European Third Party Logistics Providers (3PLPs): Non-asset Based Model for Higher Performance?



European Third Party Logistics Providers (3PLPs): Non-asset Based Model for Higher Performance?

Authors

V Carbone, INRETS-DEST, FR; H Leggate, London Metropolitan University, UK

Description

Abstract

Third-party logistics service providers (3PLPs) undertake management, analytical and design activities associated with transport and warehousing such as inventory management, information related activities, including tracking and tracing, as well as the value-added activities of secondary assembly of products and supply chain management. The role of 3PLPs is becoming increasingly important as a consequence of the wider spread of outsourcing habit shown by European customers, both manufacturers and retailers.

Historically, the TPL industry was dominated by asset based transportation firms which had then pursued a strong business diversification towards logistics services in order to maximize their utilization of assets. Nowadays, there seems to be a shift toward the non-asset model.

This paper aims at testing the proposition that main third party logistics providers in Europe follow the non asset based model, e.g. that they take little risk in the form of capital investment. This view is tested by an examination of the asset base of 12 major European logistics providers over a 5-year period.

It analyses the asset base itself and compares performance of the businesses in terms of fixed asset turnovers. The majority of these companies achieve high operational revenues with a relatively small level of fixed asset and thus capital commitment. Furthermore, the period has seen an improvement in performance. The results demonstrate that such companies are building success from a low risk base.

Publisher

Association for European Transport