Status of Third Party Logistics - A Comprehensive Review

Abstract

Third party logistics has many definitions and interpretations. In this paper, we review some of the most commonly used definitions including the ones appear to be broad and inclusive in nature as well as the ones with a narrow and more exclusive focus. We define third party logistics as an external logistics service provider offering single or multiple logistics activities to its customers, which typically is on contract basis. From the provider's point of view, their business covers a great number of relationships involving everything from simple logistical activities to advanced logistical solutions; from the customer's point of view, the degree of outsourcing varies and the outsourced logistics activities differ greatly. We also discuss the reasons why business outsources the logistics functions to 3PLs. Moreover, we review the previous research and attempt to predict the future of 3PL. At the end of the paper, we point out that the rate of growth may decrease, but outsourcing logistics functions to 3PLs is still a major trend. 3PL used to provide services such as warehousing and transportation. More recently, 3PLs are putting more attention on building a long-term contractual relationship with their customers by providing multiple logistics services. We conclude that 3PLs have a significant impact on not only the past and the present, but also the future.

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