To survive in this volatile business environment, third-party logistics providers and their customers must work together to build up their digital capabilities and talents while also focusing on meeting the end customer’s needs.
C. John Langley Jr. (johnlangley11@gmail.com), Ph.D., is a professor at Penn State University’s Smeal College of Business and the Department of Supply Chain and Information Systems, and founder of the “Annual Third-Party Logistics Study.”
Effectively matching supply and demand has always been challenging, but the current volatility in many supply chains has made it even harder, creating new and unique problems. Companies desperately need innovative and improved solutions to deal with supply chain complexity and create agility and responsiveness.
One key facilitator of success will be the ability of supply chain partners to be well-aligned and to optimize the capabilities of each partner within the network. Now in its 27th year, our “Annual Third-Party Logistics Study” has time and again shown the benefits of working with logistics service providers to navigate market uncertainties and achieve overall success for the supply chain.
High-level research results from this year’s study indicate three key focus areas for strengthening relationships between third-party logistics providers (3PLs) and their customers: 1) the ability to collaborate in the interest of creating value for customers and consumers, 2) the ability to create insight through digitization and analytics, and 3) the critical need for talent. (A broader and more detailed summary of the research will be presented at the CSCMP EDGE Conference in Nashville, Tennessee, on September 19.)
Creating value for the end customer
For 3PLs and shippers to have a successful relationship, both parties need to understand the overall supply chain goals and use this knowledge to create effective working relationships.
As the primary flows of products and services in supply chains are downstream toward the eventual consumers and business customers, the supply chain’s most important priorities should be related to satisfying demand and creating value for these parties.
Ideally, then, all participating supply chain organizations, including 3PLs, should have some understanding of demand patterns at the customer/consumer level that are driving requirements for the overall supply chain. One way to achieve this is by sharing available forecast and demand planning information relating to the needs of customers and consumers.
The best results are achieved when both 3PLs and their customers are working with accurate information and are well-aligned on goals, objectives, and working relationships. 3PLs and customers must also be aware of factors that may impact the ability of supply chains to meet these overall objectives. Partners should be willing to share information on potential problems and issues—these could range from a shortage of transportation capacity to unexpected volatility in the availability of needed materials and supplies.
Digitization and analytics
For many years, our “Annual Third-Party Logistics Study” has documented that shippers view IT capabilities as an essential element of their 3PLs’ expertise. That sense has intensified over the past year as 74% of customers participating in this year’s study noted that technology plays a greater role in their 3PL partnership than it did just three years ago.
Furthermore, what customers are looking for in terms of that expertise has evolved and become more sophisticated. One question for shippers that is asked in each of our yearly studies is, “Which technologies, systems, or tools are ‘must haves’ for a 3PL to successfully serve a customer in your industry?” Figure 1 compares the results from this year’s study to those of the prior year. This figure also indicates the percentages of participating 3PLs that indicate those capabilities are currently available.
[Figure 1] Importance of IT capabilities in shipper-3PL relationships Enlarge this image
While more traditional execution and transactional software—such as transportation management systems and warehouse management systems—continue to rank highly, there was a growing importance expressed for the availability of digital and analytical technologies. (In the interest of clarity, digitization refers to the conversion of information to a digital format, and analytics refers to the use of mathematical and statistical approaches to help solve problems intelligently using digital data.) A related finding from last year’s study is that 64% of customers noted that they were investing in intelligent data analytics. While there are some variations in year-over-year data, Figure 1 indicates there is a continued or growing interest in advanced analytics and data mining, warehouse automation, and global trade management solutions.
Findings from this year’s study indicate that this shift in focus toward digitization and analytics will continue to be of great importance for 3PLs as well. Referring to Figure 1, 54% of 3PLs reported having capabilities in the areas of advanced analytics and data mining tools. However, gaps are noted in the areas of automation and global trade management solutions.
We believe that to deal successfully with future supply chain challenges, 3PLs and their customers will require significant dedication to digitization and the use of analytics. Coupled with wisdom and experience, these analytical tools will facilitate the development of complex solutions to problems faced both individually by 3PLs and their customers, as well as those problems they face in collaboration.
