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Introduction
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Research Methodology
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‘ Facts and Findings

III
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‘ Analysis and Interpretation
IV
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Conclusion
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‘ References 13

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½‘ rowth of 3PL companies began back in the 1980¶s when businesses began to look for
new ways in which they could outsource logistics functions and concentrate on their core
business.
½‘ FedEx is the company which has brought 3PL revolution.
½‘ áhe company¶s overnight delivery service changed the way in which B2B andB2C
transactions operated.
½‘ As the number of companies offering the service increased, it led to intense competition
between them.

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·‘ áhird party logistics (3PL) companies are a becoming an important part of today¶s
Supply chain.
·‘ áhese companies offer services that can allow businesses to outsource part of all of their
supply chain management function.
·‘ Many 3PL companies offer a wide range of services including; inbound freight, freight
consolidation, warehousing, distribution, order fulfillment and outbound freight.
·‘ In developed countries like US and Japan, use of 3PL services account for over 50% of
the total logistic cost

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áhird Party Logistics firm may be defined as an external supplier that performs all or part of a
company¶s logistics functions.

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½‘ Characteristics of 3PL are integrated/ managed together and they provide solutions to the
logistics/ supply chain problems.
½‘ Recently, there has been significant increase in the number of firms offering the service
and this trend is expected to continue. While many of the firms are small, niche players,
the industry has large firms as well.
½‘ E.g. Fed Ex, UPS Worldwide logistics, Exel, Caterpillar Logistics services, etc.

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1.‘ áransportation, which is a major activity in a supply chain of a firm, is taken care
of by these providers.

2.‘ Leveraged 3PLs use assets of other firms and Non- leveraged 3PLs use assets
belonging solely to the parent firm.

3.‘ Ryder, Schneider Logistics, FedEx Logistics, and UPS Logistics are examples of
3PLs.

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1.‘ áhese types of providers take care of all the ware house and distribution activities
of the firm.

2.‘ áhis type of transition is more complex when compared to transportation based
transition.

3.‘ DSC Logistics, USCO, Caterpillar Logistics, are examples of

warehouse/distribution-based 3PLs.

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1.‘ Independent middlemen extend forwarder roles.

2.‘ Non-asset owners provide a wide range of logistics services.

3.‘ AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, and the Hub roup are
examples of forwarder-based 3PLs.

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1.‘ Provide freight payment and auditing, cost accounting and control, and tools for
monitoring, booking, tracking, tracing, and managing inventory.

2.‘ Cass Information Systems, CáC, E Information Services, and FleetBoston are
examples of financial-based 3PLs.

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1.‘ Significant growth and development in this alternative category of Internet-based,
business-to-business, electronic markets for transportation and logistics services.
2.‘ áransplace and Nistevo are examples of information-based 3PLs.

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½‘ As, companies are concentrating on managing supply chain demand for 3PL¶s has
increased rapidly.
½‘ Increased awareness about efficient logistics practices led to the growth of 3PL industry.
½‘ Because of the infrastructural development such as ports, highways, bridges as well as
increasing connectivity and rising significance of logistic services in the country, 3PL has
vast opportunities in India.
½‘ Segment-wise market potential of the 3PL services facilitates the better analysis of the
penetration level of latest logistic services across different industries in India.
½‘ Analysts says that, automobile and Iá hardware industry to be the largest end-user
industry for 3PL services, multinationals being the dominant users.
½‘ FMC and retail sectors are among the other sectors which contribute to the 3PL market
and have significant potency to grow in future.

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‘ Research is a purposeful, precise and systematic search for new knowledge, skills,
attitudes and values, or for the re-interpretation of existing knowledge, skills, attitudes and
values. áype of research adopted is descriptive i.e. self explanatory. áhe aim of this research is to
verify formulated hypotheses that refer to the present situation in order to elucidate it.

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‘ Research has been done using the existing data i.e. secondary data. áhe source of
information is Internet, Business newspapers and Business magazines. Various newspapers and
magazines have been referred for the latest and factual data.

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áhe objective of this research is to find out various problems of 3PL industry and at the
same time focus on the prospects of the industry. Different type of 3PL companies and the 3PL
market in India have been discussed. áwo companies namely, DHL, which provides
international express service and DáDC, India¶s largest domestic delivery network company are
considered for study.

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DHL Express (originally standing for Dalsey, Hillblom and Lynn) is a division of Deutsche Post
DHL providing international express mail services, founded in 1969. It is a erman based
Express Logistics Company. DHL was first international company to offer overnight service. In
2004, DHL has acquired Indian domestic courier Blue Dart. DHL was the third largest courier
behind FedEx and the UPS, in the world. It is worlds No.1 in ocean freight and contract logistics.
Competitors worldwide are FedEx, UPS, and áNá. Keeping in view the environmental safety,
DHL has switched from fuel to CN for delivery fleet.

DHL offers a full range of customized solutions - from express document shipping to supply
chain management.

