Armstrong & Associates’ executive says 3PLs face moment of truth: Part I

Supply chain activities specifically related to transportation have seen dramatic changes in the last five years driven by end user experience and the technologies available to support, maintains Ravi Dosanjh Executive Armstrong & Associates’ (A&A) Vice President – International Advisory,

He adds that 3PLs have had to look hard at the near term and long term strategies to anticipate/understand where they currently fit and where the opportunities are.

Dosanjh will be among the many supply chain industry experts participating in the 3PL Value Creation North America Summit 2018 in Chicago this October.

In a two part interview with SCMR, he notes that “evolving expectations” around transit time and visibility are a challenge in today’s 3PL environment.

“Faster transit times mean 3PLs must have interconnected networks with efficient hand offs supported by predictive analytics,” says Dosanjh. “Visibility necessitates system integrations with those networks supported by 3PL platforms that in real-time can share detail that allow the user to mitigate disruptions, stay agile and predict market trends.”

Another challenge for 3PLs is the need for network redesign to support the growing e-commerce segment, he says.

“As we cited in our ‘Ecommerce Logistics in the United States’ report in April 2018, e-commerce accounted for 9.1% of all retails sales and accounted for 6.9% of all logistics costs. We expect this to rise significantly over the next 5 years further driving the redeployment of assets and changes in network design. E-commerce is effectively redrawing the map for logistics many networks.” This observation raises another question: how can 3PLs best demonstrate competence in an ever changing business area?

“We can see certain trends with high performing 3PLs in the market,” he says. “When diving into the strategies and offerings of the Top 50 Logistics Companies, the Top Freight Brokerage Firms, the Top Dry Storage Warehouse Firms, the Top Refrigerated Warehouse Firms, the Top Dedicated Contract Carriers, the Top Airfreight Forwarders and the Top Ocean Freight forwarders (NVOCCs), it becomes clear that Speed to Market, Execution and Technology differentiates those 3PLs and supports the best competencies in their respective verticals.”

According to Dosanjh, the recurring them here is that user expectations and the technologies supporting them are driving rapid changes in many areas. The 3PL’s that have organized and quickly delivered services supporting these changes are leading market.

“The respective freight markets are constantly changing and posing challenges such as supply and demand, cost management and service issues,” he adds. “The companies that can navigate those issues and execute well are the leaders that rise to the top in their respective fields.”

As mentioned in A&A’s “Bulls Lead the Third Party Logistics Results and Trends Report for 2018” Technologies that are being invested in such as AI, Machine Learning and IOT supporting real-time and predictive information will set 3PLs apart in their respective competencies.

Tomorrow, Part II: What do shippers need to do when evaluating the best 3PL?