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Third party logistics (3PL)
Logistics activities are often outsourced by manufacturers to Third Party Logistics operators
(3PL). These operators have greater expertise, which enables increased flexibility of logistic
operations to cover wider geographical areas, with lower operating costs and better quality of service.
The externalisation of logistical services has been a two dimensional process, with firms
increasing both the range of services that they source externally and the volume of traffic entrusted to
the third party. Companies have been increasingly demanding an integrated logistics service tailored to
their requirements. The best third party providers understand the strategic importance of logistics
management, and position themselves to provide more and better services that overcome their client’s
concerns about relinquishing control of their key competency. This places heavy emphasis on the
contractor’s ability to co-ordinate and customise its service.
The clients appear to be satisfied with their 3PL-service experience. The outsourcing of logistics
activities is expected to increase. This trend has encouraged many global logistics service providers to
expand the range and geographical coverage of their activities to developing regions, offering more
customised services.
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