Supply Chain Brain - September 2010

is someone with whom you can partner, especially as things get
tight. “That’s key.”
A solid, ongoing relationship dovetails with another concern:
rising costs and what to do about them. “Mitigating cost increases is
more important than reducing costs,” Gulisano says. “Look at your
efficiency. Am I the most efficient at managing my transportation?
Not only, do I have the proper rates, but do I have the proper solu-
tions? This is the time to look at these things. Your transportation
network design is key.”
Having said that, Gulisano notes that
it’s the mid-tier shipper who will be most
affected by the capacity squeeze and rising
rates. Larger shippers will be able to do
things in their supply chain to mitigate the
effect of higher rates; they can leverage the
marketplace. The burden is on the mid-
tier. But they have the opportunity to
leverage the buying power of a greater
entity, such as a 3PL. With one, you can
take your buying power and multiply it by
10 or more times.”
A 3PL relationship offers more than
increased buying clout, he says. A financially
sound provider will have made the necessary
technology investment for optimized trans-
portation management and visibility. “Ask
yourself, do I want to invest in this technol-
ogy and bring my company up to speed or
work with someone else who’s already doing
that everyday anyway, like a 3PL?”

they will see more than 18-percent growth this year. Finally, dedicated contract carriage, the most mature segment in the U.S., will see growth of little over 6 percent.

Consolidation will continue, in Armstrong’s view, especially among the family-owned companies operated by baby boomers who will look to retire and don’t have anyone to leave the business to. These will become acquisition targets, he says.

In addition to the expected clout of Chinese 3PLs, especially in the country, there should be significant growth among Indian-

Growth in the 3PL Sector Our Values Define How We Do Business

The third-party logistics services sector in the U.S. is set to expand by more than 13 percent this year, says Evan Armstrong, president of Armstrong Associates Inc. But the future will see even more dynamic growth in such places as China and India.

There are relatively few clouds in the sky, to hear Armstrong tell it. The company, which has identified more than 4,000 3PL customers, has divided the third-party provider market in the U.S. into four segments, each of which is expected to show growth.

First, is the group whose members serve the international transportation needs of its customers. That segment is expected show as much as 20-percent growth over last year. Then, purely domestic concerns should report about 14-percent growth. Value-added warehousing and distribution providers are becoming more mature, says Armstrong. Still,

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