New Study Highlights Role of Third-Party Logistics Providers in Helping
Shippers Adapt to Economic Challenges
Fourteenth Annual Third-Party Logistics Study from Capgemini, Georgia Institute
of Technology, Oracle and Panalpina examines global market for shippers and
logistics providers
Paris, September 21, 2009
News Facts




Capgemini, one of the world’s foremost providers of consulting,
technology and outsourcing services, in cooperation with Oracle, the
Georgia Institute of Technology and logistics provider, Panalpina, today
released an in-depth study examining the current global market for
logistics outsourcing.
Based on responses from both shippers and logistics service providers in
North America, Europe, Asia Pacific and Latin America, the Fourteenth
Annual Third-Party Logistics (3PL) study explores some of the key issues
affecting the industry. Key findings include:
o The economic downturn has created significant challenges for both
shippers and third-party logistics providers (3PLs) – 82 percent of
shippers are employing cost-cutting tactics and 60 percent are
rethinking their supply chains and relationships with 3PLs as a
result
o 88 percent of shippers feel that IT-based logistics services are
important, but only 42 percent are satisfied with the capabilities of
their provider – as a result of this IT capability gap, shipper
respondents reported a lack of the key performance indicators,
alerts and visibility required for an adaptive supply chain and 3PLs
reported similar difficulties in getting the data and commitment they
need from shippers
o There are significant differences between how 3PLs evaluate their
role in the supply chain and how they are viewed by shippers – only
59 percent of shippers feel their use of 3PLs has a positive effect
on customer service compared to 88 percent of 3PL respondents.
Shipper respondents devote an average of between 47 percent (in North
America) and 66 percent (in Europe) of their total logistics expenditures to
outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the
prevailing uncertainty and economic volatility in global markets,” said Dr.
C. John Langley Jr., Professor of Supply Chain Management, Georgia
Institute of Technology. “It is very important for 3PLs to mitigate or reduce
any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs



Economic volatility has challenged shippers and 3PLs alike to contend
with factors such as unpredictable demand, instability in fuel costs and
currency valuation, and excess inventory. In response, not only are
shippers attempting to cut costs, they are also seeking to improve
forecasting and inventory management (77 percent).
Cost reduction and improved reliability in services are the main factors
likely to increase shipper respondents’ use of 3PLs. This includes
converting fixed to variable costs (59 percent), expanding to new markets
or offering new products (56 percent), and restructuring the supply chain
network to improve financial performance (48 percent).
“Companies worldwide are still dealing with the effects of the economic
downturn,” said Jim Morton, Senior Manager within Capgemini Consulting’s
Supply Chain practice. “But shippers should embrace the opportunity to rethink
their supply chains and the role that 3PLs can play in helping to attain business
goals.”
Supply chain orchestration
 The study shows that while shippers continue to outsource logistics
services that are more operational and repetitive, they outsource less
frequently those that are more strategic, customer facing and IT intensive.
However, economic volatility presents an opportunity for shippers to
assess their supply chains and make changes designed to increase agility
and responsiveness, reduce costs and reconsider their relationships with
3PLs to drive them deeper. Overall, 75 percent of shipper respondents
agree that more strategic 3PL relationships would help them reduce costs.


In order to achieve a more strategic shipper-3PL relationship, shippers want to
see 3PLs investing in enhancing their regional and vertical expertise to better
understand their particular business. Shipper respondents will also need to be
more forthcoming with their data and be willing to team with 3PLs to re-engineer
business processes.
“As a provider of outsourced logistics services, we know that openness,
transparency and good communication, flexibility and the ability to achieve cost
and service objectives are key to the success of our customer relationships,” said
Kai Peters, Head of Supply Chain Development, Panalpina. “But in order to be
an effective partner for our customers, it is also increasingly important for us to
understand the entire business, not just logistics.”
The IT capability gap

IT is viewed as central to the overall performance of 3PL-customer
relationships. However, lack of IT integration within 3PLs leads the list of
shipper respondent issues (55 percent) with 3PL IT capabilities. Shippers
and 3PLs seek IT that is responsive, delivers valued information such as
order, shipment and inventory visibility, builds on existing investments and
allows for innovation. However, widespread use of manual practices and
variations in standards make it difficult for shippers and 3PLs to exchange
data reliably and connect workflows. Real-time interfaces to shipper order
management systems (63 percent) and timely demand forecasts (54
percent) are the most desired IT capabilities 3PLs need from shippers.


