Reliance on 3PLs Increasing for Supply Chain managers

Eighty-six percent of Domestic Fortune 500 companies use 3PLs for logistics and supply chain functions according to a new report just issued by Armstrong & Associates.

The report “Trends in 3PL/Customer Relationships - 2013” leverages Armstrong & Associates’ proprietary database of 6,398 3PL customer relationships to provide detailed information on the top outsourcers to 3PLs, trends in service demand, and 3PL market size by vertical industry segment from 2005 through 2013E.

According to the report, General Motors, Procter & Gamble, and Wal-Mart each use 50 or more 3PLs. The report also quantifies the Global Fortune 500 3PL market at $250.2 billion, a 67% increase since 2005. Within the Global 500, “Technological” industry 3PL customers spent $66.8 billion with 3PLs in 2012 and are on track to spend $71.1 billion in 2013. The compound annual growth rate for Technological 3PL revenues was 9.3% from 2005 to 2012. “Electronics, Electrical Equipment” companies led all Technological industry sub segments with over $25.7 billion in 2012 3PL spend.

Ed Kitt, Area Vice President, Central Region, Penske Logistics, told SCMR in an interview that the “cold chain” is also generating new demands from 3PLs.

“We regard compliance, training and adherence to food and product safety requirements as among the most pressing issues in cold chain logistics.

The average customer is utilizing each 3PL for just under three different logistics services with Transportation Management being the most frequent service utilized. Of the total 6,398 3PL/Customer relationships, 1,184 or 18.5% are strategic with the 3PLs performing supply chain management and/or lead logistics provider services. While these strategic relationships were dominated by Automotive and Technological industries in the past, there are increasing numbers of strategic relationships within the Retailing and Industrial industries.

“This year’s analysis of 3PL customer relationships is our best to date and builds upon our previous reports,” said Commenting on the report, Evan Armstrong, president of Armstrong & Associates said.

He also noted that the report provides insights into customer outsourcing trends and which services are in demand.

“Our analysis includes industry 3PL spend and growth estimates for years 2005 through 2013E for the Fortune 1000 Domestic and 500 Global,” he said. “We have also expanded our vertical industry sub segment analysis and 3PL services segmentations and analysis.”

The complete report is available from Armstrong & Associates online at:  http://www.3PLogistics.com.

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