Logistics Service Providers PDF

CHAPTER 8 Logistics Service Providers Own-account transportation · In recent years, logistics services have grown both in scale and in terms of services that they provide. · Own account transportation: when a company provides its own transport services. (done internally) · However, many compani...

CHAPTER 8 Logistics Service Providers Own-account transportation · In recent years, logistics services have grown both in scale and in terms of services that they provide. · Own account transportation: when a company provides its own transport services. (done internally) · However, many companies no longer perform many of their own logistics activities. · Companies nowadays use logistics service providers (LSP). Classifying Logistics Service Providers (LSPs) Classifying Logistics Service Providers (LSPs) · Freight carriers: – Carriers typically transport large packages at once. – Generally, carriers usually do not offer door-to-door service. – Ex: trucking companies, train companies, airline companies. · Couriers: – Became popular in the 1980s and 1990s – Transportation of valuable documents – Immediate delivery of products – Transport smaller shipments – Door-to-door service – ‘onboard courier’ (an individual transporting the document) – Ex: mail Classifying Logistics Service Providers (LSPs) · Freight forwarders: – Middleman in the shipping process – Multiple carriers and couriers to arrange the delivery of your goods. – Freight forwarders can be incredibly flexible because of the large pool of vendors they work with. They also have no costs that come with maintaining a network of planes, vehicles and couriers. – Since most forwarders rely on passenger air traffic, fluctuation in air travel will directly affect whether they can take on your job. – Because forwarders outsource services to other providers, their total charge will be a sum of various elements like pickup, handling, shipping, clearance charges and delivery. – Ex: Agility Classifying Logistics Service Providers (LSPs) · Freight Integrators: – An integrator is a company that owns and operates its own fleet. – From pickup and shipping to clearance and delivery, the freight journey is facilitated by integrators internal experts. It's a lot to manage and that's why integrators run a scheduled network. – For customers, this means both reliable transit times and, usually, a lower price tag for the service. – Ex: FedEx, UPS, DHL Classifying Logistics Service Providers (LSPs) · Agencies: – Non-Vessel Operating Common Carrier (NVOCC): An ocean carrier who performs all of the services of a carrier, but who does not own their own vessel. – When opting for ocean transport to export or import materials, an NVOCC is an intermediary that helps small and medium businesses that may not require an entire container to ship their goods. – NVOCC’s lease or rent space in containers from large shippers or freight forwarders, and sell it to smaller shippers. LSPs versus 3PLs · There is a considerable overlap between all of these categories. · For example, a company that operates ships can also have its own freight forwarding operations. · The classification is given to illustrate various activities and types of companies that operate across the sector. · All companies that provide logistics services are LSPs. · However, as freight companies provide a broader and more integrated range of services, many have become to be known as third-party logistics companies (3PLs). Typical 3PL services · Transportation: using multiple modes · Warehousing: providing capacity · Pick and pack: picking multiple SKU and packing these into single shipments/containers · Light manufacturing: OEM’s (original equipment manufacturer, example: Apple iPhone) · Vendor managed inventory · Customs clearance · Trade financing: currency exposure · Managing reverse logistics: repairs and returns · Parts distribution: take care of critical spare inventory. · Inventory management Top 20 Global 3PLs (by revenue) in 2019 Data from Armstrong & Associates (2019) A&A’s top 50 global third-party logistics providers (3PLs) list, https://www.3plogistics.com/Top_50_Global_3PLs.htm Fourth-Party Logistics (4PLs) · Offering total outsource supply chain solutions · Originally trademarked by Accenture in 1996 – ‘A supply chain integrator that assembles and manages the resources, capabilities and technology of its own organisation, with those of complementary service providers, to deliver a comprehensive supply chain solution’ · Outsource the entire supply chain including technology integration, monitoring and planning · The distinction between 3PL and 4PL is increasingly blurred as some 3PLs now offer 4PL type solutions Fifth-Party Logistics (5PL) · Although still new and not clearly defined, 5PL refers to LSPs who use technology solutions across complex networks that incorporate multiple supply chains. · Suitable for ecommerce companies. Selecting LSPs and Services · Services to be provided · Costs and costing approach · Terms of carriage, applicable Incoterms, insurance · Speed/transit time · Performance metrics and service levels, reliability · Information systems, other technology issues and documentation requirements · Core versus value-adding services required · Staffing issues · Reverse logistics issues · Implementation/termination/ability to alter conditions · Details on the logistics service provider's history, client references, etc. · Digitisation and transparency capability in the end-to-end supply chain