This document summarizes key findings from the 2018 22nd Annual 3PL Study. The study examines the current state of the third-party logistics (3PL) market through an email survey of shippers and 3PL/4PL providers from major industries globally. Special topics in the 2018 study include blockchain for supply chain, automation/digitization in transportation, and risk/resilience in shipper-3PL relationships. The study also explores contemporary issues like the logistics talent revolution.

1. 2018 22nd Annual 3PL Study
September 2017

2. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

3. 2018 22nd Annual 3PL Study – Major Research Thrusts
3
Customer Study
• E-mail Survey
• Shippers
• 3PL/4PLs
• Global
• Major Industry
Verticals
Special Topics
• Leading Research
• Industry
• Infosys Research
• Key Industry
Experts
Facilitated
Discussions
• Workshops
• Roundtables
• Focus Interviews

4. “Special Topics” Featured in Recent Annual 3PL Studies
4
• Omni-Channel
• Strategic Workforce Planning
• CRM and Cloud
• Business in Mexico
2015
• 3PL Competitive Landscape
• Labor Shortage
• Multi-Enterprise Relationships
2016
• Logistics Service Providers: Decision Time
• 3PL Roles in Supply Chain Transformation
• Utilizing Big Data and Analytics
• End-of-Life Supply Chain
2017
• Blockchain for Supply Chain
• Automation/Digitization in Transportation
• Risk/Resilience in Shipper-3PL
Relationships
• Logistics Talent Revolution
2018
• Economic Volatility
• IT Capability Gap
• Supply Chain Orchestration
2011
• Total Landed Cost
• Life Sciences
• Fast-Moving Consumer Goods
2010
• Emerging Markets
• Electronics
• Talent Management
2012
• Supply Chain Innovation
• Supply Chain Disruption
• IT Gap
• Talent Management
2013
4
• Preferential Sourcing
• Smart Growth
• Big Data
• Growth and 3PL Relationships
2014

5. Recent 3PL Study Themes and Graphics
www.3plstudy.com
2011-12
2014
2010 20132009
2015 2016 2017

6. 3PL Users – 93% of Survey Respondents
Represent 8 Major Industries
21% 21%
11% 10% 10% 9% 7% 4%
7%
Users
41%
Non-Users
13%
3PL/4PLs
46%
PERCENTAGES OF RESPONDENTS
N = 580

7. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

8. Customers Currently Outsource a Wide Variety of
Logistics Services
10%
11%
11%
15%
17%
18%
20%
25%
27%
29%
29%
31%
34%
46%
46%
63%
66%
83%
Fleet management
LLP (Lead Logistics Provider) / 4PL services
Customer service
Supply chain consultancy services provided by 3PLs
Inventory management
Service parts logistics
Order management and fulfillment
Transportation planning and management
Information technology (IT) services
Product labeling, packaging, assembly, kitting
Cross-docking
Reverse logistics (defective, repair, return)
Freight bill auditing and payment
Freight forwarding
Customs brokerage
International transportation
Warehousing
Domestic transportation
Percentage of Respondents
LogisticsFunctionsOutsourced

9. Selected Financial Aspects of Users’ Logistics and 3PL
Expenditures
Selected Information 2017 Study 2018 Study
Total Logistics Expenditures as a
Percentage of Sales Revenues
10% 11%
Percent of Total Logistics
Expenditures Directed to
Outsourcing
50% 50%
Percent of Transportation Spend
Managed by Third Parties
53% 55%
Percent of Warehouse Operations
Spend Managed by Third Parties
40% 39%

10. Benefits Experienced Through Use of 3PL Services
92%
73% 71%
81%
61%
Successful
Relationships
Increasing
Use of
Outsourcing
Improving
Service to
Customers
Reducing
Logistics
Costs
Innovation
To Improve
Effectiveness

11. 89%
85%
91% 90% 92% 92% 92%
88%
94% 93% 94% 98% 96% 93% 91% 91%
27%
33%
42% 40%
35%
42%
37%
42%
54% 54%
53%
55%
60% 59%
65%
56%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
IT Capabilities Necessary Element of 3PL Expertise Shippers Satisfied with 3PL IT Capabilities
IT
“Gap”
62%
52% 49% 50%
57%
50% 55%
46%
40% 39% 41% 43%
36% 34% 36%
45%
“IT Gap” Showing Potential for Increased Dissatisfaction ???

