By Patrick Burnson, Executive Editor ·
May 27, 2020
San Francisco — As noted in a recent LM website post, Armstrong & Associates has announced the release of its latest report, “Increasingly Strategic: Trends in 3PL/Customer Relationships.” This news comes in advance of our annual magazine feature in June on “Top 50 Global & Domestic 3PLs.”
In this exclusive three-part interview, Evan Armstrong, president of the consultancy, explains the current volatile and uncertain business environment, an increasing number of logistics providers are being forced to take dramatic action to generate positive impact rapidly.
Logistics Management (LM): Have you seen any major shifts in modal decisions by global 3PLs? More ocean, less air, for example?
Evan Armstrong: The focus is still on meeting product demand using the most economical mode, but strong spikes in consumer B2C business and healthcare related spending drove procurement toward airfreight. We will see a shift to other modes as demand declines and stabilizes in the remainder of Q2. From there we can see more normal transportation procurement patterns as the economy continues to open up and expand.
LM: For domestic players, is there a trend for more cross-border and on-shoring concentration?
Armstrong: From a manufacturing and supply chain perspective it is hard decouple from China depending upon the level of regional supplier integration and a company’s local market customer base. Where manufacturing can be nearshored, it tends to happen in the northern border states of Mexico. So, yes cross-border Mexico activity is very important and should be part of every DTM 3PL’s strategy. On-shoring is happening to a lesser extent, but it is important for manufacturers to partner with one or more solid 3PLs as part of a wholistic supply chain strategy when shifting operations.
LM: To what extent has digitization made an impact?
Armstrong: Digitalization has had the largest impact on DTM/Freight Brokerage with the biggest impacts coming from what I’ve dubbed as Capacity Management Systems from systems providers such as Parade. These systems integrate with Transportation Management Systems (TMS) to automate digital freight matching for freight brokers using A.I. and machine learning and can result in significant service improvements and cost savings. This type if digital freight matching capability is also core to digital freight brokerage 3PLs such as Convoy, Transfix, and Uber Freight. Another area of digitization has been on the shipment visibility system side with applications such as project44 and MacroPoint which also plug into existing TMS for improved shipment visibility. Real-time is truly becoming real.
LM: Should we expect to see more AI, Robotics, and Block Chain?
Armstrong: Yes, yes and yes for A.I. and Robotics. Block Chain is still a problem child with very little industry adaptation. A.I. is being deployed across the 3PL segments but has had the largest impact on DTM where it is truly disrupting traditional freight brokerage models. Autonomous robots by manufacturers as Fetch and Locus are supporting warehouse workers in picking and putaway. It seems like they are dropping in price every day and have a short, less than one-year ROIs. Deploying new technologies such as these to improve operations for customers is key to any 3PL’s growth strategy.
Tomorrrow: Our interview with Evan Armstrong concludes.
May 27, 2020
About the Author
Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]
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