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New model for 3PL relationships

Staff -- Modern Materials Handling, 3/1/2002

Most companies that use third-party logistics service providers (3PLs) simply hire them to handle specified functions and responsibilities. Not so for Nortel Networks.

In January, the telecommunications and networking company divested its outbound logistics operations to Kuehne & Nagel, the Schindellegi, Switzerland-based global logistics provider. K&N's USCO Logistics subsidiary has a longstanding relationship with Nortel. Under the agreement, Kuehne & Nagel will create a separate organization that will act as a "lead logistics provider"—that is, it will manage the performance of all of Nortel's logistics service providers worldwide. About 95 Nortel employees in 18 countries will join Kuehne & Nagel.

Although this arrangement is unique, it's not the first to break with tradition. The Vector SCM joint venture between Menlo Worldwide and General Motors also illustrates the growing trend toward new models for relationships between 3PLs and clients.

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