Any discussion of whether Amazon is turning into a 3PL can officially stop, because there’s no doubt anymore that it is a 3PL. It’s added freight services, brokerage services (Amazon Brokerage), planes and trucks – and it’s locked up a significant percentage of truckload capacity. In a similar vein, the growth of Uber Freight is raising eyebrows as it expands among owner-operators; a segment that’s long been ignored, even if it’s the largest in the trucking market.
While Amazon and Uber could reasonably be viewed as threats, it can also be argued that they’re waking up the market to more innovative ways of operating. The challenge for 3PLs and brokers will be figuring out how to differentiate their services.
Technology will clearly play a big role in this effort, and it’s one important way that 3PLs, shippers, and brokers are focusing on how to compete and be efficient. If you’re one of these companies, you can’t risk ignoring or dismissing what Amazon or Uber are doing; you need to figure out a response.
Take a hard look at your tech stack. Do you have tight integrations for customers? Do you offer portals? Are you exceeding customer expectations when it comes to ease and visibility? Your transportation management system (TMS) needs to be in this best-in-class tech stack.
Supported or enabled by technology, which capabilities are most important for success right now? What’s important to plan for further down the road?
3PLs and brokers are in the business intelligence business just as much as the moving freight business. It’s critical to have the right technology for measuring what you’re doing. You don’t necessarily need data to slice-and-dice something a million ways, but you do need to be able to track key metrics and develop a scorecard that helps identify operational areas to improve. This is where a TMS can help, too. It’s the hub of your enterprise software, bringing together order data, warehouse data, carrier data, cost, finance, and customer data all into one data model, cleansing it, and then putting your business model on top of it.
Note that cost is important to your customers too, but it’s not the driving factor anymore. We’re seeing it become just one of many considerations that companies use when choosing to work with a 3PL, shipper or broker. Speed, level of service, delivering on time and in full, reliability and visibility are just as important.
What most customers want really boils down to “make this as easy for me as possible.” Maybe they want a zero-touch experience. Or a 3PL to manage the entire transaction. Give customers freight visibility, but only alert them when there are significant problems (not for every little problem – you can be handling those).
We don’t know exactly what’s going to happen in the next two years, but we know it won’t be manual. Whatever you do, don’t ignore what’s happening – or you risk going the way of the taxi cab.
For more on this discussion, check out JP Wiggins’ interview with Talking Logistics.