74% Anticipate an Increase Spend over Next Two Years, Higher than Annual 3PL Study Recently Found

There was new research on the use of logistics outsourcing from the analysts at Gartner this week.

Supply Chain Digest Says...   While 3PL can upgrade or acquire new technologies on behalf of their shipper customer, will only be an option for the 3PL if the shipper extends their contract agreements. What do you say? Click here to send us your comments   Click here to see reader feedback

After finding that 66% of companies said they increased their level of spend this year with third-party logistics companies (3PLs), 74% expect that trend to continue over next two years, Gartner’s survey said.

From March through May 2021, Gartner surveyed 298 supply chain professionals in the US Europe and APAC who had decision-making capacity regarding supply chain outsourcing.

The expected increase in logistics outsourcing spend from the Gartner survey is higher than the 56% of shippers who said they are increasing their use of 3PLs in the data from the annual Third-Party Logistics Study, released at the CSCMP conference in September. That study was led as usual by Dr. John Langley of Penn State.

That same study found that on average the share of spend on transportation and distribution management with 3PLs was expected to fall rather sharply this year.

For example, the study found he percentage of shippers' transportation spend managed by 3PLs was forecast on average at 51%, down from 64% last year. Meanwhile, the percentage of shippers' warehousing spend managed by 3PLs was forecast to also fall sharply to just 37%, a drop from 48% last year.

Collaboration is Key to Success, Gartner Says

“Logistics outsourcing to third-party logistics providers has been on the rise for a while, and there is no indication that this will change anytime soon,” said David Gonzalez, vice president analyst with the Gartner Supply Chain practice. “However, logistics leaders are grappling with significant challenges that they can only address in collaboration with their 3PL partners.”

When asked for their top three logistics priorities, the leading areas cited by survey respondents were:

• Improve or update technology (37%)
• Cost reduction/cost optimization (31%)
• Increase customer satisfaction (29%)

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Although 3PLs can help address many logistics challenges, it requires collaboration and inevitably compromise on both sides to get that result, Gartner says.

Gartner observes, that while 3PL can upgrade or acquire new technologies on behalf of their shipper customer, will only be an option for the 3PL if the shipper extends their contract agreements to allow the depreciation of the investments and/or partly shares the financial burden with the 3PL partners.

“The 3PL community has a lot to offer, and the shipper community has a lot to gain. In the face of on-going disruptions, growing carrier influence and customer selection, shippers and 3PLs must work together to mutually protect their vested interests. If they can enter a trusted relationship, there’s lots of room for future innovation and opportunities,” Gonzalez concluded.

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