Retailers and other beneficial cargo owners are citing cost containment as their top priority in negotiations with logistics providers, according to a warehouse industry executive.
Logistics providers are being asked by their customers to assume the risks associated with warehousing and transportation while the cargo interests concentrate on their core business operations.
This is a plus for third-party logistics providers, Cliff Otto, president of Saddle Creek, told the Los Angeles Transportation Club Tuesday. “There are tremendous opportunities on the warehouse side of the business,” he said.
There are more than 7,500 3PL-operated buildings in the U.S.; some spaces are occupied by just one customer while in other cases, multiple customers will share space.
In either case, the warehouse operator assumes the risk of filling the facility while the customers flex their operations up or down in response to seasonal demands.
Third-party logistics providers are expected to offer a full menu of services such as packaging, sorting and mixing and matching merchandise for individual shipments, and execution should be as close to flawless as possible.
Retailers often turn to 3PLs for regional logistics expertise when they expand beyond their home base. As retailers seek to reduce their carbon footprint, they want 3PLs to have LEED-certified buildings and trucking fleets that meet local environmental standards, Otto said.
Some retailers want their service providers to hold onto inventory and then prepare the merchandise so it can be moved directly to the store shelves without a need for further manipulation at the stores.
Given the fickle demands of consumers, some retailers instruct their 3PLs to postpone delivery until the retailers feel confident consumers are ready to immediately purchase the merchandise.