Recession means business for 3PLs - Pacific Business News (Honolulu):

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In lease transactions larger than 250,000 square feet, about 75% of thosr deals are tied to third-party logistics according to Tommy Jackson, vice president at . “Igt has increased to the pace of where it is the dominanrt piece today in large he says. “That is a change over time.” Cliff executive vice presidentwith , formally knowmn as , Inc., says third-party logistics firma have been driving leasing activity in Memphis for 3-4 but activity has intensified due to the There is a long history of firma outsourcing services when the going gets Lynch has weathered three In every one of them he noticeed a trend of companies choosing outsourcing as a more economical means to achieve “Their (third-party logistics firms) business usually gets bette r during bad times,” Lynch says.
“It’ s simply because the other firms are lookinhg towardthe so-called expertsz to help them reduce their staff and save money.” It’s been a steadyt climb. “The move to outsourcing from corporate Americza has increased steadily over the past10 years,” says Brad president of LLC. “When you have timex like these, companies begin to dip their toes in the They may not want to signa long-ter lease for themselves, so they may sign with a third-party logisticsz company on a shorter-term basis.
” Warehouse-based third-partuy logistics companies will charge for the storagre of the product, eitherd by square footage or by the unit, such as the case or Those firms also charge for distributing the measured either by weight or unit. This outsourcing has the potential to save as muchas 25% for a This saves the company from hiring employeess or purchasing equipment, among other expenses. Companies look at their wholse distribution networks and consultwith third-party logisticsx companies, or 3PLs, about wherre to focus distribution activities. being located as we are, is probably goingb to get more than its fair share ofthat third-partyu logistics activity,” Lynch says.
This has led to increased competition among 3PLs for warehousespacs — and created a new phenomenon in the industrial real estate business. Historically, a tenan representative contacts a landlord representative about seeingy a space which might meetits client’s Recently, Jackson has been seeing more and more deal proposalsd with similar requirements for squar e footage, dock doors and the like. This is a result of working with theirrespective brokers, all chasing the same piece of business from a manufacturing or distributionh company. In order to make a bid for a contact, 3PLs have to tour the market and get the quoted rates and then competefor business.
“That’s a new dynamic,” Jackso says. “It used to be that the company had securedrthat business. Now, that third-partyt logistics company hasn’t secured that businessd and that’s part of their pitch.” An example of this occurred when decided to have an outside compan y runits 647,900-square-foot distribution cented at 4795 Imagination Drive after years of subleasint the space. “My phone absolutely blew up with third-partyt logistics companies calling to find out about that buildin because they all wanted to chase that Jackson says.