Growing differentiation among logistics service providers

Things are looking up for European logistics service providers. Their clients (shippers) are increasingly outsourcing logistics services to third-party specialists. So far, however, no logistics service provider offers complete European coverage in terms of both warehousing and transport. The European 3PL market remains fragmented but relatively straightforward. For the second consecutive year, Supply Chain Movement has put together a 3PL Subway Map Europe showing the specific services of the most important logistics service providers with offices in several European countries.

This growing optimism in the 3PL market is echoed by the survey results published in the 2014 18th Annual Third-Party Logistics Study. The overall nature of shipper-3PL relationships continues to improve, with both parties viewing them as successful. Shippers are seeing positive results again this year: an average logistics cost reduction of 11%, an average inventory cost reduction of 6%, and an average fixed logistics cost reduction of 23%. Shippers agree that 3PLs provide new and innovative ways to improve logistics effectiveness, and that they are sufficiently agile and flexible to accommodate future business needs and challenges. Despite ongoing churn in shipper-3PL relationships, shippers are generally increasing their use of outsourced logistics services, and shippers and 3PLs are now about equally satisfied (70% and 69%, respectively) with the openness, transparency and communication between them.

Several ongoing factors are impacting progress towards the advanced end of the maturity model for shipper-3PL relationships. The continuing economic uncertainties in the global marketplace may continue to dampen significant growth and innovation in the 3PL sector. Despite its miniscule worldwide revenue growth, one of Europe’s largest providers of logistics services, Kuehne & Nagel (K&N), succeeded in boosting its bottom line by tightening its focus on profitable activities. As a result, around 40 contract logistics facilities were closed down. K&N’s road and rail transport activities have been making a loss for years.

Contract renewal

According to last year’s 3PL Selection & Contract Renewal report by eyefortransport, European 3PLs revealed that the average length of a contract with new customers is 3 years. Those based in the Middle East and Africa seem to opt for shorter contracts of just 1 to 2 years. The majority of the 3PLs surveyed have been working with their more established customers for 10 years or more, and this is almost a direct replica of earlier survey results. Logistics service providers still make all kinds of promises in order to secure a contract with little regard for how they will deliver on them.

The result is a ‘murky’ market in which shippers have to spend a lot of time on selecting a logistics partner. Supply Chain Movement experienced this first-hand when preparing this second edition of the 3PL Subway Map: many of the 3PL companies surveyed during the research phase for the map were reluctant to reveal details of successful projects or their relationships with shippers. Hence, the operational knowledge and experience of logistics service providers often remains unclear. Logistics service providers who claim that they can ‘do everything’ contribute to the lack of market transparency, which makes it even more difficult for shippers to choose the right partner.

>> To download the 3PL Subway Map 2014 in PDF, please click on the red button and fill in the fields to activate the green download button

Subway posters

Supply Chain Media creates subway posters which present an overview of the major players in a particular sector.

Subway posters have so far been developed for the following sectors:

IT
In order to arrive at the optimal choice of IT, companies visit various software vendors. The SCM subway poster presents a clear overview of the complex (under)world of IT. Visit www.itsubwaymap.com for interactive website of this poster.

Consultancy
To help companies literally find their way in the world of the supply chain consultancy, both figuratively and literally, SCM has developed a subway poster that helps to reduce transit time when searching for suppliers.

3PL
To offer a transparent view of the 3PL landscape in Europe, SCM has literally mapped out the continent’s service supplier market.

SCM’s subway posters are distributed in printed format together with editions of the magazine and are also made available online as PDF’s.

Download: SCM 3PL Subway Map 2014

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