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Are 3PL services becoming a commodity?

Category : Strategy

I was keen to have this guest piece by Dr. John Langley on the CTOblog as it raises some interesting questions about the apparent split between developed and developing markets in their use of third party logistics providers. My question is whether this investigating is starting to show that the more developed economies are facing pressures in the face of lower cost manufacturing that has led them to move towards increasingly looking at how they service their markets and customers to increase their competitive differentiation and their value / margins. If so are they making an increasing focus on extending their control to embrace the logistics elements??? In short is this report highlighting a bigger change in the way developed market suppliers are competing in their business models?

Andy Mulholland 

Based on findings from the 2012 16th Annual Third Party Logistics Study, 64% of current users of 3PL services globally suggest they are “increasing” their use of 3PL services, while 24% suggest they will “decrease” their use of 3PL services. Overall, one conclusion that may be drawn is that shippers project a net increase in the use of 3PL services – which is a reasonable assertion to make.

What is even more interesting, however, is that most of the increases are projected by shippers located in developing and emerging markets, principally in Asia-Pacific and Latin America … while shippers in developed economies such as North America and Europe are far more conservative in their projections. Thus, a question that needs to be raised is what factors are responsible for the greater relative increases in developing/emerging markets than in more developed economies? My thinking on this is that developing/emerging markets are moreso “where the action is” these days, and manufacturing and distribution organizations in these areas need much more near-term help with their logistics and supply chain activities and processes than those in other areas of the world. So, in a matter of speaking, we may be observing a phenomenon of “3PLs to the rescue.”

Additionally, it may be that markets for 3PL services in regions such as North America and Europe are beginning to reach maturity, and the use of 3PL services in those regions has become more of a “commodity” than in other parts of the world. In either case, there appears to be some support for the contention that future growth opportunities for 3PLs lie more in the developed and emerging markets than in more traditional regions.

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