In an increasingly connected world, 3PLs are under significant pressure to respond to emerging trends. As their clients demand more real-time communication, greater visibility, and reduced costs, 3PLs have been driven to adopt various forms of technology to increase efficiency and maintain a competitive edge. Recent trends include IoT transportation ecosystems, LTL dimensioning pricing technology and the continued shift towards ecommerce. Let’s take a look at those three trends in more detail.
1. IoT Transportation Ecosystems Maximize Resources at a Lower Cost
U.S. companies transport over 70 percent of their goods across the country using freight trucking services. However, over 90 percent of truck carriers manage a fleet of 6 or fewer vehicles, and more than 97 percent of carriers manage 20 or fewer trucks . These realities demonstrate the significant degree of fragmentation and the need for platforms and technology solutions to connect the industry by providing real-time information exchange and greater visibility.
New Internet of Things technologies, like 10-4 Systems, bring that much needed visibility into the shipment process. Web-based transportation ecosystems connect carriers, brokers, and shippers to move and track freight in real-time. 10-4 has built an automated transportation ecosystem matching live freight to live capacity. The technology helps to maximize resources at a lower cost – reducing manual processes and focusing efforts on revenue generating activities.
Products like the 10-4 Marketplace provide a single interface to push freight and capacity, allowing for complete enterprise supply chain visibility. From the perspective of a 3PL, this eliminates the administrative time spent making calls – the interface allows one to broadcast freight to the entire 10-4 network and match it with available capacity in real-time. Ultimately, enabling 3PLs to react to the on-demand nature of consumers by responding to their clients in real-time and providing visibility from origin to destination.
2. LTL Dimensioning Pricing Technology Removes Doubt and Confusion
For years, shippers, 3PLs and carriers have discussed density based pricing and subsequently kicked the can down the road for lack of accurate “DIMS” (cubic dimensions/weight). Transportation costing systems and algorithms have also been hindered by the absence of accurate information. Recently, however, the creation of competitively priced dimensioners across a wide spectrum of LTL terminals has opened the door to an accurate, readily available shipment data resource upon which all parties can agree and depend.
The emergence of dimensioning technology has finally brought clarity to the true characteristics of freight and provides a long needed measurement tool that removes all doubt and confusion. Adopting dimensioning and density based pricing allows both the shipper/3PL and the carrier to now have a common basis to simplify the pricing model using a basic weight/cube/distance formula. The issues of value, fragility, special handling and packaging standards can be handled through accessorial charges, but the basic rate and math should be universally accepted.
The adoption of this form of technology removes an element of uncertainty and the risk of additional unaccounted for costs. 3PLs can behave more competitively with greater information at their disposal to make knowledgeable business decisions.
3. Shift in Consumer Purchasing Behavior Pressures 3PLs to Turn to Technology and Data
As consumer purchasing behavior continues to shift towards ecommerce, we’ve seen an increased strain on the physical supply chain. This shift has made it more difficult for shippers to meet the evolving needs of consumers.
3PLs are utilized by many ecommerce shippers to oversee and manage their supply chain. They specialize in optimizing the supply chain, allowing shippers to focus on marketing and other business operations.
The introduction of technology in to logistics has quickened the delivery of goods from manufacturing hubs to big-city markets in recent years. But speeding up the so-called “last mile”, from a local distribution center to a retailer or a consumer’s home, has remained a challenge. According to Matthias Winkenbach, director of the Massachusetts Institute of Technology’s Megacity Logistics Lab, that’s a crucial hurdle, as the “last mile” of delivery routes tends to be the slowest and least cost-effective.
This is where big-data analytics and technology can be powerful tools. “More and more companies are sitting on tons of data, but they don’t know what to do with it, or how to understand it,” Winkenbach told The Wall Street Journal .
3PLs are increasingly positioned to utilize data-collecting tools to accurately track the progress of carriers and inform route planning. This is accomplished by identifying patterns in delivery times and allowing 3PLs to make knowledgeable decisions based on past performance available through the historical data. This data can help drive more efficient routes, allowing 3PLs to determine the best carriers to use and offering better service to their shipper customers.
The Barrier to Entry is Low
In a fast-paced world driven by real-time and dynamic decisions, 3PLs are leveraging technology to better support their customers’ needs. Most of the emerging technology available to 3PLs today is being built and provided by new, agile businesses. These startup companies are using web-based systems to drive faster deployment and implementation at a cheaper cost. The 3PLs that are able to adopt these tools effectively and apply them to increase efficiency, reduce cost and drive profit will be the ones to succeed.
Peter Rentschler is Managing Director of CarrierDirect.