37

RFID

24

22

18

36

26

28

Cloud-Based Information Technologies

12

38

Mobile Technologies for Sales Support

11

36

CRM (Customer Relationship Management)

Source: 2015 19th Annual Third-Party Logistics Study.

to processes that are more strategic and

current satisfaction with those services. As

customer facing.

indicated, 96% of this years user respondents

2015 19th Annual 3PL Study

For 13 years this study has tracked measurable

include:

differences between shippers opinions as to

whether they would agree that information
technologies are a necessary element of 3PL

Key Takeaways

Although last years report suggested that the

of global economic conditions has impacted

this years study continues to look for reasons

industry revenues. Armstrong & Associates

Figure 5 reveals

global markets for 3PL services and related

reported aggregate global revenues for the

that over the long term this gap has narrowed

3PL sector grew by 13.7% from 2010 to 2011,

may be continued convergence occurring

2012 to 2013.

between shipper ratings of the necessity of

9.9% from 2011 to 2012 and only by 2.7% from

use of mobile and cloud technologies by 3PLs.

Shippers report an average of 36% of their

Current State of the 3PL Market

outsourcing compared with an average of

17

shippers report that their relationships with

conditions have impacted aggregate shipper

3PLs generally have been successful.

customer facing tend to be outsourced to a

In the survey, 73% of shippers and 77% of

activities and processes of interest to this

spending on 3PL services as a percentage of

study, this years percentage of shippers

Annual 3PL Study reports that

with the openness, transparency and good

indicating they outsource those activities

communication in their relationships, and

decreased by a few points.

75% of shipper respondents judge their 3PLs

67% of the shippers surveyed are increasing

For the past 13 years, this study has been

their use of outsourced logistics services.

future business challenges.

Only 26% report a return to insourcing

the difference between the percentage of

Involvement in gainsharing arrangements
with their 3PLs was reported by 41% of

outsourcing divided by the 26% that returned

shippers, and 39% indicated involvement

in the current study) and the percentage of

to insourcing) has been apparent for the

in collaboration with other companies,

the same shippers who agree that they are

past several years. Also, 53% of shipper

even competitors, to achieve logistics cost

respondents indicate they are reducing or

and service improvements. Variances in

consolidating the number of 3PLs they use.

these results over the years suggest that,

Shippers report an average logistics cost

these approaches simply fit better with

reduction of 9%, an average inventory cost

some shipper-3PL relationships than they

and rationale for any apparent convergence.

do for others.
modestly from those reported in last years
operational and repetitive activities tend to
be the most frequently outsourced, while
Figure 5: The IT Gap Exhibits Continuing Convergence

89%

91%

92%

90%

92%

92%

85%

94%

98%

94%

93%

96%

88%
IT Gap

80%

60%
60%

54%
42%

40%

37%

35%

33%

54%

42%

42%

40%

55%

53%

27%
20%

0%
02

03

04

05

06

07

IT Capabilities Necessary Element of 3PL Expertise

Source: 2015 19th Annual Third-Party Logistics Study.

08

09

10

11

12

Shippers Satisfied with 3PL IT Capabilities

13

14

Year

18

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

The New Landscape of Omni-Channel Retailing

The New Landscape of Omni-Channel Retailing

than their competition and creating a unique

adjusting to changes in consumer demand as
But respondents said they have found
geography. What meets customers needs in
one area may not in another, so the ability to
differentiate offerings by geographic location
strategy and a highly detailed, integrated

can improve customer service while also

approach.

network is a priority for retailers, and they

are testing a wide range of cross-channel
fulfillment options. However, nearly onethird of the retailers participating in the study
said they are not prepared to handle omnichannel retailing. Figure 6 shows that only
2% of respondents rated themselves as high
performing in the omni-channel space, while

operations..
And there are more consumers than ever as
changing economics are affecting the face of

Changes to the Supply Chain

Enabling the growth of the omni-channel

well as technological innovations. Now more

looking for seamless interaction across retail

19

So while retailers sales and marketing

departments are promoting the tailored,

percentage33%said they had no capability

and 26% said they are inconsistent.

net worth has been improving, increasing 13.4%

in 2013 after a 9.5% rise in 2012. Globally, the
middle class is growing and is on track to more

for the customer. As consumers become more

than double in size to 4.9 billion by 2030 from

and how they can get their products delivered.
And while several companies are blazing a trail
consumers have more discretionary income.

centers were for full shipments, and, in the

consumers from the store.

customer requirement.

succeed in this changing landscape, retailers

are enhancing the consumer-facing side of their

are enhancing the consumer-facing side of

operations, redesigning their supply chain,

their operations, requiring a redesign of their

and creating more in-store integration with

online channels, using bricks-and-mortar stores
and to facilitate Web order pickup in which the

supply chain and testing new fulfillment

turning to tailored marketing and promotions,

that were designed to pick, pack and ship

past, companies rarely shipped directly to

retailers are gradually transitioning their

are emphasizing consumer engagement and

omni-channel. Previously, retailers created

dedicated e-commerce distribution centers

2 billion today.

options to keep up with rapidly evolving

infrastructure simply cannot support a true

in mind.

Figure 6: Omni-Channel Supply Chains Remain Immature

How prepared do you think your organization is to handle omni-channel retailing?

such as customized messages pushed to

shoppers mobile devices based on their

33%

26%

29%

10%

by their previous shopping history. As a

2%

result, retailers are trying to be more dynamic

No capability

Inconsistent

Competent

Source: 2015 19th Annual Third-Party Logistics Study.

Efficient

High performing

20

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

customer shops online then picks the package

introduced an updated Web order, in-store

com are ready for pickup in about 60 minutes.

Ship-to-store options have the potential to
reduce the retailers transportation costs and
possibly spur additional in-store sales made
when shoppers pickup an online purchase.

Varied Fulfillment Options

While respondents are still developing
their omni-channel supply chains, they are

a discount on their bill.

Amazon has made headlines by testing drones

options and testing new approaches, including

in-vehicle pickup, warehouse pickup and
buy-online-and-pick-up-in-an-hour options.
Figure 7 shows that among respondents, 36%
currently offer order-online-and-pickup-at-thewarehouse, 29% allow consumers order in store

to locations within a one-mile radius of an

has also installed delivery lockers in grocery,
convenience and drugstore outlets at several

for home delivery, 22% allow mobile orders to

most companies dont have the space to run a
said to get to a true omni-channel, they would
have to dismantle their current network, which
would be costly.

be picked up at the warehouse and 20% offer

warehouse pickup of orders placed in the store.
Nearly half of respondents, as shown in
Figure 8, said they are not testing new
fulfillment strategies, but 16% are either
utilizing or considering home delivery from

their current infrastructure they are willing

to take apart to build new delivery channels.
to determine which customer requirements
companies are also questioning whether or
not it makes sense for them to create their

local stores, 15% either do or plan to offer

Sunday delivery, 12% are either using or
investigating customer delivery in which an
in-store shopper delivers goods, and 11% are
using or interested in locker pickup. A smaller

10 pounds and customers can pick up their

deliveries at their convenience, eliminating the
chance of missing a delivery or theft from their
doorsteps. In the Los Angeles and New York
metropolitan areas, Amazon is collaborating
package delivery.
Yet with new opportunities come new
challenges. Retailers have the opportunity to
provide customers with more options than ever

number4%are considering drone delivery

and bike/messenger delivery.
investing in new technologies, allowing them to

partner with another type of service provider

may create additional opportunities for 3PLs
going forward.

shoppers who are already in the store to deliver

products to customers who ordered online.
In-store shoppers would inform the retailer
of their destination and volunteer to deliver

Figure 7: Respondents Offer a Variety of Cross-Channel Fulfillment Options

Do you offer/enable cross-channel fulfillment?

Order Online Pickup at warehouse
Order InStore Deliver to home
Mobile Order Pickup at warehouse
Order InStore Pickup at warehouse
Order Online Pickup In store
Mobile Order Pickup In store
Order Online In-vehicle pickup
0

20

40

# of Respondents
Source: 2015 19th Annual Third-Party Logistics Study.

60

80

100

120

140
N=365

make decisions based on real-time information

from stores.

The New Landscape of Omni-Channel Retailing

21

Figure 8: Shippers are Testing and Using a Variety of Fulfillment Options

Which of the following fulfillment strategies are you utilizing/piloting/considering?

# of Survey Respondents

160

149

140
120
100

71

80

48

60

46

37

40

34

22

12

20
0

None

Other innovative Home delivery

from local stores
solutions

Sunday
delivery

Customer
delivery

Locker
pickup

Online order
with one hour

10

Drone
delivery

Bike/messenger
delivery

N= 298
Source: 2015 19th Annual Third-Party Logistics Study.

The Role of Information Within the

Supply Chain

transportation management systems (54%),

to trace the products origin and differentiate

supply chain visibility (43%) and warehouse

products from their competitors.

With timely information, retailers are focusing

management system add-ons, which include

on the retail shelf and working to speed

deliveries to the store to keep product in supply.

labor management, analytics, slotting

Respondents said the physical and digital

organization, etc. (33%).

information necessary to successfully

manage omni-channel offerings has been

Now planning cycles can take place hourly or

more frequently, and the total supply chain
response time takes place in hours or daysa
transition from the old supply chain model in
which retailers focused on replenishing the
level taking days or weeks.

analyze consumer data, track products and

reduce operational cost while also serving as
a tool for product promotions through various

met with varied success. Warehouses operate

invested in RFID technology, which can save

in an integrated fashion, yet many require

shoppers time and also reduce inventory levels

manual movements of digital inventory and

as a result of real-time information about the

information across systems or tools. Figure 10

movement of goods. Products with RFID tags

demonstrates that when it comes to managing

need not be scanned separately, resulting in

shorter checkout lines and less time spent at

said they utilize shared distribution centers,

the cash register. For retailers, RFID captures

16% have distribution centers by channel, 15%

and stores information over time enabling them

Figure 9: Companies are Adapting with Integrated Technologies

digital platforms. Retailers said they are trying

inventory and delivery.

crucial. Figure 9 shows that to better manage

inventory and product delivery, respondents
are investing in such technology, including
warehouse management systems (58%),
enterprise resource planning software (54%),

Are you making/have you already made any of the following technology investments?
# of Survey Respondents

and transparency to profitably manage

220
200
180
160
140
120
100
80
60
40
20
0

WMS

N= 337

ERP

TMS

Supply
chain
visibility

WMS
Mobile
add-ons apps

Source: 2015 19th Annual Third-Party Logistics Study.

RFID

Pick to
voice

POS

Pick to
light

ePOD

None

Electronic
price tags

22

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 10: Respondents Use a Mix of

Solutions to Manage Fulfillment

Figure 11: Fulfilling Orders Across Multiple Channels Creates Certain Issues

What is your largest issue in fulfilling orders across multiple channels? (select top 3)
How do you manage fulfillment by channel?

