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

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In lease transactions larger than 250,000 squared feet, about 75% of those deald are tied to third-party logistics according to Tommy Jackson, vice presidenr at . “It has increased to the pace of where it is the dominant piece today inlarg transactions,” he says. “That is a changd over time.” Cliff Lynch, executive vice president with , formally known as , Inc., says third-party logistics firme have been driving leasing activity in Memphisfor 3-4 but activity has intensified due to the There is a long history of firmzs outsourcing services when the going gets rough. Lynch has weathered three recessions.
In every one of them he noticedx a trend of companies choosing outsourcing as a more economicalo means toachieve objectives. “Their (third-party logisticds firms) business usually gets better duringbad times,” Lync h says. “It’s simply because the other firmss are looking towardthe so-called experts to help them reducew their staff and save It’s been a steady climb. “The move to outsourcingy from corporate America has increased steadily over the past 10 saysBrad Kornegay, president of LLC.
“When you have times like these, companies begin to dip their toes in the They may not want to signa long-term leas for themselves, so they may sign with a third-partyg logistics company on a shorter-term basis.” Warehouse-based third-party logisticse companies will charge for the storage of the either by square footage or by the such as the case or Those firms also charge for distributing the product, measured either by weight or unit. This outsourcin g has the potential to save as muchas 25% for a This saves the company from hiring employees or purchasinh equipment, among other expenses.
Companies look at their whole distribution networkds and consultwith third-partyu logistics companies, or 3PLs, aboutg where to focus distributionj activities. “Memphis, being located as we are, is probablg going to get more than its fair share ofthat third-part logistics activity,” Lynch says. This has led to increasedr competition among 3PLs for warehousespace — and creater a new phenomenon in the industrial real estatde business. Historically, a tenant representative contacts a landlord representatives about seeing a space which might meetits client’s needs.
Recently, Jackson has been seeint more and more deal proposale with similar requirements for square dock doors andthe like. This is a resulr of 3PLs, working with their respectivd brokers, all chasing the same piece of business from a manufacturinhg ordistribution company. In order to make a bid for a 3PLs have to tour the marketf and get the quoted rates and then competeefor business. “That’s a new dynamic,” Jackson “It used to be that the company had secured that business.
Now, that third-party logistics companh hasn’t secured that business and that’s part of their An example of this occurred when decided to have an outsids company runits 647,900-square-foot distribution center at 4795 Imaginatiohn Drive after years of subleasing the space. “My phoner absolutely blew up with third-party logistics companies callin to find out about that building because they all wanted to chasethat business,” Jacksoj says.