CSCMP's Supply Chain Quarterly
November 13, 2019
Forward Thinking

Analytics, green logistics rank high in 3PL study

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24th Annual third-party-logistics study underscores demand for responsive, cost-effective, and greener supply chains.

Demand for better analytics capabilities and a greener supply chain ranked high in the 2020 Third-Party Logistics Study, released today during the Council of Supply Chain Management Professionals' (CSCMP) EDGE 2019 conference, in Anaheim, Calif.

Sponsored by Infosys Consulting, Penn State University's Smeal College of Business, and transportation and logistics provider Penske, the study addressed a range of issues affecting the modern, complex supply chain and the relationship between shippers and third-party logistics (3PL) providers. The growing importance of analytics in the shipper/3PL relationship, growth of supply chain finance, and demand for greener, more sustainable supply chains were top issues identified in the report, which marks the 24th installment of the collaborative, 3PL study.

Representatives from Infosys and Penske Logistics presented an overview of the report during the EDGE conference, first noting that 3PL expenditures by shippers have remained consistent in recent years, as have the types of services shippers are outsourcing to 3PLs: domestic transportation, warehousing, international transportation, customs brokerage, and freight forwarding are the top five outsourced services, in that order. They also highlighted the growing focus on analytics, environmental sustainability, and supply chain finance, noting that: 

  • Analytics capabilities are in demand. The study showed that 95% of shippers and 99% of 3PLs agree that analytics are a necessary element of 3PL expertise, but only 26% of shippers and 27% of 3PLs said they are satisfied with current analytic capabilities. Melissa Hadhazy, an associate partner at Infosys, who presented the analytics results during the EDGE conference, emphasized the importance of focusing on analytics in shipper/3PL relationships, calling analytics a "driving force in today's economy" and something that "we all need to take on."
  • The study also noted an "analytics gap" in the supply chain, pointing to a roadblock that develops when the shipper and 3PL are not in total agreement on a strategic plan for the best use of analytics. Researchers said this could result from a battle of the old versus the new: Many shippers employ legacy systems that are difficult to connect with today's hardware and software, they said. In general, the supply chain, like many areas of the business world, may be "slow to adopt new approaches," the research found.
  • As geopolitical volatility affects global operations, supply chain finance is becoming critical. The survey showed that 26% of shippers employ a supply chain finance professional at the vice president level, and 31% report having someone with the director title. For shippers, their top supply chain finance costs are freight payment audit (72%), total landed cost (57%), and letters of credit (37%). For 3PLs, top supply chain finance costs are freight payment audit (71%), letters of credit (39%), and open accounts (36%). The study also revealed that 70% of shippers manage the impact of global political decisions internally; 20% aren't managing it at all; and 19% use 3PLs to do so. 
  • The greening of the supply chain continues. Why do shippers and 3PLs feel the need to introduce more sustainability into their supply chains? The top reasons are regulatory requirements, public perception, and cost savings, the survey showed. For shippers, these are the leading uses of "greening" technologies are: optimization, such as route and load (76%); tracking and reporting emissions (42%); voluntary programs (38%), such as the U.S. Environmental Protection Agency (EPA) SmartWay program; and the use of alternative fuels (16%). For 3PLs, the list reads as follows: optimization (78%); voluntary programs (63%); tracking and reporting emissions (39%); and using alternative fuels (19%). 

During the CSCMP EDGE presentation, Penske's Joe Carlier emphasized efforts by both shippers and 3PLs to increase the use of alternative fuels as well as autonomous vehicles and platooning technologies over the next five years. The latter group is expected to increase from less than 10% today to nearly 30% in the next five years, he said.

The 2020 3PL study is available for download free (registration required). EDGE 2019 runs through Wednesday, September 18, at the Anaheim Convention Center.

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