28
30
30
31

Shared
DCs

Mix

33%

Picking & waving logic

11

Long-term DC leases
Expedited delivery
Return management

58
61
80
80
81

Outsourced DCs by channel

15%

16%

95

N=320

116
0

Source: 2015 19th Annual Third-Party Logistics Study.

channels can create issues. Respondents were

50
N=304

100

150

Issues in Omni Channel by # of Respondents

membership programs into one solution,

of growing interest to both manufacturers and

enabling retailers to acquire more information

retailers.

about their actual and potential customers

minute changes to either the quantity, shipping

Pick/Pack ef f iciency
Ef f iciency
Technology
Order management
Inventory control
Inventory accuracy
Inventory visibility
System integration
Order felxibility

41

36%

compared to traditional payment methods.

address or shipping speed), system integration

Per sonalize d
Experiences

Pr o duc t s

and

and inventory visibility, accuracy and control

Because retailers are increasingly dependent

(Figure 11).

Retailers are focusing more on consumer

on technology for real-time visibility into

engagement in response to customers targeted,

operations to track products when they leave

As online shopping continues to grow,

the manufacturing facility, throughout the

merge information to consolidate shipments

point of sale, retailers are gradually moving

solutions offering real value to shoppers.

all of their platform-based solutions to the

workshop, a respondent shared the story of one

DHL truck showing up at a business to deliver

amounts of customer data faster, better match

business-to-business orders while another

retailers are now offering home dcor product

customers demands with a sales season and

arrived to deliver packages to employees from

selection and installation services ordered in

provide personalized solutions, not only in

a single touch. In apparel, shoe manufacturer

what customers buy and how they buy it, but

New Balance allows customers to create custom

additional visibility is a likely solution.

also in how they receive it.

store. Once the shopper designs his or her shoe,
By obtaining and transmitting information

retailers perspectives. Digital promotions,

10 business days and shipped to the customer.

mobile promotions and digital wallets are

options, giving customers the option of picking
give retailers greater insight, and therefore the

With mobile technologies, retailers can send a

products up in the store or the warehouse or

mobile coupon for a product that complements

digital wallets combine the functionality of

technologies, along with others, enable the

mobile payments with digital couponing, and

concept of mass customization, which has been

digital storage of various cards and loyalty

other items on the customers shopping list or

inform customers about special offers based on

The New Landscape of Omni-Channel Retailing

also allow in-store promotions through

23

creates additional challenges surrounding

interactive touch screens that customers

logistics and inventory as distribution centers

with smartphones can connect to and search

While technology is making it easier for

for particular products. Over one-third of

retailers to allow consumers to buy when and

resulting in overstocks. An even greater

respondents33%said they have invested

where they want and choose how the order

challenge can come when online shoppers

in mobile apps.

return an item to a store, which then has to be

multiplied by the number of delivery options

Opportunities and Challenges

returned to a distribution center. Respondents

admitted that returns are often an afterthought,

shippers and logistics providers.

and this is an area where retailers and shippers

will need to focus on in the future.

force behind shippers omni-channel efforts.

As seen in Figure 13, about one-third of
respondents32%listed customer service
as the top reason they are investing in

customers purposely order multiple items and

Figure 12: Technology Enables Retailers to Analyze Consumer Data, Track Products and Reduce Costs

Technology in retail enables the retailers to analyze consumer data analysis, track products and reduce operational
cost while at the same time serving as a tool for product promotions through various digital platforms
RFID

Electronic Price
Tags

Products attached with RFID tags need not be scanned separately

Savings in customers time due to shorter checkout lines and less time spent at the cash register
RFID captures and stores information over time enabling retailers to trace the origin of products and
differentiate products from their competitors
Convenient replacement for traditional paper price tags and enabling retailer to change prices quickly
Elimination of customers complaints about incorrect product prices
Enables store staff to focus on other retailing activities

Mobile
Promotions

Retailers can send a mobile coupon for a product that complements other products on the customers
shopping list
In-store mobile promotions enable the retailers to inform customers about special offers or complements
depending upon the customers location in the store
Promotion of in-store locations through installation of interactive touchscreens that customers with
smartphones can connect to and search for particular products

Cloud
Computing

Enables the retailer to process large amounts of customer data in real time to provide
them with personalized solutions
Enables retailers to match customers demand with their sales season
Retailers gradually moving all their platform-based solution to the cloud

Mobile Point
of Sale

Digital Wallets

Digital
Promotions

Enables retailers to collect sales data at the point of sale (POS) instead of the traditional cash register
Provides store assistants with the opportunity to spend more time with customers and also influence
their purchase decisions
Cheaper to equip assistants with mobile POS rather than to move or build more fixed POSs
Combines the functionality of mobile payments with digital couponing, digital storage of various
cards and loyalty membership programs into one solution
Enables retailers/merchants to acquire more information about their actual and potential customers (such as customers e-mail address) as compared to traditional payment methods
Intensive use of social media platforms such as Facebook, Twitter, Pinterest, etc. to promote the
companys products and initiatives
Loyalty programs have gained acceptance amongst retailers allowing them to target customers
through relevant messages based on analyzed card data
Digital coupons are becoming increasingly popular with the customers offering them the flexibility to
store coupons on their smartphones and use while shopping

Source: 2015 19th Annual Third-Party Logistics Study.

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

24

Omni-Channels Potential Dividends

Omni-Channel Key Takeaways

Retailers are working to provide consumers

within the omni-channel space, but the

with an always-on, always-open shopping

question remains: Are customers willing to pay

opportunity. Shoppers are looking for a

or will this become a cost of doing business? Is

data is crucial, yet the physical and digital

information necessary to successfully
manage omni-channel offerings are met
with varied success. Warehouses operate
in an integrated fashion, yet many require
manual movements of digital inventory and

too risky and of little value for retailers to

build their own capability? For retailers and

approach to meet consumers needs.

shippers, there has to be some type of revenue

information across systems or tools. When it

36% of respondents said they utilize shared

to justify the service. It may be that omniforce behind omni-channel efforts. About

distribution centers, 17% have distribution

that forces companies to merge operations

one-third of respondents32%listed

centers by channel, 15% outsource and 33%

versus maintaining competing supply chains,

customer service as the top reason they are

supply chains are still maturing and retailers

gives them greater customer insights and

to customers. Nearly half of respondents

of respondents saying theyve invested in

strategies, but 16% are either utilizing or

mobile apps and 21% saying theyve invested

considering home delivery from local stores,

in RFID.

15% do or plan to offer Sunday delivery, 12%

are either using or investigating customer
delivery in which an in-store shopper delivers
goods, and 11% are using or interested in
locker pickup. A smaller number4%are

Figure 13: Priorities in Omni-Channel Fulfillment

considering drone delivery and are either

utilizing or testing bike/messenger delivery.

What is your priority in omni- channel fulfillment?

Minimized backorders

2%

Inventory allocation

4%
5%
5%
7%
10%
11%
23%
32%
0%

5%

10%

15%

20%

25%

30%

Priority in Omni-Channel by % of Respondents

Source: 2015 19th Annual Third-Party Logistics Study.

35%

technologies and are adapting as necessary.

Respondents are investing in such technology,

Replenishment effeciency

including warehouse management systems

Packing efficiency

(58%), enterprise resource planning software

Fill rate

(54%), transportation management systems

Order cycle time

(54%), supply chain visibility (43%) and

Freight costs

warehouse management system add-ons

Service levels

(33%).

Customer service

The New Landscape of Omni-Channel Retailing

2015 Third-Party Logistics Study

Omni Channel Creating a Seamless Customer Experience

What is driving this trend

Where to sell?

Retailers are venturing into new markets and store formats while integrating
their in-store and digital offerings to cater to the demand of several consumer groups

How to sell?

How to operate?

Focus towards consumer engagement and cost efficiencies is driving...

Personalized products

Reduction in store size

Focus on consumer engagement

Greater utilization of store space

Customer service continues to be the driving force behind shippers

omni-channel efforts
10

11
Customer
service

Service
levels

Freight
costs

Immaturity of supply chains for omni-channel operations

Shift from the traditional supply chain

model to a modern, more agile model

Order cycle
time

Fill rate

Largest issue in fulfilling orders

across channels
Order Flexibility
System Integration

Traditional model

Modern model

Total response time from order to

retailer DC in weeks or days

Total supply chain response time from demand

estimation to shelf delivery in days or hours

Quality defect per million at the plant

Quality defects per million at the retail shelf

Forecast accuracy in replenishing the

retail DC

Zero stock outs on the shelf

New product design, manufacture and

delivery

Speed to deliver innovation to the shelf

Inventory Visibility
Inventory Accuracy
Inventory Control

How prepared do you think your organization is to handle omni-channel retailing?

33
No capability

26
Inconsistent

29
Competent

10
High
Efficient performing

Will shippers focus on developing their own innovative solutions or will they turn to 3PLs to help them determine
how to fulfill customer demands?

www.3plstudy.com

Some info in the above chart from: The Consumer Driven Supply Chain: IBM

25

26

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Strategic Workforce Management Throughout

the Supply Chain

Strategic Workforce Management Throughout the Supply Chain

27

Strategic workforce managementthe system

development, they struggle to grow. Figure

Yet, aligning business strategy with the talent

and processes by which leaders ensure they

15 shows that organizations value operational

strategy does not mean the talent strategy

people management and development.

if the business strategy is to drive innovation,

have the right talent in the right place and

timeis relevant to everyone involved in the
supply chain, be it an hourly employee or the

HR does not innovate. Instead, HR provides

Figure 14 shows that companies

When a company aligns its talent strategy to

that practice strategic talent management have

its business strategy, it is more likely to achieve

strategy is designed to make the business

40% lower voluntary turnover among their high

its strategic objectives, perform better in the

strategy successful.

performers and generate 26% greater revenue

market and retain high-performing individuals.

per employee compared to their peers.

However, a business strategy simply details

Demand for Supply Chain Talent

where the company wants to go. Getting there

Aligning talent to business objectives helps a

In most organizations, total human capital

costs account for as much as 70% of operating

business get the proper talent focused on the

ask themselves the following:

right initiatives to drive the organizations

strategy and accelerate business outcomes.

human resources leaders need to be close

where estimated demand for supply chain
strategy and direction of the company. About
60% of respondents, as shown in Figure 15, said
having the right people and leadership in place
is a primary driver of the organizations success
amount said success relies on having the right
strategy and roadmap. Yet, less than one-third
of companies said they are effective at building

those goals?
What are the talent implications of each
objective?
What key roles/skills are required for each
talent implication?

