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New scenario for logistics service providers

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New scenario for logistics service providers

Data analysis driving decision making for 3PLs
Edition of December 12, 2017

As digitalization moves forward, data becomes essential for the decision making process in any field. For the logistics service providers industry -3PLs- fluctuating capacity, increased shipper demands and disruptions within the industry are creating a volatile decision-making environment for shippers and logistics providers trying to optimize the supply chain. That added to an increasingly faster lifecycle of consumer products, and you have a very busy supply chain on your hands.

The 2017 21st Annual Third-Party Logistics Study, by French global strategy and transformation consulting firm Capgemini Consulting, sheds a light on the industry’s conundrum. To help optimize the supply chain, shippers are becoming less concerned about the mode of transportation and instead are opting for the most efficient means of moving products, including those at the end of their lifecycle, focusing on data analysis for the decision making process.

The value of informed decisions

According to the study, shippers’ concerns have resulted in the growth of mode-neutral logistics providers, and 3PLs are using data aggregation and analysis to determine the best shipment methods. More than half of 3PLs surveyed -62%- said that over the past two to three years, their customers showed interest in changing their use of various modes of transportation. The document also reveals that nearly three-fourths of shippers -71%- said real-time analytics from 3PLs help them better understand shipping alternatives, and 61% valued 3PLs’ assessments of trade lanes and origin-destination pairs in terms of cost and service levels.

Logistics providers have turned to mergers and acquisitions to fill gaps in service areas, expand their global network, and leverage best practices and technology across a global scale. Shippers have mixed reviews of the M&A activity, although mess than 30% reported added options and versatility within a provider are good for shippers and 34% expressed concern about reduced competition based on price.

Challenges ahead

The report highlights that in spite of growth, challenges remained. “Shippers and their logistics providers faced oil price volatility, a drop in global demand and excess shipping capacity. Carriers and 3PL providers also dealt with increased regulations, including the implementation of the electronic logging device mandate, and remain concerned over the worsening driver shortage. All those factors continued to drive the need for optimization.”

One of the top challenges for the logistics service providers industry is the end-of-lifecycle supply chain, which involves a series of environmental, social and economic regulations that increase pressure for organizations to focus on environmental impact and sustainability initiatives, creating a key role for reverse logistics providers.

The study revealed that less than half of shippers said they do not touch end-of-lifecycle products or processing. Those that do handle those products said it is a result of consumer demand, request or expectations, and about 20% do it because of extended product responsibility.

A sea of opportunities

Logistics providers can take advantage of several opportunities as shippers look for help with their end-of-life supply chain. More than one third of surveyed shippers said they prefer a third party to handle all aspects of end of- lifecycle collection and processing; 29% would like to improve the efficiency of their internal capabilities; 20% would like to work with a third party to support product disposal; and 19% would like to work with a partner to support physical logistics/movement of end of- lifecycle products.

Currently more than half of 3PLs and 4PLs offer logistics/physical movement support of end-of-lifecycle specific offerings, but 40% do not have any EoL-specific solutions. In addition to meeting customer and regulatory demands, recovering products can create opportunities for manufacturers to improve designs, and 15% of shippers said they accept failed products for research and development purposes.

As lifecycles of products continue to shorten, the role of reverse logistics in the supply chain will continue to grow. Ensuring a closed loop for the full product lifecycle allows for greater efficiency, reduced environmental impact and lower total costs at all touch points. Logistics providers that invest in the resources and infrastructure for reverse logistics can leverage their expertise through end-of-life-specific product offerings.

By MundoMaritimo

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