Study reveals widening scope for ‘Third Party Logistics’
Research for Transport and Logistics :
Only some companies are realising gains by outsourcing their
logistics operations to create efficiency in their businesses with most
reluctant to do so despite globally proven advantages due to perceived
risks, a new study has revealed.
The third party logistics (3PL) market in Sri Lanka is fragmented and
dominated by a few major local players. The top five players in the
market, based on scope of activity and warehouse footprint, are DHL,
Hayleys Advantis 3PL Plus, JK logistics, EFL and Global Park.
Supply chains are the backbone of international trade and commerce
and logistics powers the supply chain, says Gayani de Alwis, who
conducted the study which was presented at the R4TLI - Research for
Transport and Logistics – conference on research for transport and
It was organised by the Sri Lanka Society for Transport and Logistics
with the Chartered Institute of Logistics and Transport Sri Lanka.
The study found there were opportunities for Third Party Logistics
businesses with only a few of the leading players providing ‘full scope’
3PL services and having the capability to manage all industry
Emerging opportunities identified by companies covered in the study,
both logistics providers and users, included integrated supply chain
service offerings, collaborative transport, multi user facilities and
using R&D and technology as a differentiator.
The study said the 3PL market in Sri Lanka is yet to achieve maturity
with few major players who have developed specialised service offerings
over the years and achieved market leadership.
“The market is highly fragmented and the majority is still providing
limited scope 3PL services to customers,” it said. “A lack of
understanding of the potential benefits of 3PL operations exists among
users in general.”
In 2014 Sri Lanka’s logistics cost to GDP was 10.6% compared with
8.3% in the United States.
“By managing logistics professionally efficiencies can be derived to
drive economic growth,” according to the study done by de Alwis.
Gayani de Alwis is also the Vice President of Institute of Supply and
Materials Management, Co-founder and Chairperson of WiLAT Sri Lanka and
the former Director, Supply Chain at Unilever Sri Lanka.
“A country’s logistics-friendliness is an indication as to how
connected the country is to achieve competitiveness.” Globally,
integrated logistics is emerging as the new norm of the industry, where
a single service provider provides end-to-end logistics services not
only within the country, but also through international networks. “This
enhances the efficiency and productivity of logistics as a function as a
whole and directly contributes to savings all around,” said the study.
“However, in Sri Lanka, most organisations are still not ready to
outsource their operations to one lead logistics provider due to
perceived risks arising from fear of collaboration.” Among the
challenges revealed by the survey were cost focus, low margins, lack of
professionalism, skill gaps, fear of collaboration, lack of clear
industry standards and legislation, high attrition rate, an unorganised
transport sector, suboptimal cold chain logistics and readiness to adopt
technology and innovation.
Chairman of the Joint Organising Committee, R4TLI, Professor Amal
Kumarage said, “The inauguration of the R4TLI - Research for Transport
and Logistics Industry came from a growing understanding of the gulf
that exists between the practice and research of transport and logistics
in many developing countries including Sri Lanka.”
“Sri Lanka’s poor choice of investment in logistics infrastructure,
lack of cutting edge research or development does not auger well for its
ambitions to become a logistics hub,” he said.