12. • Transportation sourcing
• Electronic data interchange (EDI)
• Web portals (booking/tracking etc.)
• Bar Coding
• Network modeling and optimization
• Supply chain planning
• Transportation sourcing
• Global trade management
• CRM (Customer Relationship Management)
• Customer order management
• Yard management
• Advanced analytics
• Cloud based systems
• Distributed order management
• RFID
> 60%
40% - 59% 30% - 39% < 30%
12
Essential IT Capabilities Suggested by 3PL Users
• Warehouse/distribution center management
• Transportation management
• Visibility (order, shipment, inventory, etc.)

13. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

14. What is a Blockchain?
Block 1 Block 2 Block 3 Block 4
Order Placed
Goods
Dispatched
Goods Received
Payment
Received
Customer:
Supplier:
Blockchain:
Order Placed Goods Received
Supply
Chain
Flow
Data
Sent
Data
Verified
Data
Sent
Data
Verified
Data
Sent
Data
Verified
Data
Verified
Permanent Data
Link Created
Permanent Data
Link Created
Permanent Data
Link Created
Data
Sent

15. Potential Application of Blockchain in Supply Chain
The public availability of the ledger make it possible to trace back every product to the very origin of the raw material used
The decentralized structure of the ledger make it impossible for any one party to hold ownership or manipulate the data
Imagine a scenario where every time a product changes hands, the transaction could be documented,
creating a permanent history of a product, across many distinct systems, from source to sale
The transactions would identify:
• Parties involved
• Price
• Date
• Location
• Quality
• State of the product
• Any other information relevant to managing the supply chain
The information shared would:
• Dramatically reduce time delays
• Eliminate added costs
• Minimize human error
• Increase visibility
• Decrease corruption
Illustrative

16. Benefits and Challenges of Blockchain in Supply Chain
• Blockchain technology guarantees
security, transparency, and
authenticity to wary customers
• Promotes standardization,
enables accuracy and
consistency, minimizes fraud
• Quicker response time, faster
contract settlements, and
shorter customer service cycles
• Blockchain technology can help in
overcoming delays and errors,
resulting in more streamlined and
efficient supply chain
management
• Provides centralized housing of
data across multiple parties
systems, allowing for uniform and
complete tracking of a products
full lifecycle
• Along with scalability issues and lack of protocols,
privacy is one of the concerns blockchain technology
has to address
• Technology complexity will require more time to
understand Blockchain. There is still a lack of
awareness around the technology's use and, due to its
nascent stage, the blockchain ecosystem needs
further development
• One challenge lies in the development and
governance of the technology (There needs to be
interoperability across private and public blockchains,
which will require standards and agreements)
• Blockchain technology in itself does not address the
reliability of its records. Often a person acting as a
trusted third party records the information on the
blockchain. In the case of tracking slavery or other
unethical business practices, an individual can simply
enter into the blockchain system that the business is
legitimate and upstream actors can thus be fooled
Benefits
Challenges

17. Blockchain: Application interest areas
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Other
Eliminate corruption
Ensure environmental sustainability
Condition monitoring
Security/safety of high-risk products
Financial monitoring
Customer/consumer use data
Ensure ethical compliance
Means to satisfy regulatory requirements
Overall visibility and data sharing with partners
Traceability
3PLs Shippers
More important to Shippers
More important to 3PLs
PRELIMINARY DATA – DO NOT QUOTE