While the transactional nature of the logistics

industry can limit the ability of individuals
to think about strategic workforce planning,

shaping the business strategy?

compan ies said that without people

Figure 14: The Benefits of Strategic Workforce Management

45%

Difference in market capitalization growth between firms ranked

in the top and bottom clusters based on leadership quality

40%

Companies that practice strategic talent management have lower

voluntary turnover among high performers than their peers

26%

Companies with strategic talent management programs generate

greater revenue per employee than their peers

31%

Less than 1/3 of companies say they are effective at building the
next generation of leadership capabilities

Source: 2015 19th Annual Third-Party Logistics Study.

Figure 16 reveals that 44% of respondents said

be higher than the average growth rate across

other occupations. Estimates show 60 million

28

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Vertical and Horizontal Management

Links

Figure 15: Organizations Primary Drivers of Success in Five Years

Strategic talent management consists of two

key elementsa vertical link to strategy and a

Having the right people and leadership in place

horizontal link across all talent management

Having the right strategy and roadmap
strategic alignmentis the connection between

Ability to execute and drive operational efficiency and

improvements

business needs and individual performance.

Having the right products and services

talent managementreflects how all the

Ability to innovate

talent management practices are integrated

Having the ability to drive greater operational efficiency

and improvements

into a coherent system and leveled at the same

Having the ability to drive greater innovation

horizontal links between talent and strategy,

goals. By optimizing both these vertical and

an organization builds a talent machine that

Having the right infrastructure

0%

20%

40%

60%

80%

results.

% of Respondents
Source: 2015 19th Annual Third-Party Logistics Study.

which roles provide a competitive advantage,

the type of talent required, and the skills to be
management practices must develop people
with the skills, knowledge and motivation to
leave large 3PLs for better opportunities in other

implement the business strategy. Figure 21

industries, and the 3PL industry is struggling

shows what the best leaders do differently.

chain roles, positions within the industry

overcome challenges and industry perceptions,

Talent Leaders and People Leaders

are changing. As a result of the dynamic

3PLs may need to continue to develop their

Every organization has both people leaders

nature of the supply chain industry, three

staff and invest in workforce management at

shown in Figure 17) with demand being

greater than the supply across all supply

all levels. In Figure 20, 47% of respondents said

People leaders are more adept at coaching and

2015 alone, and there is a potential shortage

a top issue in the organization is developing

developing others and serve as a role model of

of new talent resulting from the constant

leaders, 28% said they struggle with effectively

the companys values and culture. Great talent

evolution of supply chain processes. As noted in

managing succession and 20% say they need to

leaders use talent as a strategic lever, make good

Figure 18, respondents said changes to the

improve supervision and coaching.

decisions around people and have a proactive

and/or attracting talent are among their top

Going forward, top employees are going to need

business outcomes.

leadership qualities and cross-functional

Return on Investment

plan for how and when to move talent to drive

pressures.
competencies. Of concern to those within the
competition for supply chain talent has

industry is that the leadership of today may

workforce management is substantial. It

worsened the demand-supply talent gap.

not have the skills or capabilities that will be

contributes to a boost in morale, increased

As seen in Figure 19, the majority of survey

necessary in future leadership roles. Employers

product ivit y, i ncreased discret ionar y

respondents feel that closing the gap between

will need to develop the skills of senior

effort, lower turnover and higher customer

supply and demand is one of their largest

management to ensure they are equipped

satisfaction. A recent study found that a one

challenges affecting 28% of respondents to a

with the right skills and mindset to make the

standard deviation increase in investment

in aligning and integrating HR practices is

thought out strategic talent management plan.

associated with a 7.5% decrease in employee

turnover and, on a per employee basis, $27,044

3PLs compete for talent with other 3PLs,

more in sales, $18,641 more in market value and

Strategic Workforce Management Throughout the Supply Chain

Figure 16: Capabilities Organizations Value in a Functional or Business Leader

29

have a sound business strategy. In addition, its

talent strategy must be designed to support the

Operational execution

business strategy and be integrated across all

Driving growth

works best when the approach includes thought

People management and development

who have insight on the industry as well as

talent practices. It is also crucial to have an

Relationship building and networking

open, facilitated dialogue among top business

Strategic planning

and HR leaders.

Change management
Technical competence
International business exposure
0%

10%

20%

30%

40%

50%

60%

70%

% of Respondents
Source: 2015 19th Annual Third-Party Logistics Study.

Figure 17: Industry Demands for New Supply Chain Talent

Industry Demands for New Supply Chain Talent

The estimated demand for supply chain professionals to exceed supply in the ratio of 6:1
The average hiring growth rate is expected to be higher than the average growth rate across other
occupations
Supply Chain Talent Gap

60 mn people to exit the industry by

2015
Only 40 mn people to fill up the gap
More evident gap across middle
and senior management level in the
transport and logistics industry

Potential Shortage

Supply
Chain
Talent

Shortage of talent due to

the constant evolution of supply
chain processes
Demand for supply chain experts
to grow exponentially with
demand being greater than supply
across all supply chain roles

Supply Chain Professional Dynamics

Only hard skills involved in operations management would not be sufficient in the future
Optimum mix of both soft and hard skills involving leadership qualities and cross-functional
competencies will shape the industry
Due to dynamic nature of the industry, 3 out of 4 jobs in supply chain are expected to change by 2015

Source: 2015 19th Annual Third-Party Logistics Study.

30

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Strategic Workforce Management

Key Takeaways

Figure 18: Top Pressures Driving Workforce Planning

Addressing changes to business model

management have stronger performance

than their peers, with 40% lower voluntary

Difficulty in finding and/or attracting talent

turnover among their high performers and

Loss of critical business knowledge and skills

26% greater revenue per employee.

Developing career acceleration and identifying

opportunities for high potential workers

Strategic workforce management will be

Anticipated changes in job roles and workforce skills needed

particularly important for the 3PL industry,

Global growth plans

talent. Nearly 50% of respondents said they

Loss of workers to retirement

rate within the supply chain industry is

Increasing diversity of under-represented groups

0%

10%

20%

30%

40%

50%

% of Respondents

growth rate across other occupations.

Estimates show that 60 million people will

Source: 2015 19th Annual Third-Party Logistics Study.

industry are changing rapidly. By 2015, three

Figure 19: Challenges in Effectively Implementing Workforce Planning

Challenges

Not at all

To some
extent

To a great
extent

Focus too much on short-term needs

16%

46%

38%

Closing the gap between talent supply

and demand

14

58

28

No clear vision of future workforce

demands

28

52

19

Keeping the process simple and

easy to use

22

59

19

Limited or no integration of data needed

32

51

18

Value proposition is not realized

31

52

17

Lack of skills for workforce planning

27

58

15

Integrating with other planning processes

31

56

13

to change.

are changing. In the future, only having hard

skills in operations management will not be
soft and hard skills involving leadership
qualities and cross-functional competencies
that will shape the industry.
About 60% of respondents said having the
right people and leadership in place is a
primary driver of the organizations success
amount said success relies on having the
right strategy and roadmap. Yet, less than
one-third of companies said they are effective
capabilities.

Difficulty prioritizing solutions to close

gaps and mitigate risks

27

60

13

Lack of budget for workforce planning

31

57

12

Monitoring progress and updating

strategies

29

59

11

Source: 2015 19th Annual Third-Party Logistics Study.

Strategic Workforce Management Throughout the Supply Chain

Logistics providers face competition for

Figure 20: Organizational Challenges to Workforce Management

employees. Not only do they compete

with other 3PLs, they also compete with

Please check the top 5 workforce issues that you believe

your organization is currently facing. (Select 5 items.)

manufacturers, retailers and consulting

leave large 3PLs for better opportunities in
other industries.
While the transactional nature of the logistics
industry can limit the ability of individuals
to think about strategic work force
planning, companies said that without
people development, they struggle to grow.

Percent

Attracting the best talent

62.60%

Developing leaders

46.88%

Developing bench strength

43.63%

Retaining high performers

42.01%

Enhancing workforce performance

35.23%

Enhancing employee motivation and engagement

33.33%

Accelerating learning and development

28.73%

Reducing workforce costs

27.91%

Effectively managing succession

27.64%

Improving supervision and coaching

20.60%

paying attention to industry, business life

cycle and strategic direction considerations.

Source: 2015 19th Annual Third-Party Logistics Study.

Figure 21: What the Best Leaders do Differently

Capability

Accountability

Core process with real accountability

(strategy, financial, talent planning)

CEO driven (time, focus, hands-on

involvement)

Source: 2015 19th Annual Third-Party Logistics Study.

Top-down

Know their talent as well as their

financials, putting same focus
and rigor into talent as P&L

31

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

2015 Third-Party Logistics Study

Strategic workforce planning Having the right talent at the right place
at the right time. Did you know
45%

40%

Difference in market capitalization growth between

firms ranked in the top &
bottom clusters based on
leadership quality

Companies that practice

strategic talent management have lower voluntary
turnover among high
performers than peers

26%

31%

Companies with strategic

talent management
programs generate
greater revenue per
employee than their peers

Less than 1/3 of companies say they are effective

at building the next
generation of leadership
capabilities

What challenges are you facing in effectively

implementing workforce planning?
Challenges

Supply
chain
talent gap
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Not at all

To some extent

To a great extent

Focus too much on short-term needs

16%

46%

38%

Closing the gap between talent supply

and demand

14%

58%

28%

No clear vision of future workforce demands

28%

52%

19%

Top 5 workforce issues your organization is facing

63%

47%

Attracting
the best
talent

44%

42%

35%

Developing Developing Retaining Enhancing

leaders
bench
high
workforce
strength
performers performance

What are your primary drivers for org

success in the next 5 years?
Having the right people and leadership in place
Having the right strategy and roadmaps
Ability to execute and drive operational

efficiency and improvements

Do you know the critical roles for your organization?

Do you have succession and training plans in place for your strategic roles?

SPECIALIST

STRATEGIC

What capabilities do you

value most in a leader?
Operational Execution

Which functional backgrounds will

be most strategically important for
your general management leadership
to have expertise in?

82%
NON-CORE
FLEXIBLE

CORE

Driving Growth
People management
and development

Strategic Value Creation

45%

Operations

Finance

58%
Sales

www.3plstudy.com

What roles are the primary feeders/launch pads into your strategic roles?

Scarcity of Skill Set

32

Strategic Workforce Management Throughout the Supply Chain

33

34

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

CRM and Use of Mobile and Cloud Technologies

in 3PL Sales Processes

CRM and Use of Mobile and Cloud Technologies in 3PL Sales Processes

35

Research on this topic included a special section

Rather than using

for ways to improve their sales processes and

in the annual global survey sessions at each

a direct connection to a server, cloud

turning to contemporary technologies to help

Strategic Research Group (SRG) and research

technologies allow users to retrieve data from

the internet through Web-based tools and
applications. Although data and software
in which available and emerging technologies

are stored in servers, the structure of cloud

components reinforced a key finding that

the 3PL industry and facilitate effective

computing allows access to information as

long as they have access to the Web. (Source:

majority of respondents70% of shippers and

Adapted from www.investopedia.com)

77% of 3PL providersagreed that the use of

Figure 22 illustrates the relationship between
and prospective customers of 3PL providers.

