Third-Party Logistics: Service and technology are key differentiators

Over the past couple years, our editors have been bombarded with news of third-party logistics provider (3PL) mergers and acquisition. In fact, these major moves changed the landscape of the market from mid-2014 through 2015. While we saw the pace fall off a bit in 2016, the numbers were still staggering. The biggest deal last year was FedEx’s acquisition of TNT Express in the second quarter along with DSV’s acquisition of UTi Worldwide and HNA Group’s purchase of Ingram Micro for $6 billion.

And while this fresh injection of equity may have cooled while the new “mega 3PLs” sort out their service integration, analysts at Armstrong & Associates tell us that shippers may expect to see 3PLs continue to purchase high-tech “solutions” and really pump up the acquisition of young, talented professionals to oversee implementation.

“With the mega-deals settled, technological changes are having a dramatic impact on 3PL operations,” says Evan Armstrong, president of the 3PL analyst firm. He points to innovative technology companies that are driving improved transit status data and carrier capacity information from transportation providers to lead logistics companies—innovations from which shippers will benefit.

“And keep in mind that this year’s electronic logging devices mandate could also be a boon for shipment tracking and carrier capacity monitoring information,” says Armstrong. “These types of advances allow for more process automation and increased operational efficiencies. They’re also increasing the quality of information available to customers of non-asset based transportation managers.”

With dynamic transportation and distribution service offerings lined up along side innovative transit status and tracking, today’s 3PLs are evolving to be some of the most technologically savvy organizations in supply chain management.

And according to the readers of LM the 3PL providers walking away with 2017 Quest for Quality gold have already put their service to work to help them differentiate in this hyper-competitive marketplace.