Talent
The need for and availability of talent in supply chains have become critical issues for many organizations. This includes both shippers and 3PLs. Almost 80% of shippers stated that labor shortages have impacted their supply chain operations, and 56% of 3PLs stated that labor shortages have impacted their ability to meet customer service-level agreements (SLAs). In particular, roughly two-thirds of all respondents to the “27th Annual Third-Party Logistics Study” survey noted that recruiting and retaining both hourly and certified/licensed/skilled hourly workers is an area that they are struggling with and believe they will continue to struggle with for some time.
But retention challenges are not limited to hourly employees. Bloomberg, in the spring of 2022, reported that supply chain managers have been quitting their jobs at the highest rate since at least 2016.1} This assertion was based on calculations performed by LinkedIn. Each month, the website analyzes the number of people who left their job in the past month and then compares that number to a baseline average from 2016. The average “separation rate” for 2020–2021 for supply chain managers was 28%, the highest in the five years since the company started tracking this data. According to the article, factors for these turnovers include burnout, desire for increased compensation, and demand for experienced supply chain managers to solve supply chain problems at nontraditional supply chain organizations.
Further complicating the recruitment and retention challenges is the fact that supply chain roles are evolving quickly, and the skills and talents needed today are different than they were just a few years ago. For example, supply chains are increasingly becoming data-driven, and the need for real-time visibility continues to grow. As a result, skills related to data analytics and digital technologies are vital and in high demand.
Meeting the rising challenge
The success of 3PL–customer relationships always boils down to their ability to create value for their customers and their businesses, as well as for consumers and end customers. But as disruption and complexity increase, effectively meeting those needs has become even harder.
In response, 3PLs and their customers will need to work together to enhance their agility and responsiveness. Technology, data, and analytics certainly will help supply chain practitioners meet these shifting needs and implement new and innovative supply chain strategies. In addition, both 3PLs and their customers will need to ensure that they have the right people with the right skills and talents. 3PLs and customers will need to work together to establish technology and talent-acquisitions strategies that complement each other, as they work to create more resilient and effective supply chains.
Online merchants should consider seven key factors about American consumers in order to optimize their sales and operations this holiday season, according to a report from DHL eCommerce.
First, many of the most powerful sales platforms are marketplaces. With nearly universal appeal, 99% of U.S. shoppers buy from marketplaces, ranked in popularity from Amazon (92%) to Walmart (68%), eBay (47%), Temu (32%), Etsy (28%), and Shein (21%).
Second, they use them often, with 61% of American shoppers buying online at least once a week. Among the most popular items are online clothing and footwear (63%), followed by consumer electronics (33%) and health supplements (30%).
Third, delivery is a crucial aspect of making the sale. Fully 94% of U.S. shoppers say delivery options influence where they shop online, and 45% of consumers abandon their baskets if their preferred delivery option is not offered.
That finding meshes with another report released this week, as a white paper from FedEx Corp. and Morning Consult said that 75% of consumers prioritize free shipping over fast shipping. Over half of those surveyed (57%) prioritize free shipping when making an online purchase, even more than finding the best prices (54%). In fact, 81% of shoppers are willing to increase their spending to meet a retailer’s free shipping threshold, FedEx said.
In additional findings from DHL, the Weston, Florida-based company found:
43% of Americans have an online shopping subscription, with pet food subscriptions being particularly popular (44% compared to 25% globally). Social Media Influence:
61% of shoppers use social media for shopping inspiration, and 26% have made a purchase directly on a social platform.
37% of Americans buy from online retailers in other countries, with 70% doing so at least once a month. Of the 49% of Americans who buy from abroad, most shop from China (64%), followed by the U.K. (29%), France (23%), Canada (15%), and Germany (13%).
While 58% of shoppers say sustainability is important, they are not necessarily willing to pay more for sustainable delivery options.
Schneider says its FreightPower platform now offers owner-operators significantly more access to Schneider’s range of freight options. That can help drivers to generate revenue and strengthen their business through: increased access to freight, high drop and hook rates of over 95% of loads, and a trip planning feature that calculates road miles.
“Collaborating with owner-operators is an important component in the success of our business and the reliable service we can provide customers, which is why the network has grown tremendously in the last 25 years,” Schneider Senior Vice President and General Manager of Truckload and Mexico John Bozec said in a release. "We want to invest in tools that support owner-operators in running and growing their businesses. With Schneider FreightPower, they gain access to better load management, increasing their productivity and revenue potential.”
