Contract logistics describes a business model of logistics services. In contract logistics, entire logistics service packages are taken over for the contracting shipper. This is based on a long-term cooperation between the logistics provider and the customer and regulated in a contract. Complex service packages are contractually agreed and processed.
Contract logistics thus becomes part of the shipper’s value chain.
Characteristics of contract logistics
Generally, there is no clear scientific definition, but the following four characteristics nevertheless describe the term quite clearly and have proven themselves in practice.
Taking over several logistics services
The tasks and functions that are bundled into specific service packages in contract logistics go beyond transport, handling and warehousing (TUL processes). The contract service provider takes on complex service packages and offers the corresponding problem-solving capability. By integrating additional logistics and non-logistics services, the contract partner is offered added value.
Individualization of the service
The contract partners in contract logistics also bind themselves to each other in the longer term, as the logistics services are individually tailored to the shipper and specially provided. Also, by integrating the logistics service provider into the client’s value chain, the contract logistics provider cannot be easily replaced.
Business volume of the contract logistics agreement
The business volume is also one of the characteristics that describe contract logistics. The contractually regulated service volume is at least €0.5 million per year. Whether the services rendered in return are performed with the company’s own resources or with those of an equally involved partner is irrelevant. There are no upper limits to the contract volumes.
Long-term contractual commitment
The contract on contract logistics is fixed in writing and it is also fixed the contract term. This is usually at least 1 year and regularly around 3 to 5 years.
Trend toward contract logistics
Companies are striving to optimize processes in order to ensure competitiveness. In the course of this, logistics processes should also always be further simplified and made more transparent. Outsourcing tasks and functions to contract logistics means a reduction in the vertical range of manufacture for the customer and the associated cost savings.