The Rise of Modern Logistics
Third Party Logistic Companies (3PL Companies) has served as an important link of businesses worldwide. Modern 3PL Companies can be traced back to Malcolm McLean, an American trucker, who was the first to conceptualize and put into practice the modern intermodal container. Being an owner of a small trucking firm, McLean has a first-hand experience with logistics. Accordingly, he observed that he had to wait for days before their cargo gets loaded and his trucks have to spend more time in the port than they are on the road. Similarly, the cargo ships are also experiencing the same predicament. Before the intermodal container was invented, a cargo ship typically would spend as much time in port being loaded and unloaded as it did sailing the seven seas. As a third-party logistics company owner, McLean believes that there must be a better way of doing things as far as the shipment of cargoes are concerned. Employing the services of an engineer, McLean developed an 8’ x 8’ x 10’ long steel container which is capable of being hoisted and detached from a truck and can be carried by a crane during loading and unloading. These containers were first loaded into an old oil tanker named ‘Ideal X’. Its maiden voyage was on April 26, 1956 from Perth to New Jersey and marked the beginning of a new era of intermodal containerization and perhaps the start of the modern third-party logistics operations.
Significance of 3PL Companies in Modern Logistics
One of the major concepts behind 3PL Company operations is that they serve as middleman distributors and work to create a global network of distributorship for their clients. As observed by Hinson, “some companies, particularly intermediaries in the supply chain, have expanded to offer value-adding supply chain management expertise”. While McLean have revolutionized the global supply chain in such a way that most companies sought for 3PL services as it can save them more time and money than to transport and distribute the goods themselves because of the already established distributor network that most 3PL companies can offer. It should be noted though that some businesses that have global presence are now operating independently in supply chain management area, using their own global chain and distribution network. One particular example is Wal-Mart. Wal-Mart’s supply chain management is considered to be the best of its kind and is one of the most efficient SCM services that any 3PL companies can offer. In the United States, the company has more than 40 regional distribution centers for import flow and more than 140 distribution centers for domestic flow . This provides the company a unique opportunity to manage its own logistics thereby eliminating its dependence on 3PL’s for the shipment and distribution of its goods. Despite the emergence of companies such as Walmart, 3PL’s does not lose its significance in the modern global supply chain since most companies prefer to use their services because of their established distribution network and supply chain management (SCM) expertise. In a way, 3PL companies play a vital role in the global distribution of goods as they serve as a bridge between the manufacturers and consumers. Modern 3PL Companies sought to enlarge their network. Apparently the larger their network is, the better they can serve their customers and the more efficient their service would be. Bigger networks also make 3PL services quite sophisticated. As observed by Bowman, while many smaller 3PLs were focused only in transportation and warehousing, modern 3PLs are expanding their offerings into full-service supply-chain management as their level of expertise rises according to their size and experience in global supply chain service. For the same reason, most 3PL companies are consolidating their services to provide a cost-efficient and value added service to their customers. In a sense, 3PL companies will continue to play a significant role in the modern global supply chain despite the independent supply chain management service of selected companies.
References
The evolution of shipping containers. (2013, May). Retrieved June 2014, from http://transportationfortomorrow.org/: http://transportationfortomorrow.org/the-evolution-of-shipping-containers/
Alyea, J. (2011). Analyzing Wal-Mart's Distribution and Logistics System. Retrieved August 2014, from http://jimmyalyea.blogspot.com/: http://jimmyalyea.blogspot.com/2012/02/analyzing-wal-marts-distribution-and.html
Bowman, R. (2014, June). Third-Party Logistics Providers Are Shrinking in Number, Growing in Size. Retrieved December 2014, from http://www.forbes.com/: http://www.forbes.com/sites/robertbowman/2014/06/03/third-party-logistics-providers-are-shrinking-in-number-growing-in-size/
Cudahy, B. (2006, October). The Containership Revolution: Malcolm McLean's 1956 Innovation Gets Global. Retrieved June 2014, from http://onlinepubs.trb.org/: http://onlinepubs.trb.org/onlinepubs/trnews/trnews246.pdf
Hinson, R. (2005, July). The Role of Third-Party Logistics (3PL) Providers in Produce. Retrieved December 2014, from http://ageconsearch.umn.edu/: http://ageconsearch.umn.edu/bitstream/27715/1/36020002.pdf
World Shipping Council. (2014). BEFORE CONTAINER SHIPPING. Retrieved June 2014, from http://www.worldshipping.org/: http://www.worldshipping.org/about-the-industry/history-of-containerization/before-container-shipping
