The 3PL market is large, but its profit level has always been relatively low. 3PL needs to be tied to the industry to grow, such as targeting specific industries such as automobiles, electrical appliances, medicines, clothing, and fast-moving consumer goods. Every profession has its own specialization. The commodity attributes, industry requirements, and logistics services in each subdivided field are different. Quoting the relevant introduction of Kerry and Sinotrans, vertical focus is to serve a certain industry, and develop the company’s unique core capabilities and technical advantages by providing professional customized logistics services, such as Baogong, Penske, and Ye Shuifu. Horizontal focus is to strengthen a certain logistics link or sector and give play to the long-board effect, such as CEVA, Kejie, and Sinker. Some logistics companies from large enterprise groups, after solving their own logistics needs, open up logistics services to undertake external business, productize professional services as much as possible, and expand in the industry. For example, Gefco, Haier RRS, Changan Minsheng, Midea Ande, SAIC Anji, etc., are all socialized logistics departments, which is very similar to platform logistics providers in the e-commerce field.
Express delivery companies can increase the stickiness of major customers, provide marginal support, and jointly expand new business areas by getting involved in 3PL. Among the top ten 3PL companies in the world, light-asset and heavy-asset companies each account for half. From the perspective of the time of entering the industry, light-asset companies represented by freight forwarders started supply chain business earlier, while heavy-asset companies are represented by express delivery companies such as DHL and UPS. However, their scale has achieved a relatively advanced position in the industry. Network-based logistics companies have inherent competitive advantages in the field of comprehensive logistics. The changes in production and circulation methods brought by e-commerce have greatly impacted traditional 3PLs that are mainly B2B-oriented, and thus face the baptism of the times. The biggest challenge is the transformation of corporate genes. The inherent business advantages have become the biggest shackles of 3PL. To completely change and revolutionize themselves, the resistance of organizational structure and operation system is also very large. Retail and fast-moving consumer goods are both businesses with low product added value. High-tech, equipment and medical fields can provide high-value-added services, which require logistics companies to have professional skills. According to IATA, the annual pharmaceutical distribution market is expected to reach 1 trillion US dollars. With the aging population and the continued growth of demand in emerging markets, logistics companies are seizing this type of business. UPS has invested in building an integrated professional healthcare distribution network and has developed a medical delivery and control tower system to support the stringent requirements of clinical trials such as GDP/GMP certification, supervision, tracking, and temperature-controlled storage, and can transport sensitive materials and biological samples worldwide.
From the perspective of the product life cycle, reverse logistics in the neglected aftermarket is very large, which broadly includes all logistics-related activities such as the collection, transportation, storage, repair and renovation, disassembly and recycling, and destruction and disposal of returned goods. The cost of reverse logistics is hidden and dispersed, and its cost accounts for at least 20% of the total. Returns are shipped from multiple starting points to a return warehouse (DC), that is, many to one. Authorized Returns (RMA) is the main process for e-commerce to handle user returns and exchanges, which is different from the rejection, return, and delivery failure of parcel delivery.
GENCO, the originator of reverse logistics 3PL, was founded in 1898 and pioneered a networked automated process to handle returned products. It is a way to handle returns for omni-channel retail. FedEx acquired it as a member of the logistics sector to help retailers find buyers, improve product handling efficiency, and sell products returned or damaged due to defects. 3PL has strong scalability, but when logistics companies try to make breakthroughs in the upstream and downstream of the industry they are concerned about, this in-depth business goes beyond the scope of logistics itself and is often difficult to match with core capabilities. Therefore, 3PL should focus on improving network integration capabilities, order fulfillment capabilities, emergency response and risk protection capabilities in vertical fields.