Local 3PLs a threat to big boys?

Asia - More local 3PLs are getting a stamp of approval from their customers, but meeting their customer's broadening demands may prove difficult.

Local 3PLs like YCH, Trans-Asia Shipping Corporation and Keppel Logistics have swept up awards at this week's 2008 Frost & Sullivan ASEAN Transportation & Logistics Awards.

The awards are based on responses from logistics customers in the company's Voice of Customer research, and aim to recognise best practices and outstanding performances by 3PLs and transportation companies. The 3PLs were ranked based on 20 parameters which include commitment to customers' needs, domestic and international network reach, warehouse facilities, industry expertise, payment flexibility and customised service among others. The research polls four key ASEAN countries, Indonesia, Malaysia, Singapore and Thailand.

At this year's awards, YCH bagged the best IT/electronics service provider in Singapore, Keppel Logistics won best retail and FMCG logistics service provider in Singapore while Trans-Asia Shipping Corporation won the same award for Malaysia. 

"This shows that local companies are beginning to give some serious competition to multinationals," said R Gopal, director of transportation and logistics, Asia Pacific, Frost & Sullivan.

In his speech, Gopal added that customers in Asia are increasingly looking to partner 3PLs who can handle multiple logistics functions help increase their supply chain efficiency and service quality.

He added that customers are increasingly looking to 3PLs who can offer value-added services including reverse logistics, warehousing and packaging. 3PLs are now functional experts, not just transactional, he says.

Customers also expect 3PLs to provide a seamless range of supply chain solutions, said Png Cheong Boon, acting CEO of Spring Singapore citing a 2007 Third Party Logistics report conducted by Cap Gemini and Georga Institute of Technology. "This includes strategic planning, sourcing, order management, value-added servicing and reverse logistics," he said.

"For logistics SMEs, striving to meet these expectations is a significant challenge," he added.

However, 3PLs present at the awards ceremony were cautioned against the softening economy and rising fuel costs.

"Current market conditions remain volatile," said Png Cheong Boon, acting CEO of Spring Singapore. "Inflation and escalating energy costs are impacting the margins of logistics companies. At the same time, logistics companies have to deal with increased environmental and supply chain security requirements."

But the picture is not all grim. According to Png, the continued growth in ASEAN, despite the US economic slowdown, translates into opportunities for growth for logistics companies.

Other winners include NYK Logistics, which won the best logistics service provider award for ASEAN, and FedEx which won the best express service provider award for Singapore.