Inbound Logistics | July 2022

WHAT IS THE MAIN REASON FOR A FAILED 3PL PARTNERSHIP? SHIPPERS SAY:

Obviously, shippers outsource basic logistics activities to 3PLs. They rely on these partners to plan and execute freight moves, find capacity at competitive rates, store inventory, fill orders, and carry out other basic functions. Beyond that, many 3PLs differentiate themselves by oering more specialized services. The most common among them is logistics and transportation consulting. In 2022, 78% of 3PLs in the survey said they oer services to help shippers develop eective strategies—for example, determining where to hold inventory or what combination of transportation modes oers the most eective balance between cost and service. Another specialized service helps shippers deliver merchandise directly to retail stores without passing through distribution centers. Among the 3PL respondents, 72% oer direct-to-store service, up from 67% in 2021. Other popular services include reverse logistics and/or product life-cycle management (61%), import/export/customs (59%), sustainability/green logistics (55%), and direct-to-home delivery (49%). SPECIAL SERVICES 3PLs OFFER Logistics/transportation consulting 78% Direct to store 72% Reverse logistics/product life-cycle management 61% Import/export/customs 59% Sustainability/green logistics 55% Direct to home 49% Marketing/customer service/call center 39% Foreign Trade Zone 37% Risk management/contingency & crisis planning 34% Labor management 33% Global expansion—sourcing/selling 18% Security analysis 16%

Poor customer service 62% Cost 20% Failed expectations 10% Loss of control 4% More competitive options 4% Cultural dissimilarities 0%

While cost cutting is clearly a high priority, another value is far more important to shippers than cost: great customer service. According to 62% of the shippers who took part in the survey, poor customer service is the factor most likely to torpedo a relationship with a 3PL. Another 10% cite failed expectations, which could include failure to deliver on promises or communicate clearly, both important elements of service. Only 20% of shippers cite cost as the top reason for breaking up with a 3PL, and just 4% say they have left a 3PL to explore more competitive options, a reason also connected to cost. But those pressures are twice as important as last year, when just 10% of shippers cited cost and 2% said they had gone in search of more competitive options.

SHIPPERS, IS PRICE OR SERVICE MORE IMPORTANT?

36% PRICE

64% SERVICE

Facing higher prices for commodities, labor, transportation, and other essentials, shippers naturally seek opportunities to cut costs. When shippers measure the quality of their partnerships with 3PLs, cost weighs more heavily in 2022 than it did one year ago. This year, 36% of shippers told us that cost is more important than service; in 2021, the number was 21%. Still, service remains the essential factor for a large majority of shippers—64%. When we asked shippers why they had singled out certain logistics partners for praise, many cited the quality, variety, and flexibility of the 3PL’s service. Some shippers oered more detail, such as: “Their excellent communication and willingness to go above and beyond for their customer.” “Quick response, weekend support, assistance with claims.” “Excellent onboarding process; dedicated support during start up; very responsive.” “Great rates, easy quoting and booking process, ecient invoicing and problem resolution.”

88 Inbound Logistics • July 2022