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Third Party Logistics Evolution:
Lessons from the Past

Chrisoula Papadopoulou and
Douglas K. Macbeth
Centre for Supply Chain Management
University of Glasgow

This paper aims at providing an assessment of the third party logistics evolution over the period of 1900s up to the millennium. It concludes with a conceptual model which summarises the main stages of the third party logistics evolution according to relevant organisational, logistical and strategic transformations, and world main events. This task entails a thorough literature analysis of the organisational shifts and logistics movements over time. Their analysis is supported by the pertinent strategic trends and world main events.

Introduction

There is a continuous increase of the importance of the third party (TPL) or contract logistics in company’s performance. The study of the TPL history has shown that as the companies continue to source in one continent and manufacture in another, and then selling in yet third, the management of the distribution channels becomes a very complicated task for the companies to manage in-house. Thus the need for contracting will continue to grow. Relevant estimates of the TPL penetration rate have shown a growth from 2.7% in 1992 to 10% by the end of the millennium. At the same time, the market for contract logistics is expected to reach $47-50 billion in the year 2000 from $10 billion that it was in 1992 (Muller 1993). The main reasons that lead companies to explore outsourcing are their need to reduce inventory, penetrate markets, reduce contracts, and gain expertise (Richardson 1990).

The study of the TPL evolution can provide guidelines for future trends in contract logistics development. This can contribute to future competitive strategy planning; company’s understanding of the way TPL can contribute to its corporate plans, and encourage academia to search for further implications for the company’s operations. This paper addresses three elements: the... [continues]

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