Gary Frantz is a contributing editor for DC Velocity and its sister publication CSCMP's Supply Chain Quarterly, and a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
For years, freight managers and logistics service providers have leveraged the value of relationships, those whom you’ve worked with successfully in the past, as the door-opener to engaging and retaining clients and service providers. It has been a fairly common practice for logistics managers, as they moved to new companies, to bring along their third-party logistics service providers, or 3PLs.
That certainly still happens today. Yet the speed and scope of change in how shippers engage and utilize 3PLs, and the emergence of new enabling technologies, have created more complex, demanding, and data-driven service requirements that are foreshadowing the rise of the next-generation 3PL.
These next-generation players and their service portfolios are defined by speed, agility, adaptability, and continuous improvement. They have to operate reliably and seamlessly in an e-commerce-defined world. They are embracing digitization and technology for automating manual processes and creating even more data. And perhaps most important, they’re emerging as an “integration hub” connecting a far more diverse and interdependent set of systems, technology platforms, and data sources across the supply chain than ever before.
Most 3PLs will say that it’s still a relationship-based business. Yet while an important factor, for next-generation 3PLs, “our value has to go deeper than someone you knew,” says Tom Curee, senior vice president of strategy and innovation for West Chester, Ohio-based 3PL Kingsgate Logistics. “The whole evolution of technology has been transformative for us. It’s challenged us in a healthy way … we are taking a much more customized approach to solutions [yet] we don’t want [the customer] to lose that personal touch and experience,” he says.
Shippers are looking more and more to their 3PLs to lead the charge in providing process automation and integration between what have been disparate systems and sources of logistics information, observes Erin Van Zeeland, group senior vice president for Green Bay, Wisconsin-based Schneider Logistics, one of the industry’s largest providers of transportation management and logistics services. “It’s critical for a TMS [transportation management system] and the underlying technology [to have] the ability to integrate with third-party best-of-breed platforms,” she says. “Connectivity through APIs [application programming interfaces] for third-party data is happening at an accelerated pace [so] you have to be nimble.”
Among the third-party software platforms that Schneider has integrated with are Trucker Tools, for freight matching, automated load booking through its Book It Now app, and shipment visibility with small fleets and independent truckload operators; and Truckload.com, for automated booking of truckload shipments with third-party carriers.
Shipper expectations for, among other things, real-time visibility, innovation, and responsive, flexible service options reflect the undeniable influence of the Amazon-driven online buying experience enjoyed by today’s consumers. That’s a key driver behind the next-gen 3PL evolution, she notes.
“We as consumers have a completely different expectation than what existed years ago with visibility,” Van Zeeland explains. “In our personal experiences, we like the Amazon model and so do our customers,” she says, noting that Schneider Logistics and its customers are focused on driving more connected, automated, and intelligence-based processes. At the end of the day, it’s about breaking down silos and bringing timely, accurate data and quality decision metrics to the shipper’s table. “What was once tribal knowledge within an organization is now very much accessible,” she says.
A BRIGHT FUTURE FOR OUTSOURCING
Will outsourcing remain a key strategy for shippers as needs rapidly evolve, technology continues its inexorable march, and the next generation of 3PLs negotiate a winding path of change?
Without a doubt, says Geoff Turner, president and chief executive officer of Choptank Transport, a $300 million national 3PL and freight brokerage firm based in Preston, Maryland. “The significant investments 3PLs are making will keep outsourcing attractive because most shippers can’t keep up with the pace of technology development on their own,” Turner says. “They want to focus on their core competencies and let their 3PLs continue to invest on the logistics tech side.”
For Turner, keeping up with the pace of technological change—and customer demand for the newest and greatest—is the biggest challenge. “Our backlog of technology integration work is huge,” as shippers increasingly want more sophisticated tools and faster access to more data, more frequently, he says. One challenge he sees is continually educating shippers on just which technologies are most important and relevant to their needs, are effective and deployable, and properly align with and support joint goals and objectives.
“Five years ago, there were a handful of solutions” shippers and 3PLs would consider, says Turner. “Now there are dozens.” Consequently, shippers “are inundated with a barrage of ‘bells and whistles,’ which makes it a challenge to know what’s real and what’s marketing hype.”
Strip away all the hype, and “what [shippers] are really looking for,” Turner says, “is a solution or a set of capabilities that resolve two or three key recurring challenges.” In his experience, those are a robust visibility platform, with high carrier compliance providing automated visibility data end to end; algorithm-driven predictive freight-matching to automate matching and booking of truck to load; and optimizing the process to ensure Choptank is running the customer’s freight to minimize cost while maximizing capacity utilization and velocity.
