In spite of this, the market growth rates for 3PL services have not slowed, at least on the warehousing side. Companies recognize the need to outsource in order to meet their strategic goals.

Outsourcing Trends

Volumes are slowing and inventories are declining, yet we are seeing more new business opportunities coming across the transom today than ever before. And we’re not alone. According to eyefortransport’s 2009 North American 3PL Market Report, 68 percent of respondents say that it is possible or very likely that they will increase their use of 3PL services.

Many companies are considering outsourcing more of their warehousing operations – shifting responsibility from in-house to a third-party provider. The reason? Rather than hiring or investing in capital, companies are turning to third parties for help in driving costs out of their operations.

This trend is less evident on the transportation side of the business where a larger percentage of companies already outsource their transportation. Instead, those companies are now putting out for bid to find providers who offer more value at a lower cost.

In the coming months, there will be many logistics players “giving away the store” in order to fill empty warehouse space. These low-price options may look attractive in the short-term but usually disappoint customers in the long run.

It is critical to consider the long-range impact of the 3PL selection process. A 3PL needs to be financially capable of providing the facility, equipment, and labor pool necessary to satisfy the customer. It’s important to work with a financially sound company that delivers on its commitments and provides value in long-term relationships.

3PLs Bring Strategic Value

What is driving the interest in outsourcing? 3PLs can be a valuable resource in troubled economic times. They offer financial flexibility and give companies the resources to retain supply chain strategies that might be difficult to handle internally right now.

3PL providers with multiple locations offer the convenience of growing or shrinking an operation to meet business needs. In addition, asset-based providers are willing to invest in buildings and take on risk. (Non-asset-based providers, on the other hand, may lease space to match a customer’s current needs but can’t offer flex space to accommodate potential inventory fluctuations.)

IT strength is another benefit of working with a strong 3PL in times like these. Never has it been more important for companies to understand the flow of their goods. Those that lack internal systems capabilities to provide full knowledge of their inventory (where it sits, when it is due to move, how often it has turned, etc.) can benefit from working with a 3PL that already has those systems in place.

Many benefits of using a 3PL transcend economic conditions – agility and responsiveness, a flexible and cost-effective workforce, innovative ideas for improving efficiency . . . Nonetheless, they are especially valuable in today’s economy.

Ultimately, many companies choose a 3PL for a strategic, integrated solution that combines state-of-the-art operating systems as well as the facilities, personnel and management to generate a lower-cost solution.

Moving Forward

As I mentioned, “business as usual” will look very different moving forward. Money will never be – at least in the next five to 10 years – as readily available as it has been. The level of merger and acquisition activity has already slowed down significantly – to a tenth of where it was nine months ago. Companies simply can’t get credit.

Looking ahead, business growth is more likely to be organic and internally focused, at least for a while. Companies will have to be more judicious in thinking about acquisitions and strategic investments and more astute about conducting their business in general. The focus will be on driving new business and managing costs to stay as competitive as possible.

Financially stable 3PLs offering integrated capabilities and innovative solutions can be valuable allies. By creating efficiencies, streamlining the supply chain and controlling costs, a strong 3PL can help companies succeed in today’s economic climate and beyond. I’m proud to say that Saddle Creek is in a good position to do just that.

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Cliff Otto is president of Saddle Creek Corporation and Saddle Creek Transportation. He has more than 30 years of industry experience and has held leadership roles with the Council of Supply Chain Management Professionals (CSCMP) and several grocery industry associations, and served as national president of the Warehousing Education and Research Council (WERC).