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How Important are Logistics Specialty and Value-Added Services?

“In order to improve our ability to leverage the unique capabilities of our specialty companies, we are realigning several companies in a new organizational structure under FedEx Trade Networks, led by FTN CEO Richard W. Smith,” said David J. Bronczek, President and Chief Operating Officer, FedEx Corporation.

Indeed, the company is moving the following groups into FedEx Trade Networks which prior to the recent reorganization, focused primarily on freight forwarding and customs clearance. The groups falling under FedEx Trade Networks now are:

  • FedEx Custom Critical
  • FedEx Cross Border
  • FedEx Supply Chain
  • A new company called FedEx Forward Depots with responsibility for Critical Inventory and Service Parts Logistics, 3-D Printing, Repair Center and the FedEx Packaging Lab

Value-added Service versus Specialty Service

Value-added services such as pick and pack, kitting and labeling are among the leading value-added services 3PLs provide.  Now, with FedEx’s latest realignment of FedEx Trade Networks, we have ‘specialty companies’ to also consider.

In a 2012 Global Trade Magazine interview, Mark Sell, CEO of MD Logistics, was quoted as saying, “Our customers are asking us to do more and more things for them that are not even thought of in traditional supply chain logistics.” Indeed, value-added services furthers optimizes customer experience and helps provide a competitive edge.

However, the traditional supply chain no longer exists. The digitization of businesses has seen to that and now logistics providers are looking towards 3D-printing, cross-border e-commerce services, e-fulfillment platforms and more to not only set themselves apart but to also address the changing needs of today’s businesses.

Good news for 3PLs – according to the annual State of Logistics Outsourcing 3PL study, 75% of surveyed 3PL users reported that 3PLs provide new and innovative ways to improve logistics effectiveness. But, at the same time, shippers’ expectations are increasing particularly as technology improves and the need for enhanced analytical capabilities are needed. As such, many of the accepted reasons for why value-added logistics service help give shippers’ supply chains a competitive edge still hold true.

A good ‘top 10’ list of reasons for value-added services is from an Inbound Logistics article, Adding Value to Your Supply Chain in which Duane Sizemore, senior vice president, marketing and business development with Saddle Creek Logistics Services provides his thoughts. We certainly agree with all ten points and in particular #10 – Find a partner. In today’s rapidly changing environment, it’s important to have a logistics partner that is trusted and knowledgeable in terms of transport & trade, logistics as well as well as industry specific trends. At the same time, technology is now a given and the ability to not only share but to also analyze data as well as provide visibility across the supply chain is extremely important for shippers to quickly adapt to any sudden change in the market without any hiccups.

Concluding Thoughts

As noted in the Global Trade magazine article, “3PL value-added services become attractive as companies continue to seek ways to reduce their spending on transportation and back-office functions like warehousing, order taking and packing…” Furthermore, we would like to suggest specialty services are not necessarily a means to reduce spending but to expand a shipper’s digitized presence which ultimately improves efficiencies and processes and thus achieves cost reductions.

FedEx’s realignment of its FedEx Trade Networks subsidiary is a step towards this direction while it continues to offer the traditional value-added services and transportation services as well as introduce its partners to new ideas and concepts in an easier manner. Expect more providers to follow its lead.

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