Logistics leaders are grappling with significant challenges and they must turn to their 3PL partners to address them, research and advisory firm Gartner Inc. said.
A Gartner survey revealed that budget for logistics outsourcing has been on the rise since 2021, with sixty-six per cent of logistics leaders increasing their budget that year.
The survey, conducted from March through May 2021, interviewed 298 supply chain professionals in the U.S., Europe and APAC who had decision-making capacity on supply chain outsourcing.
According to Gartner, seventy-four per cent of logistics leaders expect an increase in their logistics outsourcing budget over the next two years.
“Logistics outsourcing to third-party logistics providers (3PLs) has been on the rise for a while, and there is no indication that this will change anytime soon,” said David Gonzalez, vice president analyst with the Gartner Supply Chain practice.
Logistics Leaders Must Collaborate with Outsourcing Partners
Gonzales said however, that logistics leaders can only achieve their critical priorities by collaborating with their 3PL providers.
When asked for their top 3 logistics priorities, the most common replies by survey respondents were: improve or update technology (37 per cent); cost reduction/cost optimisation (31 per cent) and; increase customer satisfaction (29 per cent).
Gartner said logistics leaders turn to their outsourcing partners for support to address these challenges. However, it requires collaboration and compromise on both sides.
For example, a 3PL can upgrade or acquire new technologies on behalf of their shipper customer. However, this will only be an option for the 3PL if the shipper extends their contract agreements to allow the depreciation of the investments and/or partly shares the financial burden with the 3PL partners.
“Nearly two-thirds of survey respondents said 3PL service providers had a positive or extremely positive effect on their competitiveness,” Gonzales said.
“This is the perfect foundation to build a long-lasting and meaningful partnership that enables joint investments and transparent information exchange.”
Relationship Management is Key
A productive and collaborative relationship between shippers and 3PLs needs both parties to listen to each other and understand the other party’s perspective.
“The 3PL community has a lot to offer, and the shipper community has a lot to gain,” Gonzales said.
For example, shippers need to have a clear understanding of the 3PLs’ capabilities and needs. In the same vein, 3PLs must carefully listen to their shippers to manage expectations and identify future areas of opportunity.
“In the face of ongoing disruptions, growing carrier influence and customer selection, shippers and 3PLs must work together to mutually protect their vested interests,” Gonzales said.
“If they can enter a trusted relationship, there’s lots of room for future innovation and opportunities,” he concluded.