Which, he adds, is also high on the list of tech features and capabilities desired by the thousands of small fleets and independent owner-operators that Choptank relies on for truckload capacity. “It’s all about the carrier experience, reducing friction, being easy to work with. We have to make sure we keep them in business, help them be efficient, and give them the tools, quality loads, and reloads they need to consistently maximize the hours they have to generate revenue,” Turner stresses.
Schneider’s Van Zeeland echoes his point about supporting the small truckload fleet operator and providing them with a positive experience through the entire cycle. “Our data shows that almost 90% of the carrier base [in truckload] is [fleets with fewer] than five trucks,” she notes, adding that Schneider Logistics works with thousands of carriers.
“Reaching out to, working with, and optimizing [small carrier] capacity is critical. We’re meeting the carriers where they are,” she says, explaining that this means deploying mobile-friendly technology that helps carriers streamline interactions, book the best loads in their preferred lanes, and execute transactions in a more automated way that saves time for both broker and carrier. It’s an approach designed to build trust and encourage collaboration, and demonstrate respect, understanding, and a willingness to help small carriers overcome the daily challenges they face to make a fair profit.
THE NEXT GENERATION: IS IT A 3PL OR 4PL?
To be a next-generation 3PL—or 4PL, a kind of uber-logistics service provider whose responsibilities may extend to managing a client’s other 3PLs—means responding faster to evolving shipper needs for more complex and sophisticated logistics planning and execution capabilities. These demands will expand the scope and scale of potential services 3PLs can weave deeper into the fabric of a shipper’s supply chain.
And the opportunity to redefine and expand their value through more automated, technology-driven—and profitable—services.
In a November 2019 report titled The Rise and Future of the 4PL Model,Gartner analysts Courtney Rogerson and David Gonzalez note that “managing ever-increasing logistics complexity while simultaneously improving visibility is a top priority and growing challenge for most shippers today—especially as the number of external partners and customers in the supply chain ecosystems grows.”
Furthermore, in an earlier research report, the 2019 Logistics Outsourcing Strategy Survey,Gartner polled 190 respondents, all senior logistics and supply chain operators, on their top three logistics priorities over the next 12 months. Almost half of the logistics leaders surveyed said updating their technology systems, increasing speed to customer, and improving visibility were their most important goals for the coming year (see Exhibit 1).
The study noted that “many survey respondents are focused on increasing technology capabilities that will concurrently improve visibility, data quality, and integrity, and decrease data gaps.” All of which provides an interesting strategic road map for today’s 3PLs to design and develop next-generation capabilities—or enhance those that exist today.
WOE BE THE SMALL BROKER?
Is there still a place in the market for the smaller, high-touch, service-oriented freight broker? Absolutely, says Andy Dyer, president of Chicago-based New Age Logistics, which is part of the Evans network of companies and which provides truckload brokerage and value-added logistics services. “Shippers have much bigger expectations of responsiveness,” says Dyer. “While we’re a smaller broker, we are often more agile, can respond faster, and can be more flexible—at a price point that has great value for the shipper,” he notes.
The infusion of capital into the logistics space and the resulting proliferation of technology choices means that even smaller players can compete with, out-hustle, and outperform many of the larger firms, he believes. In his view, the logistics tech revolution has completely upended the landscape, bringing advanced platforms and low-cost, cutting-edge capabilities to the masses. These are enabling quicker decisions, shorter implementations, easier training, and faster ramp-up to return on investment.
“You don’t have to run $5 billion worth of freight through your [in-house] system anymore to make the technology pay back,” Dyer notes. “You can run $100,000 worth of freight through, and it will work [and give you payback]. And [with APIs and pre-built integration modules], implementation is far faster and much more straightforward—with the go-live conversations starting at 30 to 45 days.”
Even with a new generation of 3PLs on the cusp, some basic fundamentals will never change, Dyer believes. “It’s very simple: Make your actions match your words,” he says, which is especially important in building and maintaining sustainable relationships with carriers. “Sell the load as it really is and make it easy for them to tender, track, and bill.”
His last piece of advice: “Dial down the hassle factor. Five different brokers at the same firm will have five different shipments with the same carrier, and all five are calling the dispatcher asking ‘Where’s my freight?’ It’s madness,” he says. “With the proliferation of GPS-enabled smartphones and driver apps … there should be no reason today for a broker to call a driver and ask where the freight is.”
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”