The port worker strike that began yesterday on Canada’s west coast could cost that country $765 million a day in lost trade, according to the ALPS Marine analysis by Russell Group, a British data and analytics company.
Specifically, the labor strike at the ports of Vancouver, Prince Rupert, and Fraser-Surrey will hurt the commodities of furniture, metal products, meat products, aluminum, and clothing. But since the strike action is focused on stopping containers and general cargo, it will not slow operations in grain vessels or cruise ships, the firm said.
“The Canadian port strike is a microcosm of many of the issues that are impacting Western economies today; protection against automation, better work-life balance, and a cost-of-living crisis,” Russell Group Managing Director Suki Basi said in a release. “Taken together, these pressures are creating a cocktail of connected risk for countries, business, individuals and entire sectors such as marine insurance, which help to mitigate cargo exposures.”
The strike is also sending ripples through neighboring U.S. ports, which are hustling to absorb the diverted cargo, according to David Kamran, assistant vice president for Moody’s Ratings.
“The recurrence of strikes at Canadian seaports is positive for U.S. ports that may gain cargo throughput, depending on the strike duration,” Kamran said in a statement. “The current dispute at Vancouver is another example of the resistance of port unions to automation and the social risk involved with implementing these technologies. Persistent disruption in Canadian port access would strengthen the competitive position of US West Coast ports over the medium-term, as shippers seek to diversify cargo away from unreliable gateways.”
The strike is also affected rail movements, according to ocean cargo carrier Maersk. CN has stopped all international intermodal shipments bound for the west coast ports of Prince Rupert, Robbank, Centerm, Vanterm, and Fraser Surrey Docks. And CPKC has stopped acceptance of all export loads and pre-billed empties destined for Vancouver ports.
Connected with the turmoil, Maersk has suspended its import and export carrier demurrage and detention clock for most affected operations. The ultimate duration of the strike is unknown, but the situation is “rapidly evolving” as talks continue between the Longshore Workers Union (ILWU 514) and the British Columbia Maritime Employers Association (BCMEA), Maersk said.
Terms of the acquisition were not disclosed, but Mode Global said it will now assume Jillamy's comprehensive logistics and freight management solutions, while Jillamy's warehousing, packaging and fulfillment services remain unchanged. Under the agreement, Mode Global will gain more than 200 employees and add facilities in Pennsylvania, Arizona, Florida, Texas, Illinois, South Carolina, Maryland, and Ontario to its existing national footprint.
Chalfont, Pennsylvania-based Jillamy calls itself a 3PL provider with expertise in international freight, intermodal, less than truckload (LTL), consolidation, over the road truckload, partials, expedited, and air freight.
"We are excited to welcome the Jillamy freight team into the Mode Global family," Lance Malesh, Mode’s president and CEO, said in a release. "This acquisition represents a significant step forward in our growth strategy and aligns perfectly with Mode's strategic vision to expand our footprint, ensuring we remain at the forefront of the logistics industry. Joining forces with Jillamy enhances our service portfolio and provides our clients with more comprehensive and efficient logistics solutions."
In addition to its flagship Clorox bleach product, Oakland, California-based Clorox manages a diverse catalog of brands including Hidden Valley Ranch, Glad, Pine-Sol, Burt’s Bees, Kingsford, Scoop Away, Fresh Step, 409, Brita, Liquid Plumr, and Tilex.
British carbon emissions reduction platform provider M2030 is designed to help suppliers measure, manage and reduce carbon emissions. The new partnership aims to advance decarbonization throughout Clorox's value chain through the collection of emissions data, jointly identified and defined actions for reduction and continuous upskilling.
The program, which will record key figures on energy, will be gradually rolled out to several suppliers of the company's strategic raw materials and packaging, which collectively represents more than half of Clorox's scope 3 emissions.
M2030 enables suppliers to regularly track and share their progress with other customers using the M2030 platform. Suppliers will also be able to export relevant compatible data for submission to the Carbon Disclosure Project (CDP), a global disclosure system to manage environmental data.
"As part of Clorox's efforts to foster a cleaner world, we have a responsibility to ensure our suppliers are equipped with the capabilities necessary for forging their own sustainability journeys," said Niki King, Chief Sustainability Officer at The Clorox Company. "Climate action is a complex endeavor that requires companies to engage all parts of their supply chain in order to meaningfully reduce their environmental impact."