THE ROLE OF UK THIRD PARTY LOGISTICS, CHANGES AND

The Role of UK Third Party Logistics, Changes and Developments

The Role of UK Third Party Logistics, Changes and Developments

Introduction

In recent years there has been a surge of academic interest and publications in the area of third party logistics (3PL). This can be partly explained by the growing trend of outsourcing logistics activities in a wide variety of industrial sectors (Transport Intelligence, 2004). The continuing wave of consolidation within the 3PL industry has also resulted in the emergence of large companies that have the capabilities to offer sophisticated logistics solutions on a continental or even global scale. Such logistics service providers (LSPs) strive to assume a more strategic role within the supply chain of clients, expanding their scale and scope of operations.

Despite the growing interest in 3PL, the literature on this area appears to be disjointed. Based on an extensive literature review (114 references), this paper aims to offer a taxonomy of 3PL studies and point out opportunities for further research. In a previous attempt, Razzaque and Sheng (1998) summarised the results of their literature survey which also included articles from practitioner journals and the trade press. For the sake of rigour, the present study concentrates only on refereed journal papers published during 1990-2005.

Terms such as “logistics outsourcing” “logistics alliances” “third party logistics” “contract logistics” and “contract distribution” have been used interchangeably to describe the organisational practice of contracting-out part of or all logistics activities that were previously performed in-house (Aertsen, 1993; Bowersox, 1990; Lieb, 1992; Sink et al., 1996). Different definitions tend to emphasize different aspects of outsourcing arrangements such as the service offering, nature and duration of relationships, performance outcomes, extent of third party responsibility over the logistics process and position/role in the supply chain.

3PL is usually associated with the offering of multiple, bundled services, rather than just isolated transport or warehousing functions (Leahy et al., 1995). Contemporary 3PL arrangements are based on formal (both short- and long-term) contractual relations as opposed to spot purchases of logistics services (Murphy and Poist, 1998). In recent years, the term fourth party logistics (4PL) has also emerged to describe more advanced contracting arrangements. Van Hoek and Chong (2001, p. 463) define 4PL as:

… a supply chain service provider that participates rather in supply chain co-ordination than operational services. It is highly information based and co-ordinates multiple asset-based players on behalf of its clients.

It is also noteworthy that some authors provide broad definitions of the 3PL industry, including freight forwarders and shipping lines (Rao and Young, 1994). Overall, it appears that 3PL terminology is overlapping and fails to take into account the shippers' industry-specific characteristics.

Method

A comprehensive literature review was conducted with the aim of constructing a classification framework for 3PL studies and developing a research agenda for the future. The review focused on refereed journal papers published within the period 1990-2005. The papers were primarily retrieved from logistics journals, although publications were also found (through database searches) in supply chain management, operations management and ...