2 Key Needs Spawning Demand for Third-Party Transportation Services

2 Key Needs Spawning Demand for Third-Party Transportation Services

Posted by Whitney

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11/21/13 5:00 AM

The Journal of Commerce recently reported a rise in US Third-Party Logistics provider’s revenue, up nearly 6%. Notable among the areas of 3rd Party Logistics expansion is domestic transportation -- the smallest but fastest-growing segment, posting a 12.2% rise in net revenue last year. This healthy increase in revenue signals a rise in demand for third-party transportation. So what's driving all this demand?

We believe the rise in demand for third-party transportation logistics stems from two basic needs:

1. The Need for Greater Efficiency in Merchandise Transportation

In today's economy, shippers must be efficient to remain competitive. In a retail environment, the efficient transportation of merchandise drives the speed, cost, and quality of the customer shopping and delivery experience -- all significant factors in determining customer satisfaction and profits. Third-party providers who specialize in transportation often have superior systems and processes in place to maximize efficiency. In addition to their superior efficiency through specialization, their cost of operating is often lower than a shipper itself can accomplish. It’s all a third-party logistics provider does, and they can do it very well, without loose ends or inefficient processes.

2. The Need for Greater Flexibility of Transportation Resources

The uncertain nature of the current economy makes it appealing for shippers to avoid hiring and maintaining their own transportation staff – let alone their own transportation equipment, vehicles, and other resources. Third-party providers offer flexibility to scale up and down with demand. A retail business handling its own deliveries has a lot of costs to front and maintain. The fixed in-house staffing costs, regardless of delivery fluctuations, as well as the expense of warehousing, fleet maintenance, insurance and upkeep, can be substantial and unyielding. To a 3rd party logistics provider, however, resources can be shifted, with well-tested mechanisms in place to react to the differing scales required, and the shifting of workload needs.

Choose a Good Partner

Diakon Logistics is one of the leading third-party logistics and home delivery companies in the nation. Contact us today to find out how we combine efficiency and flexibility with our peerless partnership of innovation and integrity.

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Topics: Last Mile Delivery