A glimpse to the future of 3PL industry.

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Illustration classifying L&T players according to risk adoption on business models and differentiation on technology.

Illustration classifying L&T players according to risk adoption on business models and differentiation on technology.

In our last post we opened the subject about the wrong-called “new disruptors” of the logistics and transportation industry.

In this post we will try to make a classification of players to show our vision on how and why disruption is going to happen across the industry.

The combination of new business models with modern technologies will reformulate, bottom up, the once-and-again recurrent strategic topics; will displace traditional players and raise the expectations of customers to new standards.

We have illustrated this with a 2×2 matrix that crosses the dimensions of business model and technology, to discretizes players, closer or farther, to the maximum value performance.

Traditional 3PLs

Players running Traditional Business Models using Standard Technologies.

They keep a conservative position in terms of risk taking, and don’t run or even have a differentiation plan through digital transformation.

Unless they may have already developed strong competitive edge, they will face a dilution of yields due to the exposition to price competition.

Trapped in this category we find most of the 3PLs today: immobile companies to the changes, challenges and opportunities in the industry during the last years.

Modern 3PLs

Players running Traditional Business Models using Modern Technologies.

They keep a conservative position in terms of risk taking, but at least they have a differentiation strategy through digital transformation.

Fell into this category we find most of the so wrongly termed “new disruptors”. As well, any Traditional 3PLs adopting modern technologies will end up here.

However, in the case of 3PLs, technology will not make a real difference if they keep performing a traditional mix of core competences.

In the case of Digital Brokers -Uber Freight and Flexport for example- they don’t even offer a traditional mix of core competences.

As result, this group invest in new technologies but they don’t know what to do with the emerging paradigms and how to make profit with the new opportunities.

Freight Marketplaces

Players running New Business Models using Traditional Technologies.

We consider them the first disruptors of the modern industry, a business-driven disruption: they emerged with new business models adopting a new mix of core competences though using traditional technologies.

Examples of Freight Marketplaces are DAT, TruckStop and Freightos.

Blockchain 3PL Networks 

Players running New Business Models using New Technologies.

They will do well soon as they understand the new paradigms of change, and thus, they are more ready than others to take advantage successfully of the new great opportunities.

Blockchain 3PL Networks will be likely the protagonists of the new paradigm-driven disruption: new technology plus new business model to perform the maximum known value.

 

Whether you can see where your company is today or not in this matrix, in Neurored we are enthusiastic about the upcoming transformations in our industry. Contact Us for further discussion.

Is 3PL on the edge of a disruption abyss?

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Illustration showing positioning of 3PL today vs 3PL disruptors such as Uber Freight and how future 3PL will look like.

Illustration showing positioning of 3PL today vs 3PL disruptors such as Uber Freight and how future 3PL will look like.

“Uber Freight users (truckers) download the app, search for a load, and tap to book it, which is followed by a rate confirmation within seconds that eliminates a common anxiety in trucking about whether or not a load is really confirmed.” Eric Berdinis, Uber Freight Product Manager.

It is just another disruption threat that traditional brokerage business models face time to time, but in this occasion it is in our industry so the “ripple effect” is shaking us.

Before Uber Freight many companies tried to implement the same concept with disparity of results. Yet to date none disrupted 3PL industry.

Can a crowded and developed marketplace like 3PL brokerage have an entry point towards the path of a total disruption?

In words of the Product Lead of Uber Freight, Eric Berdinis, their key to success is on truckers: “Over the last year, we’ve gotten pretty deep in the crazy pain points that drivers have an are going one by one to knock them off”.

Among them Berdinis highlights that basically the whole payment process in the carriers/shippers ecosystem does not work:

– Payment terms are net 30 or 60 days.
– Factoring skimm off between 2% and 5% every load.
– Uber Freight pay turnaround of 7 days.

“We are paying quickly. We are just giving loads in a more efficient way” he said.

Is this enough for causing a disruption in a complex industry, the Achilles heel of the traditional players?

Bit too simplistic. Freight movement is not just a transaction and it is not relying in one actor such as Carriers nor ultimately in the Truckers – despite the fact of their tough and valuable activity.

For a freight to become a load, be shipped and reach destination, many logistic companies, partners and experts are involved, more or less depending on the complexities of the shipping, but all are exposed to potential exceptions resolved ultimately by 3PLs and their customer support network.

3PLs bring value to shippers with a wide array of shipping, technological and financial options, including generally today:

  • Multimodal freight, not only truck freight.
  • Warehouse management.
  • Customs management.

And this plus IT services, compliance, risk management, analytics and many other added value services.

Building an APP, Uber Freight and other players such as Convoy or Transfix, they believe they will overcome the 3PLs empowering small fleets and indie truckers and provide better and cheaper service to shippers.

However, as new specie of player is moving forward in the trying to replace the traditional 3PLs, one collateral effect is happening already: if disrupting driver is a technology making happier truckers, what is the impediment for 3PLs to take advantage of it?

Supply Network Technologies and new Supply Trade Finance solutions for 3PLs like the ones provided by Neurored will more likely impact in a real disruption of the industry by those 3PLs adopting them rather than by those called the disruptors of today.

Future 3PLs

Future 3PLs

If you are a 3PL contact us for the answer today.