Framing the Topic

providing capable support and interaction

to their customers. Although there are more

shows how use of these technologies facilitates

are available, 75% of shippers and 77% of

in which the use of these mobile technologies

based selling, which frequently depended

allows 3PL providers to respond to customers

upon personal connections and customized

solutions to meet customers needs. However,

that are more tailored to the industry than what

in todays contemporary world of logistics,

is currently available.
can facilitate interaction between 3PL sales

these time-honored approaches are no longer

enough. As 3PLs operations have become more

needs and improve 3PL-customer relationships.

Also, 84% of shippers and 89% of 3PL providers

agreed that customers are demanding value-

sophisticated and structured in the ways they

added services from their 3PL providers and

are seeking vendors based on competitive

and operations teams are looking for new,

improved and innovative ways to create value
for their customers.

and cloud technologies provides 3PL sales

differentiation and strategic alignment.

the effectiveness of customer-facing activities.

Evolving Technologies

Although historically there have been some

For purposes of this study, the following

concerns about the security and privacy of

cloud computing, workshop participants felt

Additionally, many 3PLs are looking to

these concerns are overstated, saying they

are not valid reasons to disqualify the use

processes on a worldwide basis, giving

systems and workflows for managing a
companys interactions with current and
a high priority on solutions that can enhance
long-term relationships among 3PLs and their

rich data insights to enable commercial

customers, deal with lengthy and sometimes

operations to increase productivity, close

uncertain sales cycles, and address the unique

more business, and improve customer

project management of supporting global

satisfaction and retention. (Source: www.

customers while also providing global visibility

across commercial operations. In short, 3PLs
need to be aware of emerging technologies that
can address these challenges and be willing to
implement appropriate technologies to raise

employees working on mobile devices,

the bar in terms of the quality of interaction

including, but not limited to, tablets, iPads,

and relationships with their customers.

PDAs, smartphones, etc.

of any supply chain solutions that involve

cloud technologies.

36

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 22: 3PL CRM Solutions Leverage Mobile and Cloud Technologies
Buyer:

3PL

Use by 3PLs of mobile technologies provide better, more timely information

and better service to customers
Leveraging
Mobile
Technologies

improve customer relationships, support

sales and marketing services, and integrate
customer-facing technologies with back-end

Mobile solutions help 3PL players with value-added services such as

shipment track and trace and other shipment-specific information
Integration with TMS and WMS solutions

Customer
Relationship
Management

Cloud-based CRM solutions enable 3PLs to launch new services, target new
industries and address global supply chain issues
Leveraging
Cloud-based
Solutions

business users (without involvement of

These solutions provide real-time visibility into the extended supply chain and
enable operational efficiency

Cloud solutions enhance information flow between 3PLs and customers that
helps to reduce costs, improve operational capabilities, sourcing activities, etc.
Cloud solutions provide end-to-end solutions for the entire supply chain and 3PL
players are actively investing in these technologies

Customers
Source: 2015 19th Annual Third-Party Logistics Study.

visibility across sales, operations, solutions

and customer service departments.

up to three weeks of constant effort to get a

technologies in support of their customers.

special price approved. Given that the greatest

Although 48% of shippers indicated they see

mobile and cloud technologies are particularly
useful when business circumstances require
real-time connectivity in geographically
separated locations.

they are in contact with current and prospective

(smartphones, in particular), and 73% of 3PL

customers, the prevailing situation leaves a lot

respondents indicate using these technologies,

to be desired.

the current use of the robust and fully capable

survey asked 3PL providers What do 3PL

improvements in overall organizational and

sales productivity, and they can facilitate
innovative approaches to customer service,
account management, prospect management,
and campaign and order management.

integrated KPI (key performance indicator)

scorecards, so commercial leaders can
measure and manage the performance of
their workforce, from customized solutions
to customer success.

environments. We look forward to greater

clarity on this issue.

Looking at the content of Figure 23, survey

3PL Sales Processes Purposes

and Realities

an average of 45% of their time engaged in

In a perfect world, 3PL sales and business

meetings/conversations (23%) and face-to-face

development staff would spend 100% of

meetings (22%).

their time in customer-facing activities and

situations. However, this is actually far from
the truth. A recent article suggested that most
sales reps spend less than half of their time
actually selling. Additionally, the article
suggested that some inside sales reps at a
global manufacturer spent 75% of their time
away from their phones, and that highly paid

support of customers, the survey asked shippers

internal sales support and tracking the progress

customer-facing activities, such as phone

A look at the remaining portions of Figure

the other 55% of their time on other topics,
including navigating pricing issues, inputting
and updating data, preparing and collecting
data for customers, managing internal issues
and team meetings and responding to RFPs.
some the direct involvement of the 3PL sales

of deals. Developing a standard proposal

(e.g., tablets, smartphones) as part of their

sometimes required meetings with as many

half of their time with non-customer-facing

CRM and Use of Mobile and Cloud Technologies in 3PL Sales Processes

37

responsibilities, then this becomes a problem

farmer is one who is equipped with more

respond in a timely manner to customer issues

that needs a solution.

operational knowledge and familiarity with

and gauge their market competitiveness. As a

potential supply chain solutions to propose

result of this global visibility, trade managers

Ideally, principal activities in the processes

of relationship building and relationship

and commercial leaders can quickly identify

technologies that leverage the power of cloud

management might include face-to-face

align resources to gain a competitive edge.

meetings, telephone conversations and

their skills as hunters. Armed with these

interactions using available technologies, such

technologies, hunters can access competitive

as tablets, smartphones and similar devices.

sales resources, such as playbooks or battle

of interactions likely provides easy access

Similarly, farmers can improve customer

to customer account information and the

responsiveness by knowing whom to call

ability to quickly request and acquire special

quickly pull customer information to identify
solutions to improve customers supply chains,

primarily hunters, as they are responsible for

track performance in all areasfrom sales to

developing new customer relationships, etc.,

invoicingand provide visibility that allows

the added knowledge and familiarity with 3PL

access to track and trace information.

operations and potential supply chain solutions

can turn some of these hunters into farmers

In the workshop held in London, one participant

as well.

as having two roles, one as a hunter and one

new business and services as an escalation
point for further development of the business

Figure 23: What do 3PL Sales Executives Do With Their Available Time?

9%

Inputting &
updating
data

8%

Pricing
issues

23%

Phone
meetings/
conversations

13%

Preparation/data
collection
for customers

22%

13%

Responses
to RFPs

Face-to-face
meetings

12%
Internal
management &
team meetings

Source: 2015 19th Annual Third-Party Logistics Study.

bottlenecks in their revenue operations and

38

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 24: How 3PL Sales Organizations Should Respond to 20% More Sales Capacity

50%
40%

35%
28%

30%

24%
20%

19%

17%

14%
10%

23% 24%
19%
10%

6%

0%
Hire more account
executives in same
geographies

Expand into new

geographies

Reduce costs
and run a more
lean organization

Shippers

Launch new
services

Reduce costs
and staff other
functions

3PL Providers

Source: 2015 19th Annual Third-Party Logistics Study.

Also, the survey asked both shippers and

in the same geographies or reduce costs and

listed. Similarly, both sides agree on the relative

providers of 3PL services how their sales

other staff functions.

usefulness of tablet-based dashboards that

organizations should respond if they suddenly

had 20% more sales capacity and if the 3PL had
in Figure 24 summarizes the responses, and

Views from 3PLs and Customers

Regarding 3PL Sales Activities and
Processes

it is apparent that there are several potential

provide access to details related to individual

customer accounts, collaborative online
workplaces and service request updates sent
process automation is rated as more useful

technologies attractive to 3PL-customer

by 3PL providers, which is not surprising,

relationships is the value that both shippers and

but it would make sense that this feature also

of 3PL provider sales processes. Of these, 35%

would be useful to shippers because it would

of shippers and 24% of 3PL providers said that

the 3PL should reduce costs and run a more

of these technologies.

operations, yet they lack the visibility to

Features of CRM and Mobile

Technologies

identify the bottlenecks in their processes,

As indicated in Figure 25, both shippers and

redundant resources and tasks that distract

providers have similar thoughts about the

these is real-time shipment analysis, and both

launch new services, and the least preferred

shippers and providers rank this highest in

usefulness among the alternatives that were

service offerings for different customers based

CRM and Use of Mobile and Cloud Technologies in 3PL Sales Processes

39

Figure 25: Importance of Specific Features for 3PLs Providing and Managing Customer-Facing Activities

1 = Least Useful
Technologies for providing and managing
customer-facing activities

5 = Most Useful
3PL User
Average Rank

3PL Provider
Average Rank

Real-time, accurate shipment analysis

4.2

4.1

Tablet-based dashboard to access details

relating to individual customer accounts

3.8

3.9

Collaborative online workplaces

3.4

3.4

Service request updates via text messaging

3.3

3.2

Sales process automation

2.9

3.4

Source: 2015 19th Annual Third-Party Logistics Study.

3PLs and Customers Benefit from

CRM and Mobile Technologies
As shown in Figure 26, shippers and providers
rated the usefulness of several types of potential
technologies. Similar to the results regarding

have proven themselves over a long period

would be of great value and convenience to
shippers during sales calls and/or follow-up

they are not always among the early adopters

revealed that 40% of shippers said their bid

processes place emphasis on whether or not

will be more receptive to these technologies

while also transferring the sales and sales

of real-time tracking information relating to

customer shipments was top-rated by both 3PLs
and their customers.

Challenges and Opportunities for 3PL

Use of CRM and Mobile Technologies
Although there are opportunities that surround

cost and shipment pricing information and

it is clear there are challenges. One observation

greater visibility of global operations were

that became a topic of discussion in the San

rated as more useful to shippers than providers.

Francisco workshop is that getting sales

However, the providers had higher ratings for

always easy to accomplish. Also, it is not unusual
had a higher rating on the prospect of moreprofessional and productive sales calls and
Looking objectively at these results, it would

those who might be termed laggards when it

management skills of these people to others in

the organization who are among the hunters
and farmers.

40

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 26: Potential Benefits from the Use of CRM and Mobile Technologies by 3PLs

1 = Least Useful 5 = Most Useful

Potential benefits of CRM and mobile technologies

3PL User
Average Rank

3PL Provider
Average Rank

Availability of real-time information relating to customer

shipments (e.g., tracking, etc.)

