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

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In lease transactions larger than 250,00p0 square feet, about 75% of those dealxs are tied to third-party logistics companies, according to Tommy vice presidentat . “It has increased to the pace of where it is the dominant piece toda inlarge transactions,” he says. “Thay is a change over time.” Clifg Lynch, executive vice president with , formally knownn as , Inc., says third-party logistics firms have been drivinbg leasing activity in Memphissfor 3-4 years, but activity has intensifiee due to the recession. There is a long history of firms outsourcing services when the going gets Lynch has weatheredthree recessions.
In everhy one of them he notice d a trend of companies choosing outsourcing as a more economica means toachieve objectives. “Their (third-partyy logistics firms) business usually gets better during bad Lynch says. “It’s simply because the other firms are lookingh towardthe so-called experts to help them reduce their stafd and save money.” It’s been a steady “The move to outsourcing from corporate Americaw has increased steadily over the past 10 years,” says Brad president of LLC. “When you have times like companies begin to dip their toes inthe water.
They may not want to sign a long-terjm lease for themselves, so they may sign with a third-partgy logistics company on a shorter-term Warehouse-based third-party logistics companies will chargw for the storage ofthe product, eithetr 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 outsourciny has the potential to save as muchas 25% for a This saves the company from hiring employees or purchasingv equipment, among other expenses. Companies look at their whole distribution networkx and consultwith third-party logistics or 3PLs, about where to focus distribution activities.
being located as we are, is probably goingt to get more than its fair sharre ofthat third-party logistics activity,” Lynchb says. This has led to increased competition among 3PLs for warehoussspace — and created a new phenomenon in the industrial real estatew business. Historically, a tenant representative contacts a landlordr representative about seeing a space which might meetits client’s Recently, Jackson has been seeing more and more deal proposalsz with similar requirements for squares footage, dock doors and the like. This is a result of working with theirrespective brokers, all chasing the same piecre of business from a manufacturing or distributio n company.
In order to make a bid for a 3PLs have to tour the market and get the quotee rates and then competefor business. “That’s a new dynamic,” Jacksoh says. “It used to be that the company had securethat business. Now, that third-party logistics company hasn’t secureds that business and that’s part of theifr pitch.” An example of this occurred when decidedf to have an outside company runits 647,900-square-foot distributiojn center at 4795 Imagination Drive afterd years of subleasing the space.
“My phone absoluteluy blew up with third-party logistics companies calling to find out abour that building because they all wantecd to chasethat business,” Jacksohn says.