18. Respondents Don’t Yet Know What to Expect

19. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

20. DigitizationAutomation
To enable faster and more efficient services by leveraging technology
to support and assist human workers throughout the supply chain
Goals
Recent Areas
of Development
On the Road
(Transportation)
Everywhere
(Across the Supply Chain)
Key Trends
• Driver-Assistive
Technologies
• Vehicle Automation
• Platooning
• Internet of Things
• Digitization of Loadboards
• Virtual Supply Chain
• Warehouse Robotics
Automation & Digitization

21. Benefits and Concerns of Automation
Optimized Transportation
1
Minimize Environmental Impacts
2
Increased Safety Lower Cost of Freight
3 4
 Limited impact of human error in
transportation
 Automated braking between connected
vehicles in a platoon and improvements
to sensing and avoidance technologies
reduces risk of accidents
 Improved traffic flows if platooning
reached 60% penetration
 No need for driver salaries leads to
lower transportation costs
 Overall cost of freight lower by up to
40% per kilometer, in part due to 4% to
20% fuel-efficiency in platooned
vehicles (depending on the study)
 Closely tied to the benefit of optimized
transportation
 Reduced fuel waste due to
reduction/removal of human-caused
over-acceleration
 Platooning tests have shown that
reduced wind resistance for following
trucks and lower fuel consumption can
lead to up to a 60% reduction in
emissions
Benefits
 Faster safe speeds due to automated
braking, resulting in faster delivery times
 Minimization of safe distance between
trucks, potentially reducing traffic on the
road
 Speed optimization from automated
planning utilizing terrain and topographic
data
 Faster delivery times, largely due to
mandated limits of driver hours being
removed
Regulation
1
Limited Consumer Acceptance
2
Existing Non-Automated Fleets Loss of Human Jobs
3 4
 Most large 3PL companies already
have existing fleets of non-autonomous
vehicles
 There would be a high cost to replace
entire fleets
 Could be a potential benefit for new,
smaller players in the automated 3PL
space
 Driverless cars do not require labor of
drivers
 Benefit to companies of lower operating
costs could be harmful to employment
numbers
 Automated technology is not yet a
reality for 3PL providers, so it has not
yet been adopted and adjusted for the
practicalities of everyday use
 It remains to be seen how quickly 3PL
providers will adopt such technology
and how fast driverless vehicles and
platooning can become mainstream
Concerns
 Piecemeal regulation could make cross-
border transportation complex
 Safety concerns during development
 Requirements for safe autonomous
vehicle operation or platooning may not
be available in all geographies

22. Benefits and Drawbacks of Digitization
Digitization trends face fewer legal and developmental obstacles than automation trends, but still carry with them unique
challenges and benefits that will change the logistics industry
Improved Supply Chain
Management and Efficiency
 Optimization of time, resources, and labor
 Reduction of duplicated effort with greater
insight into advance management (lower out
of stocks, faster transportation time, lower
congestion in warehouses, etc.)
Pros Cons
Relatively Low Cost of
Entry
 Multiple players in the digitization space, all
competing for the largest market share
 Inexpensive opportunities to try SaaS and
small-scale solutions before full
implementation
 Opportunity for increased level of
transparency across the entire supply chain,
especially through cloud connectivity and IoT
 Support for greater integration across the
supply chain
Greater Visibility Across
the Supply Chain
Rapid Change
 Many companies competing in the same
space, which may drive costs down, but may
mean that continuity of service may be a risk
as players drop out
 Rapid progress, so today’s technologies may
be obsolete next year, as new players rise
and fall in the digital space
 Potential struggle to build a comprehensive
adoption strategy as technology changes
over time
Cannibalization of Work
from Human Labor
 Digital loadboards and IoT will remove
certain aspects of everyday manual labor,
from in-person monitoring to check-ins and
scans through various points of the supply
chain process
 Warehouse robotics will take over aspects of
distribution center picking, packing, and
processing, reducing the need for unskilled
labor
 Need to adapt to the digitized workspace with
new skills from workers and coordination with
ubiquitous technology and new capabilities