4.2

4.0

Easy access to cost and shipment pricing information

3.9

3.6

Greater visibility of global operations

3.7

3.4

Increased ability of 3PL sales executives to respond to

customer requests

3.7

4.0

More professional and productive sales calls and customer

presentations by 3PL sales executives

3.0

3.7

Source: 2015 19th Annual Third-Party Logistics Study.

Key Takeaways

other activities that are not directly related to

securing new customers or directly serving
value for the 3PL providers and their
commercial leaders lack global visibility
across their commercial operations and

Although there are more generic salesand 77% of providers agree that the 3PL

of the technologies are streamlining

do not have individual KPI scorecards to

measure and manage performance.
If commercial leaders knew where these

bottlenecks in commercial operations. Also,

there are a number of ways in which 3PL

more tailored to the industry than what is

currently available.
While there are some logistics professionals
security and privacy in relation to the use
of mobile and cloud-based technologies,
discussions within workshop sessions
supported the view that these are not
valid reasons to disqualify any supply
chain solutions that may involve use of
these technologies.

45% of their time engaged in customerfacing activities, such as phone meetings/

conversations and face-to-face meetings.

operations, almost one-fourth admitted

they would cut costs and run a leaner

corresponding information, particularly

organization. Shippers have taken note of

real-time information regarding topics, such

the lack of alignment, too, and more than

as shipment visibility, etc.

one-third agreed and recommended the

cost-cutting approach.

Although there are a number of challenges

and opportunities related to the use of

An interesting distinction in the processes

of relationship building and relationship
management is that of the hunter and the
these new technologies is sometimes easier
primarily hunters, as they are responsible for
developing new customer relationships, etc.,
the added knowledge and familiarity with

amenable to using these technologies,

3PL operations and potential supply chain

and they are also willing to work with

solutions can turn some of these hunters into

farmers as well.

on the important qualitative elements of

relationship building and relationship
management.

CRM and Use of Mobile and Cloud Technologies in 3PL Sales Processes

2015 Third-Party Logistics Study

CRM Benefits for 3PLs

CRM & Cloud Solutions

Increased productivity
Systematic way to track business activity
Measurability of marketing and sales activity
Individual customer service
Automated information updates

CRM

Ensured safety of shipments

Cloud Benefits for 3PLs

What do 3PL sales executives do with their

available time?
Responses to RFPs

Reduction of the total cost of services

(including cost for installations, upgrades,
maintenance fees, etc.)

12%

22%

Pay-per-use model offers more agility,

flexibility and elasticity of business, as well

13%

quick and cost-effective reaction to

23%

less-predictable events
Customized, personalized logistics services
becomes affordable for end customer

Internal
management &
team meetings

13%

Face-to-face
meetings

9%

Phone meetings/
conversations

8%

Preparation/
data
collection
for customer

Pricing issues

Inputting & updating data

3PL Users

3PL Providers

Availability of real-time information relating to customer shipments

(e.g., tracking, etc.)

4.2

4.0

Easy access to cost and shipment pricing information

3.9

3.6

Increased ability of 3PL sales executives to respond to customer requests

3.7

3.4

Greater visibility of global operations

3.7

4.0

More professional and productive sales calls and customer presentations

by 3PL sales executives

3.0

3.7

Potential Benefits of CRM

(1 least helpful, 5 most helpful)

41

42

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Mexico Rising as Manufacturing and

Logistics Hub

Mexico Rising as Manufacturing and Logistics Hub

With more free-trade agreements than any

43

Figure 29 highlights respondents reasons for

other country, a growing manufacturing base

an Economic Partnership Agreement that

is emerging as an economic powerhouse.

grants it preferential access to 44 countries and

important reasons being lower cost wages

over one billion consumers guarantees access

and moving operations closer to the point

A number of companies are moving

manufacturing to the country, which creates

signed 28 Investment Promotion and Protection

strong growth opportunities for 3PLs on both

freight movement and ancillary services.

more than 40 countries, presenting additional

incentives for companies to move operations
there.

world and the second largest economy in Latin

Figure 30 shows that just under half of study

America, as shown in Figure 27. American trade

respondents40%said they have already

renowned as a low-cost manufacturing and

2010 to $507 billion annually, according to the

Workshop participants said concerns over

option for the North American market,

contaminated products being imported from

and study respondents said businesses are

recalls on goods ranging from pet food to toys,
economy by 2050.
Figure 28.

Figure 27: An Open Economy Backed by Sound Fundamentals and Alliances Offers Lucrative Opportunities Within Mexico

Opportunities in Mexico Economic Perspective

14th largest economy in the world
2nd largest economy in Latin America
Economy
Size

To become the 5th largest global

economy by 2050 as per Goldman Sachs

Strong demand for luxury products

within the economy
Top 10% of households hold around
40% of income and 80% of assets

Low country risk (EMBi* +157)

Economic
Outlook

Average growth rate during 2019

expected at 4%

Sound
Fundamentals

ECONOMIC

PERSPECTIVE
Product
Demand

Open economy that guarantees access to

international markets through a network of
FTAs and strategic geographic location

Source: 2015 19th Annual Third-Party Logistics Study.

FTAs

Open
Economy

Agreements
& Treaties

S&Ps long-term foreign currency rating = BBB

S&Ps local currency rating = A-

Mexico has a network of 12 Free Trade

Agreements (FTAs) and an Economic
Partnership Agreement granting it
preferential access to 44 countries and
over one billion consumers

Signed 28 Investment Promotion and Protection

Agreements (IPPA) and Double Taxation
Treaties with more than 40 countries

44

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 28: Percentage of Respondents Moving Operations

to Mexico

Figure 29: Primary Reasons Businesses are Moving to Mexico

1 is the most important reason, 10 is least important

% of Respondents Moving Operations to Mexico

USA

Why has your business shifted operations to

Mexico from other regions of the world?

55%

China

36%

Canada

9%

Antigua & Barbuda

3%

Bangladesh

3%

Brazil

3%

Europa Island

3%

Hungary

3%

Pakistan

3%

Singapore

3%

Thailand

3%

United Kingdom

3%
0%

15%

30%

45%

60%

Respondents also moving operations from: Afghanistan, Algeria, American Samoa,

Angola, Antarctica, Armenia, Bahrain, British Indian Ocean Territory, Burma,
France, Germany, Hong Kong, India, Japan, Lebanon, Maldives, Peru, Pitcairn
Islands, Poland, Puerto Rico, Saint Helena, SriLanka, Sweden, Switzerland,
Taiwan, Thailand, UAE, Venezuela, Vietnam, Virgin Islands, Zimbabwe

Source: 2015 19th Annual Third-Party Logistics Study.

largest percentage of those that are moving

Lower Cost Wages

Closer to Point of Product Consumption

Risk Management

Tariff/Tax Incentives

Lower Overall Operating Costs

Competitive Advantage

Exchange Rate

Closer to Supply Sources

Reduced Freight Transport Time

Source: 2015 19th Annual Third-Party Logistics Study.

Figure 30: Respondents Currently Operating in Mexico

Just under half of respondents have already moved

some of their operations to Mexico
near-shoring alternative option for the North

1-3 years 6.39%

3-5 years 5.28%

to the point of consumption of goods shortens

5-10 years 7.32%

the supply chain, which minimizes potential

10+ years 23.06%

disruptions and cuts costs. It also enables

companies to carry less inventories.
Labor costs are also creating an advantage

are comparable with other nations, and it

Not currently
operating in
Mexico 58.33%

has higher productivity, which enables lowcost manufacturing. Whats more, free-trade
transit zones, local consolidation points
on both inbound and outbound loads and
localized customs clearance lead to optimized
time, transportation costs and administration

Avg
Rank
(1-10)

Source: 2015 19th Annual Third-Party Logistics Study.

Mexico Rising as Manufacturing and Logistics Hub

Opportunities for 3PLs

Manufacturing Within Mexico

45

with security, crime and corruption along

with workforce readiness and infrastructure
(Figure 34).

rest of Latin America and is the 15th largest

cost competitive as compared with similar

Figure 32 shows the top

ventures globally. For years shippers have been

three manufacturing industries included food,

transportation equipment and chemicals.
2012, shippers reported an average logistics cost
In

2013,

computer

a nd

ele c t ron ics

reduction of 21% compared with other parts

manufacturing saw the highest year-overyear production growth14.3%as a result of

reductions of 12% compared to 9% globally and

growth in food and a 1.2% increase in beverages

Remaining Challenges

and tobacco, shown in Figure 33.

of goods produced for domestic consumption,

particularly in the food and beverage sector, is
also increasing. As employment rates within

from lower costs, of those that have moved

have yet to see large revenue growth from
both opportunities and challenges remain.

income and purchase more.

Respondents said they are most concerned

Figure 31: Mexico is Renowned as a Low-Cost Manufacturing and Export Destination

Near Shore option for the North American

market (NAM)
Mexico serving as manufacturing,
engineering and sourcing base for NAM
Ranked 53 out of 148 nations in the
Global Competitiveness Index (GCI)
during 2012- 2013 moving up from
58th rank during 2011-2012

Location
Global
Benchmarking

Free trade transit zones, local consolidation

points (inbound and outbound) and
localized customs clearance lead to
optimized time,transportation costs
Logistical
and administration efficiency
Savings

BUSINESS
PERSPECTIVE

Low Cost
Manufacture

15th largest exporter in the world with 80%

of exports in manufacturing
Exports more than the rest of Latin America

Source: 2015 19th Annual Third-Party Logistics Study.

Local
Market Size

Exports

Dollar
Dependency

Large local market size and growth potential

offers a solid base for loading of manufacturing
and engineering capacity in addition to
export potential

Comparable labor cost as compared

to nations such as China and higher
productivity enable low-cost
manufacturing

Strong correlation between the Peso and USD makes

Mexico a natural choice for companies with high
invoicing in USD

46

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Figure 32: Mexicos Top Manufacturing Industries

Break-up of Manufacturing Production, 2013

Figure 33: Year-Over-Year Changes in Manufacturing

Production

Computer and Electronics segment recorded the highest

y-o-y production growth during 2013 owing to a surge in exports

Break-up of Manufacturing Production, 2013

21%

24%

Food
Transport equipment
Chemicals
Basic metal products
Beverages & Tobacco
Non-metal mineral products
Computer & electronics
Machinery & equipment

0.6
5

4%

0.3

17%

0.1

5%

1.2

5%

-2.9

5%

7%

14.3

12%

-1.1

-5
Food

Basic metal products

Computer & electronics

Transport equipment

Beverages & tobacco

Machinery & equipment

Chemicals

Non-metal mineral products

Others

10

15

20

y-o-y % growth

Source: BBVA Research, Mexicos Auto Industry Outlook: MexicoNow

Source: 2015 19 Annual Third-Party Logistics Study.

th

A lack of quality infrastructure, limited use

by small and medium-sized companies, and

with a shortage of institutions to keep

instead of as a tool or investment. While 27% of

improve security and visibility, a number of

respondents said they are currently buying or

companies utilize track and trace technology,

providing technology services, 14% said they

and 3PLs have the opportunity to differentiate

of technology and certain regulatory aspects

industry. However, this also can create
these areas.

themselves by providing such updates to their

to 18 months.

customers. Shippers and logistics providers

are also encouraging the county to keep the

68% of respondents said they are currently

Respondents said technologies, such as

buying or providing domestic transportation,

warehouse management equipment and

international transportation and warehousing,

software and asset and vehicle-tracking

and 12% said they plan to invest in those areas

solutions need to be increasingly adopted to

border open 24 hours a day, seven days a week.

minimize cargo theft as freight on trucks would

(Figure 35). Nearly

half47%of respondents said they are

advantage for 3PLs that are already using and

purchasing or providing customs brokerage,

but 25% said it needs improvement and 6% plan

said they are seeing increased demand from

companies looking to leverage technology. In
addition, 3PLs typically use software with
global platforms and can integrate systems

challenges and also provide opportunities for

easily with their customers enterprise resource

those that provide the services. Just over 40%

are purchasing or providing freight forwarding.

management systems.

growth is within information technology

ranks 106th
there is little use of information technology

midnight to 6 a.m. daily.

