3PLs, Shippers and Carriers: In It Together
How 3PLs Are Building More Collaborative Supply Chains
Seth Clevenger, Managing Editor, Features
April 21, 2023
Third-party logistics providers have been adjusting to normalizing market conditions as the historic supply chain disruptions, inventory shortages and surging freight demand of the last few years have receded into the past.
But with the memory of those extraordinary times still fresh, 3PLs are now working to build more efficient and resilient supply chains for the future.
Logistics companies of all types, from freight brokers to warehousing and fulfillment providers, are pursuing closer collaboration with their shipper customers and carrier partners.
To realize that goal, logistics providers must get closer to their customers’ businesses to fully understand their needs and how their objectives interact with their supply chains, said BlueGrace Logistics CEO Bobby Harris.
“Going forward, I think you’ll see more and more of that collaboration happening, not just with the shipper, but with the carrier,” he said.
The value of true business partnerships among supply chain participants became especially clear amid the turbulence of the coronavirus pandemic and its many ripple effects on the flow of freight.
Tough times for businesses mean they rely on their partners more than ever. If you’re truly a partner — if you’re really, really there to make their business better — you will end up winning in the long run.
“Tough times for businesses mean they rely on their partners more than ever,” Harris said. “If you’re truly a partner — if you’re really, really there to make their business better — you will end up winning in the long run.”
By providing that level of customer support, 3PLs should be able to grow regardless of fluctuations in freight demand, Harris said, pointing to his own company as an example. BlueGrace, a freight brokerage and provider of managed transportation services, got its start in 2009 amid a particularly weak freight market.
Over the years, the role of 3PLs in the broader transportation industry has expanded. Harris said 3PLs are involved in a growing share of the total freight market, a trend he expects to continue in the years ahead.
My belief is if you don’t have someone as a 3PL partner, whether it’s BlueGrace or one of my peers in the industry, I think you’re at a big disadvantage.
“My belief is if you don’t have someone as a 3PL partner, whether it’s BlueGrace or one of my peers in the industry, I think you’re at a big disadvantage,” he said. “We always say we can help any business be better, and we really mean that. When we get in there, there’s some value we can provide.”
The 3PLs that succeed in the future will be the ones that find a market niche and help their customers simplify their logistics challenges, said Nicole Glenn, founder and CEO of Candor Expedite, a brokerage specializing in expedited freight.
When she started the Plano, Texas-based company in 2017, she set out to support clients through a consultative approach to logistics — “to listen to what they have going on and then develop a strategy for them.”
Glenn expects that mergers and acquisitions will continue to reshape the third-party logistics space, with a widening gap between the industry’s numerous small firms and the very large companies that will expand through acquisition.
As supply chain disruptions have abated and truck capacity has loosened, negotiating power in the freight market has shifted from carriers back to the shippers.
At the same time, shippers have been reevaluating their transportation networks, which they expanded out of necessity to get through the pandemic, said Grant Goodale, co-founder and carrier experience officer at technology-enabled freight broker Convoy.
In some cases, that means partnering with a smaller number of freight transportation providers to optimize their networks moving forward, he said.
Meanwhile, some freight brokers are finding more ways to support their carriers, who have been facing tougher business conditions as freight demand has cooled.
Goodale said part of Convoy’s mission has always been to help carriers earn more with less hassle, starting with helping them maximize loaded miles and minimize deadhead between jobs.
Convoy recently introduced instant bid responses in its carrier app, enabling carriers to see if they won a bid right away rather than possibly waiting for hours while another potential job is available.
“They know immediately whether they’ve got it, they don’t, or if there’s a counteroffer on the table,” Goodale said.
Seattle-based Convoy ranks No. 54 on the TT100 list of logistics companies.
Another freight broker taking steps to promote carrier loyalty is RXO, which spun off from less-than-truckload carrier XPO in November 2022.
Earlier this year, RXO announced a program to provide rewards and cost savings to its carriers. The program, RXO Extra, offers carriers savings on fuel, maintenance, tires, retail and more through an online marketplace.
“Obviously carriers are critical for us as a broker,” said Alyssa Myers, RXO’s vice president of brokerage technology. “Investing in that carrier relationship across the board is absolutely critical for us to effectively serve our customers.”
RXO, based in Charlotte, N.C., ranks No. 18 on the TT100 list of logistics companies.
Shifting Market Conditions
Many shippers did very well during the economic rebound from the pandemic, “but they’ll also lament some of their supply chain costs or lack of inventory” that prevented them from prospering even more, BlueGrace’s Harris said.
At that time, shippers were focused on securing whatever inventory they could get in a high demand environment, he said, but during the past year the prevailing sentiment has been more muted as markets have been normalizing and truck capacity has loosened.
Nonetheless, Harris expressed optimism that the freight market will improve in the second half of this year.
Many of BlueGrace’s largest customers are seeing their inventories begin to diminish again, and there will come a time when they need to restock.
“The American consumer still has a good amount of money pent up,” Harris said. “We don’t see that stopping. We see inventories depleting that need to be restocked, so the consensus is the second half of the year should be a little bit more fulfilling than the first half.”