23. Why Invest in Automation and Digitization?

24. How Much Is Being Invested?

25. What is Standing in the Way of Your Future Automation
and Digitization Capabilities?

26. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

27. Risk Management Process (1)
Process
Planning
(2)
Identify Risks
(3)
Analyze and
Evaluate
(4)
Mitigate
Risks
(5)
Evaluate and
Improve
3 R’s: Key Elements to managing risk
Reactive Proactive Innovative
Accepted Risk Management Steps
3PLs and Shippers seek to move to an Innovative Risk Management Stance
RecoveryResiliencyRisk

28. Risk & Resilience
Real-Time Problems Require Real-Time Solutions
 Shippers and 3PLs prepared to deal with uncertainties?
 Respond to problems before they actually occur?
 Resources needed to facilitate?
 Risk management processes effective and robust?
 Causes of communications issues?
 Areas for improvement in risk management processes?

29. Risk & Resilience
Basic Study Findings
Percent in Agreement
Shippers 3PLs
Need for More Timely Response and Better Information
• Complete
• Accurate
• Consistent
98% 99%
3PLs Communicate Well Responding to Risks and Executing
Operating Objectives
51% 50%
Consider Shippers “Strategic” Buyers 43% 31%
Risk Management Strategies
Are Unique to Phases of
Shipper-3PL Relationship
Planning
Forecasting
Execution

30. Consequences Resulting from Lack of Complete,
Accurate or Consistent Information
74%
54%
44%
35%
11%
68%
51%
46%
56%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Frustration at your
organization
Project delay or cancellation Negative impact on
reputation of your 3PL
provider by your company
Loss of margin and/or
revenue by your 3PL
provider
No major impact to the
project
Shippers 3PLs

31. Factors Impacting Timely Decisions
Relating to Risk Assessments Involving 3PLs
Unclear Ownership
of Risk Assessments
65%
Lack of
Needed IT
(TMS, WMS, CRM,
etc.)
52%
Teams in Different
Geographies 25%
Poor Processes for
Group Decision-
Making 23%

32. Example Causes of Communications Issues with 3PL/4PLs
51%
• Delays arising from use of email for communications
43%
• Lack of collaboration hub or digital workspace for teams to work together
39%
• Unclear or changing internal organizational structure
34%
• Teams are geographically dispersed

33. Areas for Improvement in Risk Management Processes
Faster response
Real-time technologies
Training and continuous improvement
More strategic relationships
Broader view of overall supply chain

34. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

35. Fundamentally change
the business model
Evolve the product,
services, or solutions
portfolio
Redefine the customer
experience
Work more efficiently and
effectively
Automation
Artificial
Intelligence
Big Data
Mobile
IoT
Blockchain
Machine Learning
Bitcoin
Rapid Technological Change is Leading Organizations to Make 4
Key Shifts – What is the Future for Supply Chain Talent?

36. A New Breed of Supply Chain/Logistics Leaders with Different DNA
Emerges
Effective influencing style,
inspires and impacts those
around them, credibly speaks
language of technology
Networked
Leadership
Drivers of
success
Partner/collaborator, able to build or be
part of cohesive top team, benefiting from
expertise that complements their own
High learning agility – and
“lifelong learner” profile
Greater business acumen and
strategic orientation than their
predecessors
Thrives in unpredictability and low
structure – opening door for non-
traditional career paths
Low power distance
leadership style with high
EQ and focus on results

37. The Company: Future DNA
Fluid Workforce
Networked Ways of
Operating
Inclusive Leaders
Appropriate talent mix for the digital journey
– beyond just technical skills
Shift from process orientation to outcome
orientation
Right people in right jobs –ability to pivot as
business needs shift rapidly
(specialist/generalist balance)
Strong facilitation of non-traditional career
paths – allowing lateral and position jumps
where appropriate
Real-time, continuous learning,
development and feedback
Diverse array of viewpoints and voices
Alignment of people and resources to the
broader business’ digital strategy
Nimble and lean organizational structure
Designated “space for innovation” – be it
within a formal incubator or simply a % of
employees’ time
Highly inclusive culture with mechanisms to
enable constructive debate
Active facilitation of information flow
Empowerment of decision-making as close
to coalface as possible
High learning agility – and “lifelong learner”
profile
Greater business acumen and strategic
orientation than their predecessors
Accessible and humble leadership style
Balance risk consciousness with strong
innovation orientation
Robust communication with diverse external
network
Ability to build or be part of cohesive top
team, benefiting from expertise that
complements their own