Mexico Rising as Manufacturing and Logistics Hub

Figure 34: Top Concerns of Challenges About Doing Business in Mexico

Top concerns or challenges about doing business in Mexico: (Rate 1 to 10)

Freight/Supply Chain Transparency
Lack of Strategic Partners/Suppliers in Region
Border Crossing Delays
Executive Level Talent
Regulations/Tax Structure
Economic Stability
Infrastructure
Workforce Readiness
Security/Crime/Corruption
1

Source: 2015 19th Annual Third-Party Logistics Study.

Figure 35: Trends in Logistics Service Offerings in Mexico

Currently buying or providing

Need
Improvement

Planned
Investment
(12-18mos)

Domestic transportation

68%

61%

12%

International transportation

68%

33%

12%

Customs brokerage

47%

25%

6%

Information technology (IT) services

27%

22%

14%

Order management and fulfillment

32%

21%

6%

Customer service

32%

21%

6%

Warehousing

68%

20%

12%

Transportation planning and management

33%

19%

7%

Services

Freight bill auditing and payment

19%

14%

4%

Inventory management

29%

13%

5%

Freight forwarding

41%

10%

5%

Reverse logistics (defective, repair, return)

32%

10%

3%

Service parts logistics

20%

10%

2%

Cross-docking

38%

10%

4%

Sustainability/green supply chain related services

13%

9%

2%

Fleet management

7%

8%

3%

Product labeling, packaging, assembly, kitting

36%

7%

4%

LLP (Lead Logistics Provider) / 4PL services

21%

7%

4%

Supply chain consultancy services provided by 3PLs

20%

7%

4%

Source: 2015 19th Annual Third-Party Logistics Study.

47

48

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Issues with Infrastructure

it is greatly used in other countries, including
road system, and respondents cited a lack of
transportation infrastructure as one of the
top challenges they face in moving freight by

trucking is integral to freight movement.

result of highway fees and the structure of the
trucking industry.

Furthermore, dealing with the Public Registry

connections with trucking companies but not

of Property of the Federal District can be

with railroads.

particularly time consuming, and paying of

Recent growth in certain manufacturing

and automotive parts, has encouraged

average of 155 hours to complete. Registering

investment in multi-modal transport corridors.

task, requiring 74 days in total compared with

Whats more, the lack of a border-crossing

can haul goods into limited zones surrounding

the border, freight has to be handed off to either

development t h roug h bu i ld i ng a nd
modernizing an 82,500-plus-mile network of

of 34 countries that have joined forces to foster

highways, 76 airports, about 17,000 miles of

global development. However, many 3PLs

railroads and 117 maritime ports (Figure 36).

often lease space, so they arent faced with the

Political, Regulatory and Workforce

Concerns

challenges that come with buying and building

a facility.
While respondents also had concerns over

the countries by truck.

are among the challenges for doing business in

In addition, there is limited connectivity

was the most-affected Latin American economy

workforce readiness, 3PLs said they have

been able to tap into an increasingly well-

between maritime ports and railroads and

Workforce readiness can depend on where a

truck transportation systems. Air transport of

Figure 36: Opportunities from the Rise of Infrastructural Development and the Increasing Role of the Private Sector

Technologies such as warehouse

management equipment and software,
asset and vehicle tracking solutions,
etc. need to be increasingly adopted
to ensure cost effectiveness

Attractive
manufacturing
destination
Greater
reliance on
technologies

New treaties/alliances, such as treaty with Peru

and the Pacific Alliance, desires supply chain
efficiencies through logistic integration for
Mexico to be globally competitive

Thrust on
infrastructure
development

KEY

OPPORTUNITIES

New
treaties/trade
alliances

Opportunities for the private sector to work together with

government to create public-private partnerships that invest
in infrastructure development

Source: 2015 19th Annual Third-Party Logistics Study.

Recent growth in Mexicos manufacturing

industries such as aerospace and automotive, etc.
has encouraged investment in multi-modal
transport corridors

Resolution of
regulatory
issues
Greater
role of private
sector

Focusing on infrastructure development

through building and modernizing a
133,000-kilometer network of highways,
76 airports, 27,000 kilometers of railroads
and 117 maritime ports

Aiming to resolve regulatory issues such

as the creation and implementation of the
so-called "one-stop-shop" for carrying out
procedures related to the import and
export of goods

Mexico Rising as Manufacturing and Logistics Hub

manufacturing facility is located and how big

the pool of surrounding employees is, and one

up the largest percentage of those moving

respondent from a leading 3PL stated during a

with workforce readiness, and the 3PL has been

and a shortened supply chain can minimize

able to ramp up faster than anticipated based

are also seeing an increase in the domestic

Key Takeaways

employment increases. Respondents said

those that are looking to move operations

improving, with respondents reporting that

entire supply chain.
both consumption and as a manufacturing
A lack of quality infrastructure, limited use
of technology and certain regulatory aspects
the top three manufacturing industries
are food, transportation equipment and
technologies by small and medium-sized
rest of Latin America and is the 15th largest

companies, and most companies see

tool or investment. However, technologies

Growth in manufacturing is creating

such as warehouse management equipment

opportunities for 3PLs as logistics services

and software, and asset and vehicle tracking

solutions need to be increasingly adopted

businesses cost competitive as compared to

similar ventures globally.
these areas.
Just under half of study respondents40%
said they have already moved some of

to sources as the most important factors as

the primary drivers of the change.

49

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

2015 Third-Party Logistics Study

Doing Business in Mexico

Economic Overview - Mexico is a leading Latin American
nation specializing in manufacturing and exports of goods

Import partners

GDP
$1,177.4bn

US (50.5%)
China (15.5%)

Import
$370.8bn

Japan (4.8%)

Export
$370.9bn
Export Partners
US (78%)

An open economy backed by sound fundamentals and several

alliances offer lucrative opportunities for doing business in Mexico

To become the 5th largest global

economy by 2050 (per Goldman Sachs)

14th largest
economy in the world

15th largest exporter in the world

with 80% of exports in manufacturing

A network of 12

Free Trade
Agreements (FTAs) and an

Around 40% of survey respondents are

currently running operations in Mexico

10+ years

5-10 years

3-5 years

1-3 years

23%

7%

5%

6%

Economic Partnership Agreement

granting it preferential access to 44
countries and over one billion consumers

Companies operating for more than 10 years primarily come

from the manufacturing, consumer products and high-tech
industries
Businesses are primarily moving operations to
Mexico from the US and China to take advantage
of lower wages as well as moving their products
/services closer to the point of consumption

Top reasons for moving operations to Mexico

1 - Lower Cost Wages
1 - Closer to Point of Product Consumption
3 - Risk Management
3 - Lower Overall Operating Costs
3 - Competitive Advantage
3 - Tariff/Tax incentives

Security, crime and corruption are the most

concerning factors for those currently doing
business or looking to do business in Mexico

Top 3 concerns or challenges about doing

business in Mexico
Security/
crime/
corruption

Workforce
readiness

Infrastructure

www.3plstudy.com

50

Mexico Rising as Manufacturing and Logistics Hub

51

52

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Strategic Assessment

Strategic Assessment

Evolution of the 3PL Business Model:

New Competition

omni-channel supporting technology services

53

embark on new partnerships, these new

solutions have the potential to alter the way

mobile and Web development in-house to

from companies, and accordingly, companies
are investing in alternative solutions to
differentiating their services.

test the best features and structure for their

is unclear.

customer base. By doing so, they are able to

spend more time developing in-house systems
and processes that contribute to their omni-

increasing, and there are many startups on the

channel competitive advantage and ultimate

horizon looking to provide last-mile logistics

success. Although these companies may be

and companies are looking for additional

spending more to develop a custom solution

ways to leverage the money they are spending

of their own, they are ensured that it will be

is creating in-house delivery services to meet

to increase revenue streams. In some cases,

companies are offering these services to new

a result, they may develop a top-tier solution

customers or competitors and may create a

or skill set that can be used within their own

solution that can be spun off or provided as

business and even beyond.

a service to others in a similar or even the

tested and proven in some sectors, including
the logistics divisions of large manufacturers.

including San Francisco, New York and London.

Between the test tucks and drone news that

In a different scenario, some companies are

choosing to create partnerships to share in the
because often the partners may compete
for some of the same customers. Procter &

duty equipment manufacturer, created a

Gambles partnership with Amazon, in which

logistics unit to ship products to customers

the consumer goods company lets Amazon

set up shop inside its warehouses, means it is
competing with its own direct-to-consumer
model. However, the company is able to gain
insights into trends, receive a boost in online

is quickly evolving.

