Logistics alliances—formal or informal relationships between companies and logistics providers—are rapidly emerging in Europe, North America, and, increasingly, the Far East. While no precise information is available, we estimate that annual value in Europe and North America is over $15 billion, with a number of leading providers enjoying almost $1 billion in revenues. The success of these alliances means that they are poised to become a building-block in the coming "network economy": a system in which companies focus on their core competencies and outsource other activities to external providers that can perform them more quickly, more cheaply, and more effectively.

We conducted a survey of alliances in the automotive, electronics, and packaged consumer goods industries. We examined 50 customers in Europe and 60 in North America, visited a number of logistics providers, and carried out several in-depth case studies.¹ We discovered that logistics alliances often bring in large service and cost benefits (Exhibit 1). These come from more efficient operations, tailored logistics solutions, an expansion in services, and the capture of synergies and scale effects. Six best practices emerged:

1. Shipper-led process design and evaluation. In most successful alliances,...