A Brief History of Third Party Logistics
The Motor Carrier Act of 1980 deregulated the trucking industry in terms of price controls, entry controls, and vendor price setting. In 1980 there were approximately 20 thousand trucking carriers. Today, as a result of the Motor Carrier Act, there are 1.2 million. As a result of this more fragmented, competitive market, it was possible for companies to offer additional logistics services in a more complex logistics environment. In the 90s, more companies expanded their product reach into global markets. Rapid industrialization in developing countries like China and India meant companies were minded to move their manufacturing overseas. In turn, this necessitated a much greater focus on management of complex global logistics. It was at this time that Accenture registered the term ‘3PL’ as a trademark and defined as ‘A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.’ However, the term is no longer registered. In 2008 HR4040 set into law that 3PL was ‘A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product’. This definition was not originated by President Bush but has taken effect as the one commonly referred to.
In spite of these advances, the 3PL market did not really explode until the technology boom of the 2000s. With the Internet becoming far more widespread, third party providers could devise and offer solutions with added services, taking on more and more responsibility. Part inventory management service, part transportation service. Order management became possible with more robust technology platforms. It’s in the last decade that 3PL services have really come of age. In 2017, 90% of Fortune 500 companies based in the United States used 3PLs for logistics and supply chain functions. In 2014, the 3PL industry’s growth rate was outpacing the general US economy by a factor of more than three. Larger 3PLs can deliver more flexible service options, thanks to their greater ease in establishing global partnerships and infrastructure. However, any 3PL business prides itself on offering cost effectiveness and freeing up its clients to streamline their own operations, creating substantial increases in efficiency.