Chapter 7: Logistics service
providers
P131-141 in textbook + extra content added
1. Developments leading to logistics outsourcing
Trends
• Globally, logistical costs are growing
• Logistical costs become a more important part of the added value of products
• Logistical management is increasingly becoming a differentiating element in international
competition
• Fuelled by several factors:
Change in customer demands
Assortment expansion
Faster development of new products
Smaller orders
More frequently placed delivery orders
Shorter leadtimes
Rise of e-commerce
…
Results
• Manufacturers have to react faster to meet the changing demand (agile)
- Flexibility in order to gain market advantage
• New concepts of collaboration between manufacturers and suppliers emergence (JIT)
• More streamlining and controlling of the entire logistical chain needed
• Manufactures must ask themselves whether their in-house logistical functions are capable of
performing their tasks at a competitive price-quality ratio
, - Companies have to consider or reconsider the question whether to carry out their own
logistical management or to contract it out (make or buy/outsource)
Focus rather on manufacturing and marketing rather than on running a
distribution system?
Focus on core activities alone?
- Logistics becomes a candidate for outsourcing ( own-account transportation)
2. Classifying logistics companies
Different services identified (also see table 7.1 + p133/134 in textbook)
• Generic label: logistic service providers (LSPs)
• Categories (often overlaps):
Freight carriers
> Basic carriage of freight – by hauliers, trucking companies, train
companies, airlines shipping companies
Freight forwarders/freight agents/brokers
> Make transportation and other arrangements
> Brokerage (customs + documents management)
Couriers
> Urgent delivery of products
Integrators
> Offer a seamless (i.e. integrated) end-to-end service from consignor to
consignee
> DHL, FedEx, UPS, ….
> Sole responsibility from origin to destination
Agencies
> Companies combine buying power to gain reduced freight transport
rates
• Those LSPs providing multiple logistics services, often in an integrated fashion, are called third-
party logistics service providers (3PLs), see next slide
providers
P131-141 in textbook + extra content added
1. Developments leading to logistics outsourcing
Trends
• Globally, logistical costs are growing
• Logistical costs become a more important part of the added value of products
• Logistical management is increasingly becoming a differentiating element in international
competition
• Fuelled by several factors:
Change in customer demands
Assortment expansion
Faster development of new products
Smaller orders
More frequently placed delivery orders
Shorter leadtimes
Rise of e-commerce
…
Results
• Manufacturers have to react faster to meet the changing demand (agile)
- Flexibility in order to gain market advantage
• New concepts of collaboration between manufacturers and suppliers emergence (JIT)
• More streamlining and controlling of the entire logistical chain needed
• Manufactures must ask themselves whether their in-house logistical functions are capable of
performing their tasks at a competitive price-quality ratio
, - Companies have to consider or reconsider the question whether to carry out their own
logistical management or to contract it out (make or buy/outsource)
Focus rather on manufacturing and marketing rather than on running a
distribution system?
Focus on core activities alone?
- Logistics becomes a candidate for outsourcing ( own-account transportation)
2. Classifying logistics companies
Different services identified (also see table 7.1 + p133/134 in textbook)
• Generic label: logistic service providers (LSPs)
• Categories (often overlaps):
Freight carriers
> Basic carriage of freight – by hauliers, trucking companies, train
companies, airlines shipping companies
Freight forwarders/freight agents/brokers
> Make transportation and other arrangements
> Brokerage (customs + documents management)
Couriers
> Urgent delivery of products
Integrators
> Offer a seamless (i.e. integrated) end-to-end service from consignor to
consignee
> DHL, FedEx, UPS, ….
> Sole responsibility from origin to destination
Agencies
> Companies combine buying power to gain reduced freight transport
rates
• Those LSPs providing multiple logistics services, often in an integrated fashion, are called third-
party logistics service providers (3PLs), see next slide