38. The Workforce: Future DNA

39. Strategic workforce planning
is the process of
synchronizing the business
cycle to the people cycle. It
helps organizations
understand the gap between
workforce demand –
determined by the business
cycle – and workforce
supply, and is the foundation
of a plan to close it.
Activity and
Productivity
Workforce
Data
Workforce
Supply
Workforce
Demand
Business
Levers
HR
Levers
Business
Cycle
People
Cycle
Key:
Inputs
Outputs
Levers
Gap
Strategic Workforce Planning is Matching Supply to
Demand: Supply Chain Talent FP&A

40. Near-term catalysts
Accelerate progress toward immediate goals in the
digital journey
Career journey will be accelerated or limited by tactical
business needs
Tomorrow’s talent today
Drivers of strategic innovation going forward
Key succession candidates
Business-as-usual talent
Most impactful in functions devoted to maintaining
stability of core business processes
Lifecycle may be limited depending on rate of change in
the overall business
Talent on the journey
Best placement is in roles where they are
programmatically exposed to experiences relevant to
the digital journey
Should be involved in succession processes
Experiences
relevant to
digital era
Mindset relevant to digital era
(competencies, traits, drivers)
STRONG
WEAK
STRONG
WEAK
Understanding the True Nature of an Organization’s “Supply
Chain Talent Inventory” Can Drive Key Build vs Buy Decisions

41. Contents
• About the Study
• Current State of 3PL Market
• Special Topics
– Blockchain for Supply Chain
– Automation/Digitization in
Transportation
– Risk/Resilience in Shipper-3PL
Relationships
– Logistics Talent Revolution
• Contemporary Issues

42. Contemporary Issues for 2018
Development of
Third-Party
Logistics in China
Meeting Consumer
Needs While
Managing Supply
Chain Costs
The Role of
Supply Chain in
Humanitarian
Efforts
Greening of the
Supply Chain

43. Development of Third-Party Logistics in China
(Appreciation/Credit to Nankai University)
3PL Market Size
#1 in World
Robust
Development of 3PL
Providers
Strength of Service
Offerings and
Impacts on Value
Chain
Innovations in 3PL
Service Models
Government
Policies Support
3PLs

44. Meeting Consumer Needs While Managing Supply Chain
Costs
Considerations
• Increased Reliability
• Optimized Inventory
• Optimize Quantity & Location
• Flexibility
• Increased Transparency
• Holistic Approach
• Reverse Logistics
Insourcing logistics
• Air Cargo Hub
• 4,000 Semi-Trucks
Testing using employees
to deliver online orders on
commutes home.

45. The Role of Supply Chain in Humanitarian Efforts
Hurricane Response in
Haiti
Drone Delivery in
Rwanda
Primary Shipper for
USO
Major Vehicle Supplier
to Relief Organizations

46. Greening of the Supply Chain
Last Mile
Bicycles are increasing in popularity
as they avoid traffic, limit emissions
and are easier to park
Within the Warehouse
• Solar Power
• Monitoring of energy usage
• LED and Motion-Sensing Lighting
Fuel Economy of Trucks
Will Keep Improving
(38% increase by 2032)*
• Improved Aerodynamics
• Reduced Weight
• Micro Hybrid Approach
• Alternative Fuel Sources
• IoT Monitoring/Coaching
*2016-2032 according to DoE Energy
Outlook 2017

47. September 2017
Questions for 2018
Annual 3PL Study?
www.3PLStudy.com
Onward to 2019!!!
22ND ANNUAL THIRD-PARTY LOGISTICS STUDY
THE STATE OF LOGISTICS OUTSOURCING