What will we see happening in the

3PL market in the near future?
Where will companies invest? Will
they focus on last-mile logistics and
will they replace other players that
currently offer these services?
Supply Chain Risk Management

sales through the Amazon platform and enjoy

organizations where supply chains and the
create a state-of-the-art service parts logistics

also provides preferential treatment because

risks they face have evolved from a back-

product will always be in stock.

to share development costs and risks and
also increased 3PL market opportunities for

What is the pricing model? What

is the value proposition to others,
particularly for those that compete
in the same retail space?
Alternatively, some companies are looking

As customers continue to demand more

to avoid additional investments altogether.

from retailers and ultimately from 3PLs, it is

As noted in the omni-channel section of this

boardroom agenda and where recognizing the

enhancing the effective management of supply
chains worldwide. In fact, the development of
processes, metrics and tools for supply chain
risk management has become one of the highest
organizations today.

likely there will be increased investments on

Of note is the growing level of commitment
make deliveries to online shoppers, effectively

3PLs are placing on risk management services

among those they promote and provide

these investments will be either shared across

shoppers can inform the retailer about their

clients. When looking at risk management,

companies or developed into alternative service

destination location and volunteer to deliver

logical questions shippers should ask are to

offerings for a wider customer base to improve

packages for online customers. In return for the

the return on investment.

delivery, customers would receive a discount

involved in the risk management process and

on their shopping bill.

how they can create strategies to determine how

those involvements will be helpful. Within the

help retailers, a growing number of companies

are looking to bring some of their outsourced

If companies continue to creatively invest

London workshop, participants discussed an

54

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

ownership of inventory once it is in transit

and fewer young people continue to select

within a certain geographic location. During

in areas critical to the companys success, such

trucking as a career option. New supply chain

the San Francisco and Singapore workshops,

as coffee, other commodities and advanced

models and mobile devices are making just-inall the more possible, but professional drivers

facilitate the ability of 3PLs to support

their clients with capable risk management

remain one of the most critical links in supply

remains relevant, Starbucks board of directors

the chain.

reviews it annually.
effectiveness of real-time shipment visibility
that is so critical to 3PLs and their clients.

Given the current interest in risk management

and the emphasis most 3PLs are placing on

Within the risk management process, it is

developing new products and services to

helpful to understand the range of risks an

create value for their customers, this seems

organization, and therefore a supply chain,

to be a prime area for collaboration between

in 2013 trucks moved 69.1% of all domestic

3PLs and their customers. In the interest of

potential impact for each type of risk and

determining the value derived from risk

management processes, it would be useful to

are major natural disasters, such as the

better understand the roles that 3PLs may play

in partnership with their customers to identify

northeastern coast of Japan. It was responsible

and then mitigate, eliminate or deal with the

to haul more because demand goes up, well

for a deadly tsunami that struck the Japanese

types of risks that may affect the overall supply

need to add more driversnearly 100,000

coastline and also caused the largest supply

chain process.

chain disruption in modern history. A lessconcern to supply chain managers, is a spike

in demand for seasonal holiday gifts, and the
from a logistics providers inability to deliver
all shipments when they were promised to

keep pace.

Where are the areas of opportunity

for 3PLs and their customers to
work together on the formalization
and implementation of processes,
metrics and tools related to
risk management?

It is clear the truck driver shortage is intensifying

and its impact on the supply chain is potentially
of drones or driverless trucks, and companies
are testing the technology. While both may be
future options, they are still years away from

even more important as companies increasingly

focus on providing a perfect customer

The Intensifying Truck Driver

Shortage

being a reality on the long stretches of highway

that lead to the narrow, winding streets that dot
American neighborhoods.

developed approach to risk management is the

global coffee and beverage provider Starbucks
countries and does business with 9,000 suppliers
worldwide. Starbucks has created an enterprise

conversation and academic concern for many

in the supply chain for many years. During the
Great Recession in 2007 to 2009, freight demand
dwindled and many trucking carriers shuttered
and parked their trucks.
As the economic rebound continues, freight

any trends or risk factors that could interrupt

demand is increasing, but concerns over who

Great Recession, the pool of aging truck drivers

before they hinder Starbucks ability to service

has become older. Retirements and regulations

its customers.

focused on improving health and safety have

Potential risk factors for Starbucks include

supply interruptions, financial volatility
and geopolitical events. As part of its risk
management program, Starbucks has also

further whittled down the driver pool. New

regulations surrounding drivers hours of
less productive in an effort to improve safety,

their trucking operations to 3PLs as a solution,

but this may be just kicking the can down the

Strategic Assessment

If I could hire 2,000 truck drivers right now I

balloon to nearly 240,000 drivers by 2022,

could put them to work, today.

everything they can to attract and retain truck

recruiting techniques and creative advertising
methods to offering higher wages, signing
perks and better routing to get truckers more
investing in equipment to improve the drivers
higher cost of doing business.

55

favorable conditions for production while

sometimes trading off occupational health

Are shippers and 3PLs considering

the effect a driver shortage will have
on their fulfillment capabilities?
Will carriers and 3PLs start to have
preferred shippers in times of tight
capacity? As companies expand the
number of fulfillment options for
customers and provide a seamless
omni-channel shopping experience,
who will provide and pay for the
increases required for the final-mile
of delivery?

and safety.
A number of leading businesses, including
Nike, Levi Strauss and Walt Disney, have
incorporated sustainability into their corporate
culture. Others are joining suit and providing
guiding principles on how to manage the
business while contributing to the social and
economic development of the communities
where they operate and serve.

approach and includes a stronger emphasis

on issue resolution, risk reduction and

abundance of veterans returning from the

federal programs are making it easier for
veterans to get commercial drivers licenses.
Still, it isnt enough to meet demand.

Wo r k i n g C o r p o r a t e S o c i a l
Responsibility Into the Supply Chain
For international corporations, corporate social
of how companies should do business in a
sustainable manner, is growing in importance.

competition the trucking industry faces from

other industries, including the building,
industries pull employees from the same pool
of candidates of would-be drivers, but dont
require long travel or much time away from
home.
It is likely that companies will begin making

Not only are companies demanding more of

themselves and their suppliers, consumers
i n c r e a si ng ly

s c r ut i n i z e

compa n ie s

approaches and demand improved social and

than ever, and companies are concerned not just
with natural resources, but also human rights,
labor practices, environmental impact, business

nimble reaction to problems, accompanied

by innovation (e.g., green materials, carbon
footprint optimization), capacity building,
crisis management and media relations.
Strategies often address actions throughout
the entire supply chain, including logistics and
distribution operations, and there is increasing
demand for better checks and balances on
role along the supply chain, all the way from
material sourcing to production and global
transportation.

ethics and corporate governance.

upstream adjustments, such as shifting

they are changing how they address talent

distribution patterns, relying on intermodal

management and the individuals who

transportation and shipping larger quantities

at one time. However, trucking remains the
the last leg of the journey requires trained,
professional drivers. If freight demand grows
as it is projected to, the driver shortage could

particularly in labor-intensive sectors, such

oversee sustainability. Achieving success as a

leader in the past required a strong focus on

electronics, takes place in low-cost countries

where working conditions, compliance
standards and human rights enforcement
are less advanced. Emerging economies often
offer even cheaper labor and an even weaker
countries attract foreign investment through

to have certain leadership attributes to improve

the sustainability of the global supply chain.
Effective leaders need to know how to mitigate
the emerging risks to the key value drivers of
the supply chain, propose remedial measures
addressing crucial issues, and respond to
requests while maintaining independence
and courage, as generally sustainability
practitioners must be meticulous and strict

56

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

about various procedures and principles

meaning they may not be the most popular
group of people within an organization.

Historically, supply chain sustainability has

come under the sourcing and/or operations
portfolio. However, a recent study by Korn/
Ferry International showed that half of
organizations now have that function reporting

reporting into legal, corporate governance or

that while a sustainability approach is a vital
factor in the end-to-end supply chain, the two
are not necessarily under the same leadership
hierarchy.
However, sustainability and sourcing functions
must remain well connected, as they drive
toward a mutually agreed upon destination. As
skills, business savvy and courage to make
advancements without jeopardizing the overall
company mission.
While embedding social and environmental
concepts into the business operation is
important, it needs to be done without

various business models, including the visible/

physical operations along with how companies
can make money off sustainable products and
services.
Although taking a sustainable supply chain
approach can require additional spending to
meet social compliance regulations, it can help
generate savings through alternative energy,
resource recycling, cleanup avoidance and
overall business risk reduction, as well as
potentially enhance a companys public image.

How will 3PLs respond to the growing importance of CSR? What will shippers
demand of their partners within the supply chain? Will CSR improve
productivity and efficiency of shippers and 3PLs?

Strategic Assessment

57

58

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

About the Study

About the Study

Over the span of 19 years, this study has

59

Ferry International, Penske Logistics, eft

(formerly eyefortransport) and IndustryWeek.

global 3PL industry. In that time, many 3PLs

on data gathered from respondents in North

have evolved from tactical service providers

America (67%) and Europe. Readers are asked

A distinguishing

to collaborative partners delivering, in many

to be cautious about comparing the data in

feature of the Annual 3PL Study is the multiple

instances, a comprehensive suite of integrated

this report to data from Annual 3PL Study

streams of research the study team undertakes

logistics services. Additionally, we have

reports produced prior to 2014, since the base

observed an evolution in which providers

of respondents is more geographically limited.

of 3PL services, and customers have become

The Annual 3PL Study Process

better buyers and users of 3PL services. Dr.

Steps and elements of the development of the

ideas throughout the year from key industry

Strategic Research Group, which also helps to

Annual 3PL Study include:

Links to the Web-based survey
tool are circulated through Annual 3PL Study
partner organizations for distribution to their
study to capture and measure this rapidly
evolving industry.

circulated in mid-2014, garnering 433 usable

responses, from both shippers (users of 3PL

Annual 3PL Study now serves as a vital

tool for use by shippers and 3PLs, and as a
on the state of the 3PL industry. In a year-round
process, the study team establishes topics of
interest, develops the survey tool, conducts
the research, analyzes the results, writes this

participants and through desk research

vet potential topics of interest. Survey topics

and trends facing both shippers and logistics
services providers. Following the survey, the
team conducts intensive, one-day facilitated
shipper workshops that enable the team to work

services) and non-users of 3PL services, as well

as responses to a separate, related version of the
survey by 337 respondents from the 3PL sector.
are also presented on a dedicated Website,
www.3PLstudy.com.

to discover deeper implications.

interactive workshops, held in London,

In addition to measuring core trends in

the 3PL industry, the Annual 3PL Study conducts

Just as this study has evolved and changed,

so has the participation rate among members
Annual 3PL Studys partner

chain topics that affected both shippers and

omni-channel, strategic workforce planning,

organizations. As part of this years survey

Solutions Environment facilities that are

process, we attracted 770 respondents, which

attributes the change to a variety of factors,
from competing priorities to survey fatigue
among prospective respondents.

in Singapore. Events in recent years also have

available throughout the world. (See http://www.

Annual 3PL Study
Sponsors of the 19th Annual 3PL Study are Korn/

capgemini-consulting.com/acceleration-capabilities/
accelerated-solution-environments for more detail
about ASEs.)

60

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

Annual 3PL Study is

logistics services for its clients and customers.

presented and discussed in prominent supply

A fourth-party logistics (4PL) provider is one

chain industry venues, including the following:

that may manage multiple logistics providers

or orchestrate broader aspects of a customers

Presentations at influential industry

industry is on track to face a shortage of

strategic workforce management can aid
in hiring and retaining top talent among

objectivity, shippers were not asked to name

within the industry and the dynamics of

2015 Third-Party Logistics Study

Goals
Research and analysis for the
of Singapore, the Gordon Institute of

supply chain professionals are changing,

and the study team sought to understand
the return on investment companies obtain
from strategic workforce management.

chapter sets out to:

Business Science (GIBS), the business

Given advances in mobile technologies

what 3PLs offer.

