Commoditization of the third party logistics industry

Third party logistics companies in the US emerged in the 1980s and have been providing valuable service for companies willing to outsource logistics. Since then the industry has been growing substantially both in terms revenues and number of players. Nowadays 3PL market has a decent share in total transportation costs and established position in the transportation sector. Furthermore, analysts forecast a significant growth of the industry and an increase of its role in the supply chain management of companies. However, the industry is not enjoying adequate profits and margins are small. 3PL companies have difficulties differentiating among each other and have difficulties demonstrating value proposition to potential customers. At first glance, it signifies commoditization--a competitive environment in which differentiation is difficult, customer loyalty is low and competing offerings are virtually indistinguishable from customer perspective. The objective of this study is to explore whether third party logistics industry in the US is experiencing commoditization by studying current state of the industry, its competitive environment and dynamics. We investigate the principal drivers of commoditization dynamics in the industry, leverage points for influencing the dynamics, and possible strategic responses of 3PL companies. The methodology for the research is the System Dynamics, analysis of industry competitive forces using Porter's framework, analysis of profitability trend in a sample of fifteen logistics companies over period 1985-2003, and a review of current dynamics in the market. The study gives better understanding of the current competitive environment and suggests that the 3PL industry is experiencing

Department dc:contributor.department

Massachusetts Institute of Technology. Engineering Systems Division.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2004

Author dc:creator

• Manatayev, Yerlan Yergalievich, 1980-

Advisor dc:contributor.advisor

• Yossi Sheffi.

• Engineering Systems Division.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

en_US

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/28508

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/28508