It is said that one of the reasons why 3PL services in Japan have not done as well as expected is because most major manufacturers and retailers have their own logistics companies as subsidiaries. Still, according to ongoing research by an Industry Publication from 2005, 3PL services have been growing at an average rate of 9.45% per annum from the start of the survey.
However, it is now believed that their main source of growth, dedicated distribution centers for large retailers, have now come to hit a ceiling. According to Masahiro Oya, Publisher of Monthly Logitsics Business, there is no decline in the number of orders received, but each project is getting smaller and smaller. He also points out that existing centers are suffering from a fall in volumes.
He analyzes that the 3PL service providers need to go upstream to the manufacturers to continue to grow. But the large manufacturers have their own subsidiaries that specialize in providing logistics services.
The key difference in the way 3PL has been growing in Japan vs. that in Europe is in that while European manufacturing businesses opted to outsource non-core operations in the form of endorsing 3PL, the Japanese market has grown in quite the opposite direction. It was not the manufacturers, but retailers who wanted to take advantage of their purchasing power by collating all their purchases in a warehouse, and then break bulk and ship to their various stores efficiently that embraced 3PL.
But that has all now come to a head, it seems...
So, will manufacturers be able to cut their logistics subsidiaries loose so that they can go ahead and offer their services to competitors as well?
Will such former subsidiaries, once cut loose, become prime acquisition targets for the likes of Sagawa and Yamato? - Maybe not as especially Yamato likes to build everything in-house.
Japan Post tried acquisition and learned the hard way that service disruptions due to tatty integration processes are a much higher price than it wanted to pay.
Either way, a new trend will emerge in the Japanese 3PL market because not having one is not an option if the industry wants to continue to grow.