Globally, but especially in Europe, the number of 3PL users not renewing more than half of their contracts has increased considerably since the last time Eyefortransport conducted its “3PL Selection & Contracts Renewal” study in 2009. While 73% of 3PL users renew more than half of their 3PL contracts, 83% did so in 2009.
In other words, over a quarter of users did not renewmore than half of their contracts in 2012, as opposed to just under a sixth in 2009. The biggest reason that users do not renew existing contracts is due to cost “creep.”
Only 10% of 3PL users renew their 3PL contracts for longer than 3 years. The majority of renewals are focused between the 1-3 year period, much the same as in 2009.
The study also found that, based on the 3PLs included in their requests for proposals (RFPs), customers in Europe are more likely than their counterparts in other parts of the world to be attracted to niche or specialist service providers.
As for the top requirement overall, the 3PL must be well respected in the industry.
As in 2009, the majority of 3PL users have been making use of 3PL services for over a decade. 2012 has seen a rise in the number of respondents using more than 20 3PLs (up to 16% from 9% in 2009).
From the 3PL perspective, 47% of initial contracts with new customers are between 1-2 years in length, with 37% being three years long. Interestingly, 53% of initial contracts are longer than 3 years.
European 3PLs showed a greater tendency to agree to longer initial contracts as opposed to their worldwide counterparts, with 19% of Europeans agreeing to 4-5 year contracts versus 9% worldwide. However, globally, as in 2009, initial contract length is less likely to be more than four years.
42% of 3PLs typically receive between 10 and 50 RFPs in a year. 16% receive over 100, though this is much lower than the 29% in 2009.