IS 3PL ON THE EDGE OF A DISRUPTION ABYSS?

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 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 on 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 a disparity of results. Yet to date none disrupted the 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 skims off between 2% and 5% every load.
– Uber Freight pays 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?

A bit too simplistic. Freight movement is not just a transaction and it is not relying on 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 a destination, many logistics 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, a new species 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.

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