The 28th Annual Third-Party Logistics Study, conducted by Dr. C. John Langley, a supply chain professor and researcher at Penn State University, in collaboration with NTT DATA and Penske Logistics, was centred around on how supply chains are addressing today’s difficulties by incorporating data-driven plans as well as emerging technologies. The publication for 2024 was released at the recent Council of Supply Chain Management Professionals (CSCMP) EDGE conference held in Kissimmee, Florida.
The study aimed to gain insights into the present state of third-party logistics (3PL) providers as well as users of 3PL services. It focused on understanding the shifting nature of 3PL relationships, the rising significance of data flow, as well as the increasing importance of automation.
The report for this year provides valuable insights on how to navigate talent troubles and economic volatility. It also highlights the enormous potential of logistics in reverse, the ongoing expansion of the cold chain, the downturn of online shopping, and the changing expectations of consumers.
The main findings are:
The relationship continues to be robust between 3PL & Shippers-
The most recent study shows that shippers are increasingly satisfied with their 3PLs, indicating that the relationships between them continue to strengthen. The shippers have gone on to express their positivity with a response rate of 95%, which happens to be a 12% increase from last year. That said, there was a rise in the number of shippers who reported lessening or consolidating their third-party logistics providers.
Competition for talent is intensifying-
78% of shippers and 40% of third-party logistics providers have reported that labour challenges have had an effect on their service level contracts. The most challenging places to fill are those for hourly employees, such as pickers, packers, truck drivers, as well as equipment operators who happen to hold licences. Both 3PLs as well as shippers have expressed their commitment to implementing automation and technology so as to enhance efficiency, prioritise safety in the workplace, and at the same time attract talented employees.
Data, analytics plus intelligence playing crucial role in driving supply chain optimization-
The volume of data transferred between shippers and third-party logistics providers happens to be constantly increasing. Nearly half of the shippers as well as third-party logistics providers have recognised the importance of automating supply chain planning choices and have devised plans to do so. In addition, 25% of shippers as well as 27% of 3PLs have already taken steps towards automating low-risk decisions. The areas that provide the most value are supply planning, which stands at 65%, demand forecasting, at 61%, and inventory management, at 61%. According to 3PLs, the greatest importance was given to route improvement, with 61% of respondents valuing it the most. This was followed by inventory management, which was valued by 55% of respondents, and freight invoicing and billing, which was valued by 54% of participants.
Emerging technology crucial for the future growth of supply chains-
This view is supported by a substantial majority, with 87% of shippers and 94% of 3PLs expressing agreement. The areas of interest that are currently at the forefront include developed analytics for prediction, wearables and mobile technology, and warehouse automation and robotics.
Enhancing the Supply Chain Resilience-
Shippers and third-party logistics providers are making efforts to strike a balance between the need for recovery and considerations such as inventory levels, sourcing, and cost. Data-driven decisions are playing a crucial role in supporting supply chains by providing valuable information for contingency planning as well as network optimisation. The growth of direct-to-consumer online sales has begun to slow down, prompting shippers and logistics providers to adjust and meet the constantly changing demands of consumers.
Dr. Langley’s study seeks to capture and measure the ongoing shifts in the industry while also documenting the evolution of the third-party logistics sector.
According to Dr. Langley, the 3PL sector is currently dealing with various external factors. Logistics service providers are making strides towards improving logistics efficiency and minimising supply chain expenses. 3PLs and their customers are utilising their relationships, as well as technology, data, analytics, as well as supply chain talent, to enhance agility and achieve greater success.
Andy Moses, senior vice president of sales and solutions at Penske Logistics, applauded the 2024 3PL Study for its ability to decode the intricacies of the modern supply chain and provide valuable insights into its fundamentals. In the current environment, shippers have numerous needs, and third-party logistics companies are well-positioned to effectively stabilise and adjust to meet them.
Irv Grossman, senior vice president of NTT DATA Supply Chain Consulting, stated that the 3PL Study, which now happens to be in its 28th year, remains an excellent benchmark when it comes to tracking supply chain trends and the evolving relationship between shippers as well as 3PL/4PL providers. The shared insights will be helpful to both providers and shippers, allowing them to enhance their efficiency in their current supply chain surroundings.
