Outsourcing: Domestic Vs. Global

With Rick Underwood, vice president of contract services, Americas, APL Logistics.


Underwood: Although it would be easy to assume global logistics contracts are from Mars and domestic logistics contracts are from Venus, the truth is the two have a great deal in common. If anything, the contract with a global 3PL may actually be easier, because those kinds of companies typically have more staff and expertise to handle contractual complexity.

Either way, a shipper signing any 3PL contract should have expertise in logistics, legal expertise from qualified contract attorneys and expertise regarding any applicable laws and regulations in the countries where the 3PL services will be performed.

Can you use a 3PL for end-to-end logistics services?

Underwood: There are some third-party logistics relationships that have come close to being exclusive. However, industry research is showing that most Fortune 500 companies still use multiple 3PLs, not just one—and that their biggest reason for doing so is they don't feel like there's a single provider whose service offering is broad enough. The results may be different in a few years, because there's still a lot of consolidation going on in the industry, and most large 3PLs like ours are continually growing their service capabilities. So stay tuned on that one.

Meanwhile, if your company is considering "single sourcing," make sure there's a precise fit between your needs and a 3PL's capabilities (both from a service and a geographic standpoint) before you pursue the possibility of an exclusive relationship.

 

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