Fresh MIT Perspective on Current State of 3PL Industry

When the 3PL Value Creation North America Summit 2018 convenes in Chicago this October, shippers will hear from a diverse group of industry experts on how to drive the best deals with their lead providers in both the global and domestic arenas.

As Armstrong & Associates' 6th annual summit gets underway this fall, the consultancy plans on helping shippers gain fresh insights on 3PL trends and forecasts. At the same time, shippers will be seeking advice on how to establish and sustain relationships of trust and mutual benefit.

Dr. Chris Caplice, Executive Director, MIT Center for Transportation & Logistics Founding Director, MIT FreightLab, shares some of his views on industry in advance of his participation in the Summit.

Supply Chain Management Review: What are the greatest challenges facing 3PLs today in the domestic and global marketplace?

Dr. Chris Caplice: In a word, relevance. There are dozens of startups that are challenging the whole idea of needing a traditional third-party company to manage their freight. In my opinion, new innovative technology will never totally replace the need for people to design and manage transportation networks, but it will reduce the total number required. Technology will make individuals more efficient to the point where a third party that provides additional people might not be needed.

SCMR: How can 3PLs best demonstrate competence in an ever-changing business arena?

Caplice: New ideas and approaches. While technology is excellent at improving the efficiency of existing operations and procedures, it takes an experienced and forward-thinking professional to come up with a dramatic improvement or change of business processes that delivers a real breakthrough.

SCMR: What do shippers need to do when evaluating the best 3PL?

Caplice: Shippers should consider two things. First, the deep knowledge of the 3PL's strategic planners to come up with an innovative approach to the business. Second, the operational expertise at actually executing to the plan. The technological expertise, in my opinion, really comes in during the daily operational efficiency. How can the 3PL speed up the entire transportation process for every transaction?

SCMR: We hear a lot about collaboration. Is that still practical?

Caplice: It is a funny word, collaboration. Growing up, the only time you heard the word collaboration was with the rest of the phrase “with the enemy”! It has obviously changed over the years. The mathematics of finding where different shippers can leverage their complementary loads is actually well understood and easy to implement. The difficulty is making it happen on a regular basis with minimal external or extraneous effort. That is the big challenge.

SCMR: Finally, how many 3PLs should most shippers engage every year? Can one alone meet all their needs?

Caplice: 42. Just kidding – that is the answer to the question of life. I believe it is always best to have more than one supplier unless there is a strategic reason that over-rides the economics. Having more than one firm that is familiar with your operations and way of doing business reduces the pain (and cost) of switching.

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