Study Implies 3PLs Underestimate Clients’ Service Demand

Third-party logistics service providers (3PLs) believe their clients are more price driven than service driven—a belief that conflict with the findings of Eyefortransport’s 2012 Global 3PL & Logistics Outsourcing Strategy study. The results of this study paint a picture of an industry in transition, still rocked by the economy of the past few years.

3PLs represented 41% of the survey respondents while shippers made up 29%. Of the shippers who responded to the survey, the largest proportion worked in either the retail or the hi-tech/electronics/telecom industries.
One of the most notable findings of this research is the disconnect in perceived shipper priorities. 3PLs overestimated the impact of their competitors offering cheaper prices, and the role of unrealistic initial expectations, on their customers’ decision not to renew contracts.

Meanwhile, shippers reported that service level is by far the most important factor in their choice of new 3PL partners. Alternative 3PLs offering better service, and inefficient management by 3PLs were seen as the primary reasons for shippers deciding not to renew 3PL contracts. Respondents representing 3PLs underestimated the importance of both these issues, and greatly overestimated the effect of alternative 3PLs offering cheaper prices and unrealistic initial expectations.

The importance placed by shippers on quality service was apparent when they were asked to identify the key traits that are sought when selecting a new 3PL. 45% saw quality service as being very important – more than twice the number of any other option. When asked to identify what they think shippers look for, 36% of 3PLs considered lowest price to be the key factor, with only 26% selecting best quality service.

The report offers a good news/bad news assessment of business prospects for 3PLs: 32% of shippers responding to the survey indicated they anticipate an increase in their use of 3PL services. That’s the good news. The bad news is this represents a reduction from the 43% who responded as such to last year’s survey.

Related Articles:

3PLs in Demand but Need to Work on Innovation

3PL Users Renewing Contracts Less Often

Special Report: The State of Logistics in the U.S.

Service You Should and Shouldn’t Expect

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