Tips for Navigating the Global 3PL Marketplace: Harnessing Shipper Expectations

When supply chain managers examine the global third-party logistics (3PL) marketplace this year, many industry analysts suggest that they take a “granular” view.

“Regional distinctions are key,” says Chris Caplice, Executive Director of the MIT Center for Transportation and Logistics (MIT CTL). “Some regions, such as Brazil, require tremendous local knowledge in terms of taxes and other rapidly changing characteristics. I do not see the emergence of a single dominant player here since the local conditions across the globe are very different - and are constantly changing.”

At the same time, Caplice believes that the biggest challenge for global 3PLs will be harnessing the growing expectations and additional services required by shippers.

“For example, being able to capture and report the sustainability footprint (whether it is carbon or something else) created by a 3PL on behalf of a shipper is becoming more important,” he says. “Yet, it is still unclear exactly how to do this - the standards are in their infancy and are evolving.”

Similarly, shippers are demanding better visibility – both real time and post-hoc for strategic analysis. Global carriers and 3PLs need to be able to merge and manage tracking data from traditional milestone based systems (EDI) and from newer real-time systems (GPS). Many traditional TMS providers are acquiring these blended capabilities (Descartes acquiring Macropoint, for example).

In addressing the question about the benefits of a fully leveraged global 3PL relationship, Caplice offers the following:

“I believe the mark of a solid strategic relationship is where the provider can help you see around corners. You are not your 3PL's only shipper – they have a wider view of the market than you will ever have. As strategic partners, the 3PL should be providing you insights not just how to improve your current workflows and processes, but also to avoid pitfalls in the future.”

Finally, Caplice observes that there is nothing new here that hasn't been part of transportation service procurement for the last decade.

“The only thing that I would suggest is to avoid wholesale flipping from one provider to another and instead allow multiple 3PLs to start small and grow into your network as their performance improves and your needs develop,” he says. “Similar to hiring a tem-to-hire for positions in an office, I think it is better long term to start small and allow the 3PL to grow…or not.”

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