3PL/4PL: Shippers may be shopping for new lead logistics providers
June 21, 2011
Shippers using more than one third-party logistics (3PL) provider may consider using a single 4PL as they seek to penetrate new markets, said a prominent industry expert.
According to Cathy Roberson, senior analyst for Transport Intelligence, “mega” players also provide some advantages of scale for ambitious shippers. In a wide-ranging interview with SCMR this week, she shared other observations on 3PL trends and development.
Supply Chain Management Review: Will 3PLs be more reliant on intermodal options in coming years as a hedge on energy costs?
Cathy Roberson: As long as fuel prices remain high, yes, intermodal will be viewed as an additional option for 3PLs to utilize in order to reduce the fuel impact. However, it needs to be noted that intermodal is not the answer to every freight movement. Express deliveries will still need to utilize air or truck because rail is not as flexible for scheduled movements.
Many larger carriers, such as Con-Way, ABF and airlines are already using some form of fuel hedging along with other means to reduce fuel consumption so regardless if intermodal is used, or if the 3PL uses other means of transport, it just depends on their carrier contract agreements.
A cost analysis may need to be run to compare an intermodal move versus a straight trucking move (timing, cost etc.). Key here is a good analytics tool. This is where a strong partnership/understanding the needs of the customer come into play.
SCMR: Will shippers have fewer modal choices as a consequence?
Roberson: It depends on a number of factors, what type of cargo is being moved, timing of delivery etc. There may be consolidation within individual modes, such as trucking. The industry is fragmented and not all offer intermodal services. Those that have agreements with various modes of transport such as rail and air will be the ones to survive (i.e. the larger carriers).
Some industries such as high-tech and automotive will continue to utilize a “just-in-time” inventory approach and will probably not move to an intermodal model for delivery of inventory.
SCMR: What key competitive advantages do “mega” 3PLs have?
Fuel hedging. UPS does an excellent job with this for their parcel business as does many of the larger truck carriers. Geographic reach/partnerships with carriers. Multiple service options.IT systems.
SCMR: How do upstart players capture share?
Roberson: Customer service/relationship with shipper. New service offering/IT software not currently available in the market. Note this would be a short term market share gain as others will catch on quickly and duplicate or acquire. Ability to demonstrate a cost savings to the shipper.
SCMR: What should shippers be looking for when contracting over the long term?
Roberson: Partnership/relationship with the 3PL. The 3PL should be able to understand the shipper’s pain points, and the unique challenges posed by the industry they are in.
For related articles click here.
About the Author
Executive Editor
Subscribe to Supply Chain Management Review magazine
Subscribe today. Don't miss out!
Get in-depth coverage from industry experts with proven techniques forcutting supply chain costs and case studies in supply chain best practices. Start Your Subscription Today!
Post a comment
Commenting is not available in this weblog entry.