Third-Party Logistics on the Rise

Sept. 8, 2004
Richard Armstrong, president of Stoughton, WI-based consulting and research firm Armstrong & Associates, Inc., reports that use of third-party logistics (3PL) services is up over 14% from last year

Richard Armstrong, president of Stoughton, WI-based consulting and research firm Armstrong & Associates, Inc., reports that use of third-party logistics (3PL) services is up over 14% from last year, with over 80% of Fortune 100 companies today now using 3PLs for at least some of their logistics and supply chain functions. Domestic Fortune 500 firms spent $62 billion a year on 3PL services.

The largest 3PL expenditures by vertical market, said Armstrong, are for retailing ($15.8 billion), technology ($14.2 billion) and automotive ($11.3 billion). According to the report, the primary 3PL services being purchased were transportation management, which increased 38%. Major increases were also reported in warehousing, value-added services and international 3PL services.

“The greatest penetration of automotive accounts is by TNT Logistics and Exel,” he added. “Retailing relationships are lead by Genco, USF Logistics and TBG/Exel. UPS and Menlo are the leaders for Fortune's technology sector.”

General Motors and Wal-Mart are the largest users of 3PLs in the U.S. today, he noted, with each using over 30 3PL service providers.

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