3PL/4PL

3PL/4PL Logistic
Logistic

Prepared By :- Ajit
AAthird-party
third-partylogistics
logisticsprovider
provider(3PL,
(3PL,or
orTPL)
TPL)isisaafirm
firmthat
thatprovides
provides
service
servicetotoits
itscustomers
customersof ofoutsourced
outsourcedlogistics
logisticsservices
servicesfor
forpart,
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or
all
allof
oftheir
theirsupply
supplychain
chainmanagement
managementfunctions.
functions.Third
Thirdparty
partylogistics
logistics
providers
providerstypically
typicallyspecialize
specializein
inintegrated
integratedoperation,
operation,warehousing
warehousing
and
andtransportation
transportationservices
services

Fourth
Fourthparty
partylogistics
logistics(4
(4PL)
PL)companies
companiesserve
serveas asconsultants
consultantswho
who
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managethetherelationship
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betweenthetheprincipal
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oneor
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more3PLs
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makesure
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They
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fromadvice
adviceon
onchoosing
choosing
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bestcompanies,
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uptotothe
theday-to-day
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essential
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tasksbeing
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theprincipal
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company
 According to Armstrong &
Associates, the world 3PL revenues

1992 - $10 billion

1996 - $25 billion
2000 - $56 billion
2003 - $141billion
2006 - $300 billion

The 3PL market in India is least developed.

U.S.
U.S. 57%
57%
Europe
Europe 40%
40%
Japan
Japan 80%
80%
The logistics firms offer limited services Lack
Lackof
oftrust
trustand
andawareness
awareness
The 3PL market in India is poised to grow at over 20% compared
to the average world growth rate of 10.7%

The Indian Government is working towards a uniform VAT

regime. Once implemented, it will enable the 3PL providers to
consolidate the warehousing facilities currently maintained in
different states bringing in economies of scale
4PL Logistic
Major Players in India
Some of the Indian
conglomerates extended their
business to third & forth party
logistics

•DIESEL
Drive India

• Drive India Enterprise Solutions, or DIESL, came out of

telecom venture
• It is a TATA group venture
• DIESL has 4.5 million sq. ft. of warehousing space across the
country, and hopes to grow the logistics arm at 100 per cent
annually
• Revenue: Rs 1100 Crores
Mahindra Logistics

• The company plans to set up four mega warehouses

(500,000 sq. ft. each) and five small ones (150,000 sq. ft.
each) across the country
• It is among the top three logistics players in the auto
segment
• Revenue: Rs 1000 Crores

TVS Logistics Services

• It is one of the oldest logistics providing companies of India
• In November 2010 it bought UK-based logistics company
Multipart Holdings
• In January 2011 it bought US-based logistics service provider
Manufacturers Equipment & Supply Company, or Mesco
• Revenue: Rs 1300 Crores
Future Supply Chain Solutions

• It is a Future Group venture

• It has 6 million sq. ft. of automated distribution centers
across the country, and plans to add another 9 million
• Revenue: Rs 700 Crores

Transport Corporation of India (TCI)

• TCI is India's leading Multimodal Integrated Supply Chain
Solutions provider with a Global presence
• TCI is equipped with an extensive set up of 1000 plus branch
offices, a large workforce, huge fleet of customized vehicles
and warehouse space of 9.5 million sq ft.
• TCI offers seamless multi-modal logistics solutions
• It moves 2.5% of India's GDP by value
• Revenue: Rs 2200 Crores
Indian Players

Company Revenues(in Rs Crores)

GATI 1500

AFL Logistics(FedEx) 1400

DHL India 823

Reliance Logistics 319

Geo Logistics 200

Safe Express 50
 Top ten player of logistics in world
S. No Name of 3PL Company Revenue Coverage
1 Exel plc Berkshire, UK, London $ 8.3bn Global
2 Kuehne & Nagel $ 6.9bn Global
International Schindellegi, Switzerland

3 Schenker Assen, Germany $ 6.4bn Europe, Asia, South America, Africa,

North America
4 DHL Danzas Air & Ocean Basel, $ 5.7bn Global
Switzerland
5 P&O Nedlloyd Rotterdam, Netherlands $ 4.8bn Coverage: Europe, Asia, United
States
6 TPG/TNT Hoolddorp, Netherlands $ 4.7bn Europe, Americas, Asia
7 Panalpina Basel, Switzerland $ 4.6bn Europe, Asia, Americas, Africa
8 UPS Supply Chain Solutions Atlanta $ 4.1bn Global