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1.‘ DHL provides transportation and outsourced logistics services across the industry's
supply chain, from sourcing/inbound logistics, to manufacturing, to outbound/distribution
logistics, to after sales support.
2.‘ It offers delivery and installation service that covers business equipment as well as home
delivery direct to consumers.
3.‘ A 24-hour door-to-door emergency delivery service in specific countries and territories is
being offered.
4.‘ Products can be tracked, queried and ordered online.
5.‘ Receipt, management, execution, sequencing and dispatch of orders in a timely manner
6.‘ áemperature controlled warehouses are present for perishable products.
7.‘ áhe warehouses are automated or semi automated for material handling purposes.
8.‘ Uses latest technologies like RFID tags for storing and detecting.
9.‘ DHL Cargo has an insurance cover for the goods lost under transit.
10.‘Offers tailored made solutions based on pre-designed and standard logistics modules for
different service level supply chains.
11.‘DHL deliver the right part, at the right place, at the right time, and at the right cost.
12.‘Value- added services like temperature controlled packaging, cargo insurance, QA/QC
Control is being offered.
13.‘Iá enabled solutions.
14.‘Operates call centre to control orders, monitor sales activities, and provide customer
services.

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 15.‘Provides useful packaging tips, support to its customers.

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1.‘ Under certain circumstances, due to unavailability of the recipient, several repeat
deliveries have to be made leading to higher costs.
2.‘ Creating extensive network and carrying out international expansion.
3.‘ Lack of own fleet of air fleet in countries like India resulting in delays.
4.‘ International parcels have to pass the custom check before they can be sent to other
countries; certain parcels get delayed for more than 24 hours.
5.‘ Shipping volume rises and falls tremendously as the economy climbs and dips.

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DáDC is India¶s Largest Domestic Delivery Network Company offering various custom made
services ranging from Domestic to International. DáDC delivers to the remotest places in India
with the help of 4,000 business partners spread across the length and breadth of India. It is spread
across 240 countries around the globe. DáDC has the state of art Iá infrastructure to support
their operations and has built many customized applications for its corporate clients. DáDC
offers wide range of services like Express courier, cargo, end to end supply chain solutions,
Retail services like ticketing solutions, bill payments, Mobile & DáH top ups apart from
áraining supply chain professionals through its supply chain training institute. Competitors in
India are First flight, Blue Dart, Professional Couriers, ati, Safe express etc

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1.‘ Domestic tracking via internet, SMS
2.‘ DáDC¶s E commerce solution that helps with system generated bar-coded waybill at the
customer¶s destination facilitating an easy process.
3.‘ Customers can schedule a courier pick-up
4.‘ et customized rate quotes
5.‘ Customer can create customized shipment reports
6.‘ DáDC Indian Address Validation áool- ensures that customer-entered shipping addresses
for the de1stinations are correct at the time of order.


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1.‘ Does not own freighter aircraft.
2.‘ Still developing its overseas expansion.
3.‘ Repeat deliveries leading to higher cost.

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áhird party logistics study revealed that number of 3PL users is very stable and it is expected
that their number may increase in the coming years.

Exhibit 1: No. of 3PL user / Non user experience, 96-01


Exhibit 2: Shippers using more than five 3Pl¶s

Exhibit 3: áhird Party Revenue Estimated

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 Exhibit 4: áop Six outsourcing Logistics services

Exhibit 5: Factors for selecting and evaluating 3PL¶s

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áhird Party Logistics research study revealed the following:

1)‘ Quantifiable measures of 3PL success:

X‘ Logistics costs reduced by 8.2 percent.

X‘ Logistics assets reduced by 15.6 percent.

X‘ Average order cycle length changed from 10.7 to 8.4 days.

X‘ Overall inventories reduced by 5.3 percent.

2)‘ Outsourced logistics services include:

X‘ Warehousing (73.7%)

X‘ Outbound transportation (68.4%)

X‘ Freight bill auditing/payment (61.4%)

X‘ Inbound transportation (56.1%)

X‘ Freight consolidation/distribution (40.4%)

X‘ Cross docking (38.6%)

3)‘ Some of the problems reported are:

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 X‘ Service level commitments not realized.

X‘ Strategic management skills lacking.

X‘ Cost reduction goals not realized.

X‘ Cost ³creep´ and price increases occurring.

X‘ Improvements and achievements lacking.

X‘ Control of outsourced functions diminished.

X‘ Consultative, knowledge-based skills lacking.

X‘ áechnology capabilities not being delivered.

X‘ áime and effort spent on logistics not reduced.

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By outsourcing logistics activities, firms can save on capital investments, and thus reduce
financial risks. Investment on logistics assets, such as physical distribution centers or information
networks, usually needs large and lump sum costs, which involves financial risks. Hence, by
outsourcing these activities, a firm can concentrate on its core activities.

‘ áhe Indian 3PL market is set to grow tremendously in the next 5-7 years, spearheading
the growth of logistics market. Several factors including government¶s support are instrumental
in this growth. áhough certain challenges remain to be addressed, the general trend is highly
positive. With scenario highly favorable for them, the onus is now on 3PL service companies to
offer quality services at affordable pricing, and delivering consistent results to maintain the
momentum. For now, surely 3PL is the way forward for Indian Logistics Market.

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1. Understanding the Sap Logistics Information System (2007) by Martin Murray

2. http://www.researchandmarkets.com/reports/888568/

3. http://www.dtdc.in

4. http://www.dtdc.com/

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5. http://www.dhl-discoverlogistics.com

6. http://www.business-standard.com

7. ³Management of Business Logistics´ ±7th Edition by Coyle, Bardi, Langkey

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