Article at a glance:

Growing pains for logistics outsourcers

Third-party logistics specialists, which started out as outsourcers of transportation services for manufacturers, have grown into something much more significant: a $100 billion industry with an increasingly important role in the world economy. Many companies, intent on saving money and focusing on their core businesses, have outsourced warehousing, distribution, and other elements of the supply chain to logistics providers. Now they are also asking providers to design supply chains and to provide services on a global scale—but the industry's business model isn't up to the task. The on-line version of this article includes a Web exclusive: a sidebar describing the $150 billion opportunity for logistics services in Asia and suggesting ways for providers to take advantage of it.

The take-away

The growing demand for logistics services won't necessarily generate adequate returns. Strong performers must develop innovative ways to offer greater value to often fickle customers, find advantages in scale, and consolidate intelligently.