Given labor shortages, supply chain issues, and expectations of same-day...
In July, Inbound Logistics released the 2021 3PL Market Research Report, which uses a variety of data from 3PL providers and shippers to evaluate how relationships between the two have impacted supply chains throughout the last year.
This report is full of valuable information for anyone involved in the supply chain industry or 3PL operations. To learn more about the findings, see our takeaways from the 2021 Inbound Logistics Perspectives: 3PL report.
It is helpful to understand the makeup of the participants in this report, given that their experiences and backgrounds could help contextualize some of its findings. While 45% of 3PL respondents reported that they were exclusively non-asset-based, 48% of respondents said that they offer both, with only 5% being exclusively asset-based.
Asset-based 3PL providers own most, if not all, of the resources needed to manage a supply chain. Common examples of assets in a supply chain include trucks and warehouses. Non-asset-based 3PL providers do not own these tools and instead rely on their ability to negotiate with other third parties like warehouses and trucking operators to meet the supply chain needs of their clients. Asset-based 3PL providers have more control over the cost and management of their and their clients’ operations.
The respondents cover a wide geographical area, as only 16% of respondents are exclusive to the U.S., and 45% operate throughout North America. Another 36% of 3PL respondents have a global reach. The markets served also varied, with 87% of respondents involved in manufacturing and transportation and only 54% in the service industry.
Given the steady growth of globalization, these numbers are likely to continue shifting away from 3PL providers based only in the United States. The growth of international shipping opportunities and the need to keep up with competitors embracing global markets are the primary factors that could speed up globalization.
One of the primary questions posed to the respondents was about the top challenges that 3PL providers faced in 2020. Most of the concerns reported by 3PL respondents were shared by a large majority of participants. More than 78% of 3PL respondents named capacity and growth management as a top concern.
Also high on the list of concerns were those involving customers and the labor force. While 74% of respondents pointed to finding and retaining customers as a top concern, 73% highlighted finding, training, and retaining qualified workers.
After these concerns, the drop-off was steep. Only 35% named compliance issues as a top concern, while 31% highlighted supply chain disruption. Interestingly, making a profit was not a top concern for many, with only 2% of respondents naming it as a top challenge, which could speak to the fiscal health of their companies.
These numbers are striking, and they dispute the commonly held belief that regulatory issues are the dominant concern facing logistics professionals. It also suggests that the majority of respondents are far more concerned about managing their expected growth, as opposed to making a profit.
The survey also provided insight into why relationships between 3PL operators and shippers sometimes fail. The survey asked shippers a series of questions about what led them to end partnerships with their 3PL providers. For 61% of respondents, poor customer service was at the top of the list. At a distant second, 22% blamed failed expectations, which relates to customer service. This highlights the importance of customer service for 3PL providers and should incentivize businesses to search for and work with a provider like Brown West Logistics that prioritizes their needs and satisfaction above all else.
The survey also asked respondents to weigh the importance of price versus customer service, and 79% of respondents chose the latter as the more important factor. This shows that shippers are prepared to pay more for service they can rely on.
In general, Inbound Logistics’ 2021 Perspectives: 3PL Market Research Report highlights a strong market for 3PL providers now and in the immediate future. With the rapid growth of e-commerce, 3PL providers are set to become an even bigger part of the supply chain for many businesses. If you have questions about how a 3PL provider like Brown West Logistics could simplify your supply chain, reach out to our team today.
