About The Industry

Industry Profile

What is Third Party Logistics? Origin- Military forces developed the
first logistics systems for managing and deploying large volumes of supplies
and troops.

Corporate Transportation - U.S. businesses first established
logistics as stand-alone divisions for transportation and manufacturing. New
distribution patterns emerged as markets demanded greater speed to market,
creating distribution sites closer to consumers, just-in-time manufacturing
and more comprehensive, precise supply chain management.

Outsourcing- Companies during the middle and latter part of the 1990s have discovered the benefits of hiring third party logistics firms to manage their flow of
raw materials to finished goods. They also see the value of providing
strategic logistics business plans to become more efficient, competitive, and
to focus on core competencies.

U.S. logistics industry: $900 billion - almost double the size of the high-tech industry, or more than 10% of the US gross domestic product (Source: US Department of Commerce). Global logistics $3.43 trillion (Michigan State University, Drs. Donald Bowersox and Calantone). . S. Contract logistics' industry $46 billion, with an average annual growth rate of between 10-15 percent each year (Armstrong and Associates).

Inventory is expensive: US companies spend $4 billion a year on inventory
interest, $8 billion on taxes, obsolescence, depreciation and insurance, and
$2 billion on warehousing (Cass information Systems)

Total logistics activities make up 15-20 percent of finished products
costs. (International Warehouse Logistics Association). Nearly 75% of
US manufacturers and suppliers are either using or considering a contract
logistics service, and the figure will go higher (survey by Ernest &Young
LLP). About 60% of 123 companies surveyed using a third-party logistics
firm said that logistics was a core competency, and almost 80% thought that
logistics represented a key competitive advantage (Ernest &Young LLP).
Satisfaction levels remain high: 86 percent of survey respondents who had
out-sourced some part of their logistics operations said the experience had
been a success (Ernest &Young LLP).

What is new in logistics today?

Global Tracking - Identify the location of freight at any time, anywhere,
internationally. Electronic data interchange (EDI) - ordering, invoicing
and billing process.
Internet- Place and track customer shipments.
Customized software

Where will third-party logistics go tomorrow?

Firms will expand overseas at an increasing pace to manage freight
movement on all points of the globe as trade grows and multinational
corporations will consolidate their international logistics operations. Only a
few, financially solid companies will continue to have the technology and
creativity to handle the most complex supply chain projects.