3PLs battling against "service commoditization"

Many companies have long recognized that outsourcing logistics operations can cut costs and improve efficiencies. But third-party logistics service providers (3PLs) still struggle to convince their customers that they can also provide strategic, value-added services.

A recent report by the research and event management company eyefortransport (EFT) contends that 3PLs are fighting to maintain relevance in an increasingly commoditized service area. The study, The 2015 3PL Selection and Contracting Report, is based on a survey of more than 400 logistics and supply chain executives. EFT says the survey results show that customer satisfaction levels are slipping, renewal rates have decreased, and contract lengths remain short (mostly in the one- to two-year range).

The great majority (68 percent) of the survey respondents said they were satisfied with their current 3PL's overall performance. EFT found it significant that only 14 percent felt that their 3PL performed better than expected, and only 5 percent thought their 3PL's performance was outstanding.

The EFT report asserts that one way 3PLs can differentiate themselves from their competitors is to develop services and expertise in emerging technologies. According to the survey, the bulk of 3PL respondents do not plan to provide services using cutting-edge technologies such as augmented reality (think of Google Glass), drone delivery, three-dimensional (3-D) printing, or driverless vehicles.

However, roughly a quarter of respondents were doing some work with these technologies, whether they currently have expertise in-house or plan to develop the necessary expertise in the future. At least a few of the respondents were already providing services around these technologies, except for augmented reality.

The survey shows that there is some demand for these types of innovative services. Forty-two percent of shippers said they are looking for their 3PLs to have some expertise in driverless vehicles. They also want them to be familiar with augmented reality (32 percent), drone delivery (30 percent), and 3-D printing (33 percent).

To download the full report, click here.