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.