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What Caused the Growth in 3PL Companies?


Prior to the early 1980s, it was difficult to find a
3PL company. Then, almost seemingly overnight, 3PL companies took off and exploded in growth throughout the 1980s and beyond.

What happened?

FedEx Happened

More specifically, FedEx revolutionized the way business transactions functioned with its overnight shipping service.  Now, businesses could focus on using just-in-time techniques which helped them reduce the amount of warehouse space they needed and decreases their overall operating costs.  Instead of focusing on logistics, companies could now focus on running what they were really good at – their core business. 

ECR Shipping Happened

Businesses also used efficient-consumer-response shipping techniques. Shipping sizes became smaller and much more efficient.  Not only did customers get improved access to products, but companies were also able to reduce costs even more.

The 1990s and 2000s:  Competition Expands

Throughout the 1990s, companies started understanding the true benefits of outsourcing various logistics functions.  Demand for these services increased, and so the prevalence of 3PLs increased too. 

Lower pricing, a wider service selection, and more efficient services began appearing at 3PLs across the nation.  Competition among these companies drove even more value to the customers using their services. 

During the 1990s, most 3PLs operated at a local or regional level.  But since the 2000s, they’ve been able to increase their service scope to operate across the nation or entire globe.

The Status of the 3PL Market Right Now

The current economy is struggling, and many analysts are predicting that it will continue to struggle or even get worse during the next couple years and perhaps even longer.  However, the 3PL industry as a whole is holding up well. 

The Transportation Intermediaries Association (TIA) compiles a report that analyzes the status of the 3PL market on a quarterly basis.  During the first quarter of 2013, companies who participated in the study outperformed the American economy as a whole.  Versus the first quarter of 2012, truck load shipment revenue increased 2.4%, less-than-truckload revenue increased 6.5%, and rail intermodal revenues increased 4.0%.

TIA CEO Robert Voltmann noted, “3PLs continued to grow, expand, and change their businesses,” during the first quarter of 2013. 

What’s the Future Hold?

It will be interesting to see how the future of the 3PL industry plays out, but so far all signs are good.  And in the near future, things continue to look good too.  In an American economy where many highly qualified individuals can’t find the work they need to support their families, the 3PL industry provides a safe and secure haven. 

 

Posted: 11/27/2013 10:33:05 AM by Global Administrator | with 0 comments
Filed under: FedEx, Inventory, JIT, just-in-time, logistics, party, third, 3PL


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