“When shippers outsource logistics functions to a 3PL, IT is an essential
part of the relationship,” said Jon Chorley, Vice President, SCM Product
Strategy, Oracle. “3PLs and shippers need to leverage integrated IT
platforms that deliver visibility across the entire logistics network in order
to keep productivity and customer service levels high.”
Other problems cited by shippers with 3PL services include a lack of
continuous, ongoing improvements and achievements in service offerings
and unrealized service level commitments (both 46 percent).
3PLs’ role in logistics success

Interestingly, while there is significant agreement between shippers and
3PLs on critical issues, 3PLs generally have a more positive view of
relationship success than shippers and have lower awareness about
potential problems. This suggests that 3PLs still have some way to go
before they fully meet the expectations of their customers. For example,
82 percent of 3PLs believe they provide new and innovative ways to
improve logistics effectiveness, compared with only 50 percent of shipper
respondents who feel they receive services of this nature. Similarly, only
54 percent of shippers reported improvements in service levels compared
with 71 percent of 3PLs.
About the 2009 Third Party Logistics Study
Over 1,000 logistics executives from both 3PL users and providers in North
America, Europe, Asia Pacific and Latin America participated in the web-based
survey. A small number of executives in other areas such as South America and
the Middle East also responded although there was no in-depth analysis of these
geographies. This was the first year that 3PLs, in addition to shippers, were
invited to share their views. The findings were then supplemented with the results
from in-depth ‘focus interviews’. Interviews were conducted with industry
observers and experts, primarily relating to the special topics identified in this
year’s report. The Capgemini Accelerated Solutions Environment® (ASE) was
also leveraged as a brainstorming setting where participants could collaborate on
shared issues.
About Capgemini
Capgemini, one of the world's foremost providers of consulting, technology and
outsourcing services, enables its clients to transform and perform through
technologies. Capgemini provides its clients with insights and capabilities that
boost their freedom to achieve superior results through a unique way of working,
the Collaborative Business Experience. The Group relies on its global delivery
model called Rightshore®, which aims to get the right balance of the best talent
from multiple locations, working as one team to create and deliver the optimum
solution for clients. Present in more than 30 countries, Capgemini reported 2008
global revenues of EUR 8.7 billion and employs 90,000 people worldwide.
More information is available at www.capgemini.com.
Capgemini Consulting is the strategy and transformation consulting division of
the Capgemini Group, with a team of over 4,000 consultants worldwide.
Leveraging its deep sector and business expertise, Capgemini Consulting
advises and supports organizations in transforming their business, from strategy
through to execution. Working side by side with its clients, Capgemini Consulting
crafts innovative strategies and transformation roadmaps to deliver sustainable
performance improvement. More information is available at
www.capgemini.com/consulting.
About the Georgia Institute of Technology
The Georgia Institute of Technology, located in Atlanta, is a leader in logistics and
supply chain and logistics education. Through its School of Industrial and Systems
Engineering (ISyE) and the Supply Chain and Logistics Institute (SCL), Georgia Tech is
committed to serving logistics educational needs through its degree programs and its
comprehensive professional education program. Georgia Tech also conducts a fully
accredited Executive Masters in International Logistics (EMIL) program, a Supply Chain
Executive Forum and a Leader in Logistics Research Program. Global involvement is
facilitated through The Logistics Institute Asia Pacific, a program in partnership with the
National University of Singapore.
For more information, please visit www.isye.gatech.edu and www.scl.gatech.edu.
About Oracle
Oracle (NASDAQ: ORCL) is the world's largest business software company. For
more information about Oracle, please visit our Web site at
http://www.oracle.com.
About Panalpina
The Panalpina Group is one of the world’s leading suppliers of forwarding and
logistics services, specializing in end-to-end supply chain management solutions
and intercontinental air freight and ocean freight shipments. Thanks to its indepth industry know-how and state-of the-art IT systems, Panalpina provides
globally integrated door-to-door forwarding services tailored to its customers’
individual needs. The Panalpina Group operates a closeknit network with some
500 branches in over 80 countries. In a further 80 countries, it cooperates closely
with partner companies. Panalpina employs about 14,000 people worldwide.
For more information please visit www.panalpina.com.
Trademarks
Oracle is a registered trademark of Oracle Corporation and/or its affiliates.
names may be trademarks of their respective owners.
Rightshore® is a trademark belonging to Capgemini.
Other
Contact Info
Christel Lerouge
Capgemini
+33 (0)1 47 54 50 76
christel.lerouge@capgemini.com
Jessica Moore
Oracle
+1.650.506.8741
jessica.moore@oracle.com