Third party logistics providers to play big role in future of shipping

In business, being able to follow trends is key to staying ahead of the competition. If your company is constantly playing catch-up, you will find yourself spending more time upgrading technology and services than being able to innovate the rest of the industry.

This is part of the struggle that organizations in the third party logistics marketplace find themselves in. This is what a new study of the industry found.

Recently, Penn State University, Capgemini Consulting, Korn/Ferry International, Penske Logistics and the eye for transport forum all collaborated on the 18th annual "State of Logistics Outsourcing" report. The information comes from a poll of 581 third-party logistics firms, 633 third party logistics clients and 179 shippers that do not currently use any outsourcing services.

The biggest takeaways from the study show that slow economic growth, increased near-shoring and the demand for new skill sets are three of the more important threads when it comes to the future of the industry.

Near-shoring has been one of the biggest trends in the marketplace in recent years. In the past, organizations have outsourced operations to cheaper parts of the world like China. This allowed businesses to save money while conducting critical operations like bulk manufacturing.

However, as the cost of doing business in these areas has increased because of growing fuel, labor and shipping costs, it makes more sense to move operations closer to home. if you are a business in Ohio, this could mean moving operations to Mexico or down the street to Dayton. This also helps companies shorten up the supply chain, making it possible to implement changes more quickly. If there is a change in a solution that needs to be made, it is much easier to get in touch with the warehouse down the street than across the globe.

When it comes to the economy, growth in the U.S. is slowing. Zack Deming, a principal at Korn/Ferry, said that the "easy growth" is over. Now there is economic uncertainty along with a growing government budget deficits and increased regulatory pressures that will make businesses reluctant to invest in supply chain options.

The report shows that dealing with these two challenges, organizations are also looking to add more quality talent. While this can be complicated, many organizations are instead trying to invest in reliable third party logistics providers.

"Shippers agree that 3PLs provide new and innovative ways to improve logistics effectiveness, and that they are sufficiently agile and flexible to accommodate future business needs and challenges," the report reads. "Despite ongoing churn in shipper-3PL relationships, in general shippers are increasing their use of outsourced logistics services, and shippers and 3PLs are now about equally satisfied (70 percent and 69 percent, respectively) with the openness, transparency and good communication in their relationships."

It seems clear that the logistics and supply chain marketplace is going to be undergoing some major challenges in the years to come. With the help of a quality third party logistics provider, any organization will be able to improve operations while opening up new ways to innovate.