Different types of logistics service providers

Logistic Management Case Study

Chapter 7 – Logistics Service Providers

In-class exercises and discussion points

Examples of Leading LSPs

If students are online in the classroom you could ask them to briefly visit the websites of some of the LSPs detailed in this chapter. LSP websites tend to be quite informative and students should quite quickly be able to get an insight into the nature of those companies and the range of services that they provide.

Solutions to end of chapter questions

· What is ‘own account’ transportation

When a company provides its own transport services (as opposed to outsourcing to an LSP).

· Describe the different types of logistics service providers

Typically: hauliers / trucking companies and other transport providers, freight forwarders (sometimes called freight agents or brokers), couriers, and integrators. Ideally students should also mention the NVOCC concept which utilises groupage / consolidation and more generally the agency concept whereby carriers come together to use their combined buying power to leverage lower freight rates. In addition students should distinguish LSPs from 3PLs: any company that provides a logistics service we can regard as an LSP, specifically 3PLs are those LSPs that provide multiple logistics services, often in an integrated fashion

· Describe the various factors that have to be considered when selecting logistics service providers. How in practice do you think consignors make decisions concerning choosing logistics services?

The various factors to be considered are listed on pages 138/139. It is also worth noting that often consignors share their shipments across two or more LSPs in order to both reduce risk and also keep their providers ‘on their toes’.

· What is fourth party logistics (4PL®) and how has the concept evolved in recent years?

Discussed on page 137. Answers should ideally note its origins (Accenture, 1996) who originally defined it as ‘a supply chain integrator that assembles and manages the resources, capabilities and technology of its own organisation, with those of complementary service providers, to deliver a comprehensive supply chain solution’. It is in effect a radical solution that offers companies total outsource supply chain solutions. Students should also note that the concept has evolved somewhat and while a number of genuine 4PL®type solutions have emerged, in practice it is now more common for some 3PLs to offer 4PL® type solutions.

· How might we distinguish 3PLs from other LSPs?

Any company that provides a logistics service we can regard as an LSP, specifically 3PLs are those LSPs that provide multiple logistics services, often in an integrated fashion.

Extra essay style questions

· You have been appointed to the post of inbound transport manager for a large retailer. What issues will you consider in your review of the retailer’s transport operations?

The starting point would likely be data gathering and analysis concerning the retailer’s existing inbound transport operations (what volumes are being moved and by whom, in what directions, with what frequencies, etc). Questions can then be asked such as: are total transport costs being minimised, would it be more efficient for the retailer and not the supplier to arrange and pay for transportation (factory gate pricing), what impact are the retailer’s wider supply chain strategies having upon transport efficiency, which and how many LSPs should be employed and would a 4PL® solution be useful.

· What advice would you give to a company that is looking to replace multiple 3PL relationships with a single 4PL® solution?

The starting point in any answer is to define / explain both of the key terms in the essay question: 3PLs are those LSPs that provide multiple logistics services, often in an integrated fashion; and as noted in the suggested answer above to the fourth end of chapter question, a 4PL® is, as defined originally by Accenture, ‘a supply chain integrator that assembles and manages the resources, capabilities and technology of its own organisation, with those of complementary service providers, to deliver a comprehensive supply chain solution’. As we noted above it is in effect a radical solution that offers companies total outsource supply chain solutions. Students should also note that the concept has evolved somewhat and while a number of genuine 4PL®type solutions have emerged, in practice it is now more common for some 3PLs to offer 4PL® type solutions. In essence then this is the core of the answer: does a company look for a single 4PL® solution, does it look for a 3PL to offer a 4PL® type solution, or does it stay with multiple 3PL solutions. In reality there are upsides and downsides to each of these suggestions. Obviously what is important is the range of available services and service providers operating in the market, as well as the particular context of the company looking for the logistics solutions (range and scale of services required, nature of their product portfolio, any issues of risk, etc).

More questions

· What are integrators and outline the benefits of the services that they provide in comparison to other logistics service providers.

Good websites and video clips

Damco is a leading LSP and they have some good corporate videos here: http://www.damco.com/en/about-damco/video-page

© 2016 John Wiley & Sons, Ltd - Additional resources to accompany Global Logistics and Supply Chain Management 3e by John Mangan and Chandra Lalwani - www.wiley.com/college/mangan 2