June 13, 2017 | Industry Insights, Insights, Shipping
Good News: Shippers Increasingly Relying on 3PLs for Logistics & Supply Chain Services
Supply chain consulting firm Armstrong & Associates released its report, “Trends in 3PL/Customer Relationships – 2017,” indicating that 90% of domestic Fortune 500 companies rely on third-party logistics providers (3PL) for outsourced logistics and supply chain services. Armstrong & Associates has been tracking these 3PL-customer relationships for more than a decade. The report findings are based on analysis of more than 7,200 current 3PL customer-relationships in 41 countries—representing nearly 20,000 services.
The report’s key findings, as outlined by online publication, Supply Chain 24/7, are as follows:
- Fortune 1,000 3PL revenues, which, at $132.8 billion, account for just under 80% of the U.S. 3PL market
- 2016 3PL revenues for the retailing and technological industries are $32.4 billion and $30.6 billion, respectively
- Global Fortune 500 3PL revenues, at $273.8 billion in 2016, were paced by the technological and automotive industries, accounting for $77.2 billion and $52.5 billion, respectively
According to the report, its finding that 90% of Domestic Fortune 500 companies worked with at least one 3PL represents a significant increase from 2001, which was at a low of 46%, when Armstrong first began tracking this data. This increase in turning to 3PLs for services, the report says, reflects the need for shippers to control costs and increase supply chain efficiency. Moreover, the larger the shipping company, the more likely it will have at least one relationship with a third-party logistics provider.
Armstrong & Associates expects 3PLs to continue to expand their footprint in the market based on their findings, including in providing additional services to e-commerce shippers in the B2C market.
Making Sure 3PLs Are Properly Covered
As the demand for 3PL companies grows, making sure proper insurance coverage is in place is critical in protecting against the various risks inherent as a result of the various services provided. 3PL companies can provide outsourced logistics services to clients for part, or all, of their supply chain management functions. A nimble and comprehensive insurance program, particularly as the reliance on technology increases, should be secured to cover the broad spectrum of 3PLs – from brokers and freight forwarders to rail transporters, consolidators, shippers and air cargo agents. Coverage, depending on the 3PL’s operation and services, can include Marine Cargo, Motor Truck Cargo, Transportation Liability, Warehouse Legal Liability, Packer’s Legal Liability, Contingent Cargo, Errors & Omissions Liability and Cyber Liability, among many other insurance policies.
Roanoke Trade specializes in insuring third-party logistics providers, offering end-to-end insurance solutions that are tailored to your specific exposures. For information about our insurance products and services, please contact one of our Roanoke Trade professionals at 1-800-ROANOKE (800-762-6653).