Global Logistics 2019: What's Ahead for 3PLs?

Global third-party logistics providers might feel like they’re in a vise grip. On one side, logistics software providers, both established and upstart, are trying to arm shippers with systems that render 3PLs less important. On the other side, some ocean carriers are aiming to recapture the supply chain management ground they ceded to 3PLs over the last decade. If anyone is used to the hustle, it’s logistics service providers experienced in low-margin markets, but the burden to remain relevant is more pronounced than ever. Although much of the focus in 2018 centered on the impact that digital forwarders worldwide might have on legacy companies, that simplifies the challenges 3PLs face, especially those with extensive forwarding operations. Margin-based buying and selling of capacity probably isn’t a sustainable model in an environment where shippers have detailed insight into freight rates. Relying on shippers to use obsolete or user-unfriendly systems when easy-to-deploy, affordable, and browser-accessible freight management tools abound likewise isn’t a sound strategy. And, with large global shippers generally preferring to deal directly with carriers as much as possible, the movement of carriers into services ancillary to port-to-port operations is another cause for concern.

Maersk Group’s September decision to hive off the origin services from its 3PL sister company Damco and incorporate those services into its liner carrier business is emblematic of this last dynamic. CMA CGM’s increasingly close ties to CEVA Logistics, including a 25 percent investment stake, is another. Those carriers, and potentially others, might have seen it as a mistake to forfeit the lucrative supply chain management turf and the deeper customer relationships that come with those services. All of these forces are set to compel 3PLs to double down on investment in two key areas: global supply chain visibility and execution and technology at large. Those two are inextricably linked, and 3PLs focusing on those areas inevitably will move further away from a pure margin-taking model.

This webcast will analyze the state of the 3PL market as the first quarter of 2019 comes to a close.

Chris Brooks, Director, Programming, JOC Events, Maritime & Trade, IHS Markit

Steve Walker, Founder, SBS Worldwide and SWG Global