The 2023 Third-Party Logistics Study, released today at the Council of Supply Chain Management Professionals EDGE conference in Nashville, Tennessee, provides industry insights into the current state of the 3PL market, the importance of relationships and the value 3PLs provide. Visit www.3PLStudy.com to download the publication at no charge.
It also takes a deeper dive into specific industry issues, including getting back-to-basics for supply chain professionals, understanding the talent crisis and tapping into the potential of reverse logistics.
Shippers and 3PLs continue to report that their relationships are successful, but ongoing volatility and the grueling and relentless nature of supply chain disruptions could be taking a toll. In the latest study, 83% of shipper respondents agreed that their relationships are successful. Traditionally, this has hovered around 90% or above. 3PLs typically respond more favorably, with 99% of 3PL respondents agreeing their relationships are successful.
Even with that downward shift, 71% of shippers report that using 3PLs has contributed to improving customer service, similar to the 73% reported in last year’s study. Additionally, 71% of shippers and 92% of 3PLs agree that 3PLs provide new and innovative ways to improve logistics effectiveness.
Dr. C. John Langley, clinical professor, supply chain information systems and director of development, Center for Supply Chain Research at Smeal College of Business at The Pennsylvania State University, founded the study in 1996. NTT DATA and Penske Logistics are the major sponsors of the 2023 edition.
Getting Back-to-Basics for Supply Chain Professionals
Supply chains continue to grow more complex and sophisticated, but fundamental principles governing supply chains continue to be relevant. The study team looked at seven core principles: customer focus, supply chain relationships, data and analytics, innovation and transformation, survivability and sustainability, talent and the end-to-end supply chain.
These core back-to-basics principles are vital to current and future supply chain success, and shippers and 3PLs can leverage back-to-basics principles as they build their relationships and improve service. This is especially important as industry stakeholders work to reset, rebalance and strengthen supply chains.
Understanding the Talent Crisis
Labor challenges have impacted the supply chain for years, and the pandemic has made attracting and retaining talent even more difficult, leaving many organizations struggling to fill critical supply chain roles. Among respondents, 56% of 3PLs and 78% of shippers said labor shortages impacted their supply chain operations.
The hardest positions to fill are those for certified, licensed hourly workers, such as truck drivers and equipment operators, and hourly workers, such as pickers and packers. Those positions are also among the most difficult to retain. 3PLs have been able to fill hourly worker positions quicker than shippers.
Labor struggles have shippers and 3PLs investigating labor alternatives, with 83% of 3PLs and 70% of shippers saying they are either actively implementing or are researching and reviewing augmenting their supply chain operations with new technology and/or automation to offset talent shortage.
Tapping into the Potential of Reverse Logistics
Reverse logistics is a critical component of business-to-business and business-to-consumer operations. It not only contributes to overall service and satisfaction but also presents opportunities to cut costs and increase efficiency.
Within this year’s study, shippers are grouped into two clusters: customer-focused shippers, who accept both consumer and business returns and represent roughly one-third of respondents, and business-exclusive shippers, who only accept business returns and represent roughly two-thirds of the shipper respondents.
Both groups believe the returns experience impacts consumer/customer loyalty, with 75% of consumer-focused shippers and 43% of business-exclusive shippers rating the returns experience as being very or extremely important to consumer loyalty. Additionally, 65% of consumer-focused shippers and 60% of business-exclusive shippers said customers’ return expectations are growing.
Additionally, 61% of consumer-focused shippers and 43% of business-exclusive shippers expect to see increased volumes of returns over the next three years.
Continuing the Conversation
The study team continued to follow several critical issues it looked at in last year’s report. These include environmental, social and governance (ESG), global rebalancing and the demand for the cold chain.
- Interest in ESG efforts is continuing to increase. Shippers are slightly ahead of 3PLs in their ESG initiatives, with 22% of shippers rating themselves as a trailblazer and a leader in ESG compared to 17% of 3PLs. Additionally, 45% of shippers said their organization is about average in its ESG practices compared to 41% of 3PLs.
- The study team has examined the actions shippers have taken to rebalance inventory levels over the past several years, and the 2023 Annual Third-Party Logistics Study found that 80% of shippers have taken or are planning to take action to rebalance inventory levels. Additionally, 71% said they have already rebalanced or have kicked off efforts to do so, and 9% said they intend to take action.
- Shippers are also rebalancing sources of supply, with 69% of shippers stating they have already executed or are in the process of executing changes. Roughly 80% of shippers responding to this year’s survey reported they are rebalancing production locations to move towards more regional or domestic production networks.
- Rising healthcare standards, healthier food choices and a growing middle class in various parts of the world have all generated increased demand for cold chains and cold chain services with 74% of shippers and 91% of 3PLs saying they see increased competition in this area. Plus, 82% of shippers and 84% of 3PLs expect demand for cold chain capacity will increase over the next three years.
By “Move Ahead” Staff