3PL Logistics Services: Risks and Benefits

In recent years, globalization, economic volatility, and uncertainty impacted global business markets. The third party logistics (3PL) sector has not been unaffected by these changes. The 3PL industry, although its existence is not something new, is constantly changing. Global industry consolidation, technology integration, industry specialization, and industry alliance networks are the main drivers for this change (Aghazadeh, 2003). The changes have been significant in areas such as industry size and make-up, services offered, geographical reach, and the information technology (IT) support provided (Lieb, 2005).According to Hertzand Alfredsson (2003), the 3PL sector is developing through the thriving demand for advanced logistics services. Globalization, lead time reductions, customer orientation, and outsourcing are the main drivers for the thriving demand for logistics services. Consequently, more and more companies are entering the 3PLmarket, which has created growing competition. As the competition within the 3PL sector is high, the service providers must find new ways to create competitive advantage, and stand out from their competitors.