How Have Value-Added Logistics Services Changed the Manufacturing Sector?
As technology advances and tariff activities continue to complicate supply chains in 2018, the value of niche 3PL services has never been higher. According to Grand View Research, in 2015 the global 3PL market was nearly $700 billion and is now estimated to be about $850 billion. The increase in growth can be credited to the need to reduce capital expenditure and optimize spend. The ability to mitigate risks, manage inventory, and liberalize a business operation to focus on its core competencies will become significant. Also, as the growing trend of relying on “Big Data” and the increasing availability of industry specific logistics services continues, middle market companies will increasingly outsource these services. The below graph highlights the expected breakdown of market share by 3PL services.
At 889, we have had significant growth by leveraging specific software and processes to reduce supply chain complexities while continually penetrating emerging countries. Most competitors are hesitant in making such capital investments, however, globalization has increased the need for efficient fulfillment of on-time deliveries to OEMs and the end-users. Adding in freight brokerage and leveraging unused warehouse space and resources has proven to improve service and cost-effectiveness.
Over the next 5-7 years, Value-Added Logistics services (VALs) are expected to have the fastest growth rates in the market. Optimizing economic comparative advantages is becoming more attractive to OEMs, meaning reduced spending on daily functions and overhead costs such as transportation. By collaborating with industry experts and regional partners here at 889, we can leverage knowledge of local markets to increase profit margins and decrease overhead costs.