September 1, 2009

Survey: shippers prize 3PLs' ability to perform landed-cost analysis

Study by freight forwarder Panalpina looks at what shippers want from relationships with third-party logistics service providers.

By Mark B. Solomon

Delivering "total landed cost" reporting and analysis is the most important quality a third-party logistics service provider (3PL) can bring to a strategic relationship with a shipper, according to preliminary results of a survey by freight forwarding giant Panalpina.

Nearly 63 percent of shippers surveyed cited "landed-cost reporting and analysis"—the ability to provide customers with the end-to-end cost of transportation, inventory, customs brokerage, and distribution services—as the strategic capability they would most like their 3PL to offer. Second on the list was a "strong knowledge of business process and IT issues," followed by the ability to perform "supply chain network design."

The responses "indicate that business is looking closely at possible major changes in sourcing and/or networks, and would welcome a 3PL doing these if they had the skills and expertise," the Panalpina survey authors said.

At the same time, the survey found that when it comes to their supply chains, shippers are reluctant to give up the reins. Asked what factors keep them from outsourcing more work to their 3PLs, 55.7 percent replied that supply chain management remained a core in-house competency, 43.2 percent said their 3PLs lacked sufficient business expertise, and 42 percent said they wanted their 3PLs to focus on execution and not design and implementation. "Many businesses still feel they are better at supply chain design and execution than their 3PLs," the study authors said.

Panalpina Chief Operating Officer Karl Weyeneth told the Eye For Transport annual 3PL Summit in Atlanta in late June that the success of future partnerships will involve the transfer of more responsibilities from the customer to the logistics service provider, more integrated supply chain services, and a challenge to freight forwarders to transform themselves into solutions companies rather than transportation providers.

However, the global downturn, weak shipping demand, overcapacity, and the soft rate environment will create major roadblocks to progress, at least in the short term, he said. For example, container rates are at or near all-time lows on almost every trade lane, and customers are asking to lock in current pricing for the next two to three years, he noted. The current situation "makes it difficult to deliver sustainable solutions," he told the group.

More articles by Mark B. Solomon

For more DC Velocity, become a fan on Facebook and follow us on Twitter.

Resources Mentioned In This Article

Related Articles


Subscribe to DC Velocity


Feedback: What did you think of this article? We'd like to hear from you. DC VELOCITY is committed to accuracy and clarity in the delivery of important and useful logistics and supply chain news and information. If you find anything in DC VELOCITY you feel is inaccurate or warrants further explanation, please ?Subject=Feedback - : survey: shippers prize 3PLs' ability to perform landed-cost analysis">contact Editorial Director Peter Bradley. All comments are eligible for publication in the letters section of DC VELOCITY magazine. Please include you name and the name of the company or organization your work for.




All Videos »
Video

Articles from CSCMP's Supply Chain Quarterly
Some of the best read articles from DC Velocity's sister publication, published in a partnership with the Council of Supply Chain Management Professionals

At Kraft, cash is king
When Kraft Foods needed to cut costs and free up cash, its supply chain organization rose to the challenge. Better inventory turnover played a leading role in boosting cash flow by 20 percent.

San Diego—you need to be here!
Just about anyone who's involved in supply chain management will converge on San Diego for CSCMP's 2010 Annual Global Conference.

Commentary: Modeling your competitor's supply chain: The untold story
Supply chain design software offers a tool for modeling a rival's network and performance. But few companies seem to be taking advantage of that opportunity.

Germany gets top marks for international trade logistics
Germany tops the World Bank's ranking of nations' capacity to facilitate international trade logistics.

Companies struggle to build "cash culture"
Many companies that are fighting to free up cash in their supply chains have not taken the necessary steps to make that happen.


Free digital subscription to DC Velocity