WHAT IS THE TOP REASON FOR A FAILED 3PL PARTNERSHIP? SHIPPERS SAY:
3PLs do a lot of bread-and-butter work for shippers. They determine e¤cient and cost-e¥ective ways to move freight, manage those moves, receive and store product, fill orders, and more. Beyond those basics, many 3PLs o¥er specialized services, applying their expertise, in-house technology, and buying power on shippers’ behalf. Foremost among those special services is logistics/ transportation consulting. In 2023, 83% of our 3PL respondents say they help shippers develop or hone their supply chain strategies—for example by re-engineering distribution networks or determining how to allocate freight to carriers. That’s a small increase over the 78% who o¥ered those services in 2022. The second most common special service is transportation from factories or vendors to retail stores, without making a stop at a distribution center. Seventy-two percent of this year’s respondents o¥er direct-to-store shipments. Many 3PLs also help retailers manage product that buyers return, or that no one has bought at all. This year, 63% of 3PLs in the survey provide reverse logistics/product lifecycle management. Other special services that 3PLs are most likely to o¥er include import/export/customs services (61%), sustainability/ green logistics (59%) and direct-to-home deliveries (42%). We’re an extension of our customers’ businesses. We take pride in handling their goods as if they were our own. SPECIAL SERVICES 3PLs OFFER Logistics/transportation consulting 83% Direct to store 72% Reverse logistics/product lifecycle management 63% Import/export/customs 61% Sustainability/green logistics 59% Direct to home 42% Marketing/customer service/call center 34% Labor management 32% Risk management/contingency & crisis planning 31% Foreign Trade Zone 29% Global expansion—sourcing/selling 18% Security analysis 14% None 1%
Poor customer service 60% Failed expectations 17% Cost 11% More competitive options 7% Loss of control 4% Cultural dissimilarities 1%
More than anything, shippers want 3PLs to treat them with respect and care. When asked what factors are most likely to break up a 3PL partnership, a full 60% cited poor customer service. No other reason came close. Another 17% of respondents cite failed expectations. Certainly, if a 3PL doesn’t deliver service or savings as promised, that will sour its relationship with the shipper. One interesting change from 2022 involves the role of cost in 3PL partnerships. Last year, 20% of shippers noted cost as the top reason they might stop working with a particular 3PL. In 2023, only 11% cite this reason for a breakup. Our 3PL’s rates are competitive, and they’re able to work with flexible parameters.
SHIPPERS, IS PRICE OR SERVICE MORE IMPORTANT?
19% PRICE
81% SERVICE
While most businesses strive to control costs any way they can, the majority of shippers consider service even more important than price in a 3PL relationship. That was true in 2022, when 64% of shippers named service the more important factor, compared with the 36% who chose price. This year, service is even more crucial: 81% of shippers name it as the top factor in a 3PL partnership, while just 19% name cost. As freight rates have eased, perhaps shippers find it easier to invest more in services that deliver impressive benefits. Many shippers in the survey cite excellent service as the reason why they singled out some of their 3PLs for particular praise. Our 3PL takes care of issues before I even know about them. Customer service is beyond exceptional and communication is on point.
72 Inbound Logistics • July 2023
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