(e.g., smartphones, mobile applications,

education programs available through the

3PL services and to recognize key shipper
and 3PL perspectives on the use and
(National Association of Strategic Shippers

provision of logistics services.

3PLs, it is an ideal time look at how these

can enhance the quality of 3PL-customer
relationships. In addition to trying to
understand the ways in which customers

relationships, and to learn how both types

weeks following the release of the annual
study results in the fall.

of organizations are using these relationships

technologies, the research focuses on how

to improve and enhance their businesses and

companies can help to make 3PL sales

supply chains.

such as Supply Chain Management Review,

Logistics Management, Inbound Logistics,

that are attributed to the use of 3PLs.

creating strong growth opportunities for

Logistics Quarterly, Supply Chain Quarterly and

Document what types of information

Supply Chain Digest and IndustryWeek.

technologies and systems are needed for

Webcasts conducted with media, publications

Supply Chain Management Review, Logistics

3PLs to successfully serve customers, and

number of supply chain organizations facilitate

addition to completing the survey, individual

participate in facilitated workshops and by

ventures globally.
not to outsource to 3PLs.
Based on what was learned from the
Goals for the

chapters include:

Assessment to take an introspective view of

the future of the 3PL industry and shipper-

is creating both opportunities and challenges

3PL relationships.

for retailers and shippers. While the

importance of the omni-channel network

seeks to understand the opportunities and

Survey recipients were asked to

think of a third-party logistics (3PL) provider

as a company that provides one or more

study process, the team uses the Strategic

and reliance on an omni-channel network

is well understood, omni-channel supply

contributors.

respondents reasons for shifting operations

cost competitive as compared to similar

the research process by asking members and

other contacts to respond to the survey. In

3PLs on both freight movement and ancillary

being achieved.

Management, Stifel Nicolaus and others.

Each year a

within the manufacturing industry is

obstacles associated with the omni-channel

options retailers offer and how technology
is facilitating growth within the network.

About the Study

About the Respondents

61

Figure 37: Respondents by category

: Figure 37 reveals the percentage of

shipper respondents to the survey, including

Percent

both shippers (users) and non-users of 3PL

User

40%

Non-User

16%

3PL/4PL

44%

Total Respondents

100.00%

non-user responses are helpful because they

provide valuable perspectives on why they do
not currently use 3PLs at this time, as well as
on a number of other relevant topics. Shipper
respondents are typically managers, directors,

Figure 38

Source: 2015 19th Annual Third-Party Logistics Study.

reported by shippers, accounting for almost

92% of the overall respondents.
Figure 39 includes all shipper respondents

Figure 38: Respondents by industry

Consumer products
12%

Food and Beverage

9%
Healthcare
7%
Chemicals
7%

Retail
10%

industries served (actually quite similar to the

Other
17%

to a similar, but separate version of the survey.

Manufacturing
14%

Hi-Tech
10%

anticipated total sales for 2015.

Automotive
4%

Oil and Gas

3%

Construction
4%

Telecom
3%

Source: 2015 19th Annual Third-Party Logistics Study.

Figure 39: Respondents by sales

Which of the following categories best

represents your organizations anticipated
total sales for 2014? (select one)

Percent

US$25 billion or more / 20 billion or more

17%

US$1 billion less than US$25 billion / 750

million less than 20 billion

37%

US$500 million less than US$1 billion / 375

million less than 750 million

14%

Less than US$500 million / 375 million

32%

Total Respondents
Source: 2015 19th Annual Third-Party Logistics Study.

100.00%

62

2015 19TH ANNUAL THIRD-PARTY LOGISTICS STUDY

About the Sponsors

Capgemini Consulting

Penn State University

Penske Logistics

Penn State is designated as the sole landgrant

Penske Logistics is an award-winning leader

in logistics and supply chain management.
Founded in 1969 and headquartered in

helps organizations transform their business,

providing pertinent advice on strategy and

and operations in North America, South

America, Europe, and Asia. Penske Logistics

strategy. Our mission is to transform your

employs more than 10,000 associates

digital landscape, with consistent focus on

sustainable results. We offer a fresh approach
to leading companies and governments that

range of solutions including: dedicated

more than 30 faculty members and over 600

uses innovative methods, technology and the

talents of over 4,000 consultants world-wide.

carriage, distribution center management,

transportation management, lead logistics,

respected academic concentrations of supply

freight brokerage, and supply chain

chain education and research in the world.

For more information:
www.capgemini-consulting.com.

around the globe rely on Penske Logistics to

educational level, including undergraduate,

manage and optimize their supply chains

graduate, and doctorate degrees, in addition

every day.

to a very popular online, 30-credit professional

masters degree program in supply chain

Visit www.PenskeLogistics.com or call

1-800-529-6531 for more information.

portfolio also includes open enrollment,

broader business community. Along with

in research, benchmarking, and corporate

identifying relevant supply chain issues that

business environment.

researchers to advance the state of scholarship

1 undergraduate and graduate programs in

supply chain management, according to the
most current report from Gartner.
For more information, please visit
www.smeal.psu.edu/scis and
www.smeal.psu.edu/cscr.

About the Sponsors

63

Korn/Ferry International

eft

IndustryWeek

At Korn Ferry, we design, build, attract and

eft is the global leader in business

IndustryWeek is the only media brand with

ignite talent. Since our inception, clients

have trusted us to help recruit world-class

intensive, dedicated coverage of the nearly $2

the transport, logistics and supply chain
industry. For over 15 years eft has specialized

leadership and talent consulting services to

empower businesses and leaders to reach

supply chains around the globe that feed it.

Focusing on best practices and analysis, IW

with their industry peers, and with the

their goals.

and technologies that aid manufacturers in

their work. eft provides the industry with

becoming more innovative, competitive and

essential business intelligence in the form

of news, reports, benchmarking data, white
we convert potential into greatness. Our

newsletters, white papers, Webinars and

papers and high-level events. With over 15

annual events in Europe, North America

and leadership development programs, to

and Asia, eft provides the primary meeting

innovation, supply chain, technology and

and recruitment process outsourcing (RPO).

industry. eft events are consistently attended

include the IW Best Plants, the IW 50 Best

Organizations around the world trust

makers from the leaders in supply chain and

enterprise learning, succession planning,

logistics.

Leader of the Year.

For a list of current research, news and

Learn more at

events please visit www.eft.com.

http://www.industryweek.com.

responsibility we meet every day with

other factors that could affect the information contained herein.

Credits

Name

Company

Bhawna Bakshi

Korn Ferry

Stefano Battan

STMicroelectronics

David Brandt

GSK

Courtney Brown

Capgemini

Joe Carlier

Penske Logistics

Alastair Charatan

Aggregate Industries

Edwin Chia

GSK

Felix Chow

FT Industrial Supplies

Neil Collins

Korn Ferry

Michael
Culme-Seymour

Name

Company

John Lynch

Korn Ferry

Niels Maas

Metro A6

Goh Mee Leng

TLI

Philip Molnar

Selecta Managment AG

Colleen ONeil

Korn Ferry

Natasha Oxenburgh

Lanetix

Dimitri Pimbert

DKSH

Raul Portela

Triumph International

Zahid Rashid

Jelly Belly

Marken

Paul Reilly

British American Tobacco

Zack Deming

Korn Ferry

Chris Saynor

Eft

Joe Figueroa

Penske Logistics

Giovanni Schoordijk

Oracle

Janet Godsell

WMG, University of Warwick

Tan Siang Choong

Unilever

Mark Goh

TLI

John Simmons

Textainer

Melissa Hadhazy

Capgemini

Jasbir Singh Nanda

Unilever

Heidi Hoffman

Korn Ferry

Marco Stroeken

Penske Logistics

Philip Teo

Philips Electronics

Ian Truesdale

True Consulting Services

Evelina Vijeikiene

Korn Ferry

Shanton Wilcox

Capgemini

Graham Wilkie

Geodia

Mark James
Bjorn Jensen

Electrolux

Michael Keong

TLI

Mehmet Kunter

Unilever

Wong Kwang Yong

Infineon Technologies

Leo Kwee Eng

Philips Electronics

Dr. John Langley

Penn State University

Peter Woon

Marina Bay Sands Pte Ltd

Ron Lentz

G2 Capital Advisors

Athena Xu

Nelson

Lim Li Li

Nike Trading Singapore

Angela Yang

Penske Logistics

Stan Lin

Penske Logistics

Contacts
For additional copies of this publication or for more information about the study, please contact any of the following:

C. John Langley Jr., Ph.D.

Randolph P. Ryerson

Clinical Professor of Supply Chain Management

Director of Communications

Director of Development, Center for Supply Chain Research (CSCR)

Penske

Penn State University

Reading, PA, USA

University Park, PA, USA

T: +1 610.775.6408

T: +1 814 865 1866

randolph.ryerson@penske.com

jlangley@psu.edu
Neil Collins
Dan Albright

Senior Client Partner

Senior Vice President, North America CPG,

Global Sector Leader, Logistics & Transportation Services

Retail and Distribution Leader

Korn Ferry

Capgemini Consulting

Atlanta, GA, USA

Atlanta, GA, USA

T: +1 404 783 8811

T: +1 404 806 2169

neil.collins@kornferry.com

dan.albright@capgemini.com
Zack Deming
Shanton Wilcox

Principal

Vice President

Korn Ferry

Logistics and Fulfillment Leader

Atlanta, GA, USA

Capgemini Consulting

T: +1 404 222 4057

Atlanta, GA, USA

zack.deming@kornferry.com

T: +1 404 431 8895

shanton.wilcox@capgemini.com

Casey Kelly
Senior Client Partner

Melissa Hadhazy

Korn Ferry

Capgemini Consulting

Global Industrial Markets, Asia-Pacific

Burbank, CA, USA

T: +65 9169 0024

T: +1 708 297 4564

casey.kelly@kornferry.com

melissa.hadhazy@capgemini.com
Chris Saynor
Courtney Brown

CEO

Capgemini Consulting

eft

Chicago, IL, USA

T: +1800 814 3459 ext 7529 (from USA);

T: +1 404 910 2371

T: +1866 996 1235 ext 7529 (from Canada);

courtney.brown@capgemini.com

T: +44 20 7375 7529 (from Rest of the World)

csaynor@eft.com

Sherry Sanger
Senior Vice President, Marketing

Dave Blanchard

Penske

Senior Editor

Reading, PA, USA

IndustryWeek

T: +1 610.796.5200
sherry.sanger@penske.com

Cleveland, OH, USA

T: +1 216 931 9794
dave.blanchard@penton.com