3PL User Spending Patterns on
Logistics and 3PL Services
According to this year’s study results, 3PL users
report an average of 44% of their total logistics
expenditures are related to outsourcing. This
compares with an average of 39% reported
last year, and 42% reported in the previous
year. Total logistics expenditures include
transportation, distribution, warehousing and
value-added services. Considering Armstrong
& Associates’ estimated and projected increases
to global 3PL revenues cited in Figure 1, these
percentages support the finding that global
markets for 3PL services continue to expand.
Increased Use of Outsourcing
Outpaces Insourcing
One consistent finding throughout the 18 years
of Annual 3PL Studies is a relatively predictable
“ebb and flow” of outsourcing vs. insourcing
in the 3PL marketplace. Sometimes customers
increase their use of outsourced logistics
services (either in total or in terms of individual
activities outsourced), and at other times they
decide to insource some or all of their logistics
needs. In general, however, movement toward
increased outsourcing generally outpaces
movement toward insourcing.
• Outsourcing: 72% of shippers are increasing
their use of outsourced logistics services this
year, which is up slightly from the average
reported in recent years. Slightly more,
78%, of 3PL respondents see an increase in
outsourcing among their shippers.
• Insourcing: Generally, insourcing remains
less prevalent; 23% of shippers report they
are returning to insourcing at least some of
their logistics activities, while an average 36%
of 3PLs say that some of their customers are
returning to insourcing.
• Reducing or Consolidating 3PLs: The
ongoing trend toward strategic sourcing by
many shippers is evident in the number who
report they are reducing or consolidating
the number of 3PLs they use, an average of
56%. This is consistent with previous years’
findings and provides continuing evidence
that more than half of shippers place a
priority on tightening up their rosters of
3PLs.
So while rates of change to outsourcing/
insourcing appear to remain stable, the
Armstrong & Associates data supports a
key finding of this study: That 3PL users are
generally increasing their use of outsourced
logistics services.
Shipper Experiences with 3PLs:
Measures of Success
Once again, a distinct majority (90%) of shippers
report that their relationships with 3PLs
generally have been successful. Interestingly,
but predictably, an even higher percentage
of 3PLs (97%) say their relationships with
shippers have generally been successful.
Figure 2 summarizes the tangible benefits
shippers report from their use of 3PL services,
including average improvements in order fill
rate and order accuracy. The average logistics
cost reduction reported by shippers was 11%;
the average inventory cost reduction was 6%;
and the average fixed logistics cost reduction
was 23%. These figures are down modestly from
those reported in last year’s study; this is not
unexpected, since both shippers and 3PLs have
been working earnestly to attain these benefits.
As with past years, just over half of shipper
respondents (55%, compared to 56% last year)
report their use of 3PLs has led to year-overyear incremental benefits, while 91% of 3PLs
say their customers’ use of 3PL services has
led to year-over-year benefits