9 Nippon Express Tokyo, Japan $ 4.0bn Global (except Africa)

10 C.H. Robinson Worldwide Eden Prairie, $ 3.6bn North America, Europe, Brazil
 Top 10 Countries in Logistics
1. Singapore
2. Netherlands
3. Germany
4. Sweden
5. Austria
6. Japan
7. Switzerland
8. Hong Kong / China
9. United Kingdom
10.Canada
 Global Economy
The logistics business growth was 4.5% in year 2011 and it is expected to be
3.5% in year 2012.

Factors Contributing to the slow down are

•Euro area economy- The exchange rate of Euro has been depreciated with
10% against American Dollar which is detrimental to Global economy.

•Fuel Prices- In case of road transport the fuel price itself contributes the
40% of their operating cost

•Labor costs - Increase in labor costs world wide leads to high operational
cost

•Investment intentions- nominal increase in business volume and heavy

increase in operating cost and investment leads to scaling down of the a
number investment plans
Global Outlook 2012
Both 3PLs and Their Clients Need to
Introduce Change
Embed innovation in the services contracts
Develop innovation capacity in operations
 Motivate innovation through incentives
 Establish open, transparent, collaborative
relationships
Upgrade the deal structure
Case References – Case 1
5.1 CJ-GLS: an analysis on 3PL using Blue Ocean strategy
•Ranking 4th in Korean Logistics, CJ-GLS is a subsidiary of Samsung
Corporation created a non-competitive blue market strategy in logistics market
by positioning itself as a value added service provider in late 80’s
•A latecomer in Korean logistics market, CJ-GLS entered into 3 PL segment
and created a largest client bases today with its market analysis capability,
accurate customer requirement analysis, and the constructing capability of its
Logistics Information Systems (LIS)
•It’s great success was achieved by giving value addition to customers by
introducing RFID based inventory management and grid computing
technology services for first time in 1988
•The 3 PL services includes:
 Freight consolidation,
 Distribution,
 Transportation,
 Warehouse design and management,
 Labeling,
 Packing, and
 Order management.
•220 companies compose its major customer base which includes National
Panasonic, Sony, Nestle, Osram Sylvania and Lego.
Case 1 – contd…

Korean Logistics Market distribution

Case 2

5.2. TVSL:
Hived off as a separate company in 2004 (it was earlier a division of TVS and Sons,
the parent company of the $3.6-billion TVS Group).

5.3. Auto Industry Focus

•TVSL's rapid growth is due to its unique business model which has turned existing
practices in the logistics industry on its head.
•Started focusing only on the auto industry, despite the fact that the sector is a
logistical nightmare as it requires handling inventories of hundreds of non-uniform
components and offers the lowest possible yield per kg.
•The two main reasons behind this decision are:
 Domain knowledge was available in-house
 The fast-growing Indian auto industry presented a huge potential— with
4-7 per cent of the auto industry's turnover is spent on logistics services.
5.4. TVSL’s Value addition and differentiation through innovation:

5.5. Key results due to innovation:

•Quick acquisition of major global clients due to variable cost model. This include
global Cummins, JCB, Caterpillar, Ford, John Deere and New Holland, apart from
Indian companies such as Tata Motors, Mahindra and Mahindra, Ashok Leyland,
Eicher and L&T Komatsu.

•Lower fixed cost investment comparing to major peers. Transport Corporation of India
(TCI), a clear market leader in the Indian logistics industry with fixed assets at Rs 413
crore in 2008-09 earned a turnover of Rs 1,304 crore. In comparison, TVSL'S fixed
asset was Rs 85 crore against a revenue of Rs 956 crore in 2009-10.
Reference

• http://www.thehindubusinessline.in/2003/06/23/stories/200306
2300500600.htm
• http://www.tcil.com/tcil/
• http://businesstoday.intoday.in/story/making-of-an-indian-
mnc/1/5226.html
• http://www.commodityonline.com/news/third-party-logistics-to-
gain-strength-in-india-17749-3-17750.html
• http://forbesindia.com/printcontent/28192