Differentiating your services as a third-party logistics provider (3PL) depends on your ability to understand the market and respond. In today’s world, the slightest of influences may contribute to sudden fluctuations within the market. As a result, modern 3PLs must evolve to stay competitive, applying freight data to increase competitive advantage.
“Although demand for logistics services likely will increase in the decade ahead, freight brokers and 3PLs will need to adapt and evolve to remain relevant in this rapidly changing industry. Looking toward the future, industry executives and observers generally envision a market that will be led by growing, tech-enabled 3PLs operating connected freight networks that increasingly automate the flow of transactions,” explained Seth Clevenger of Transport Topics. In fact, the value of automation and tech-enabled 3PLs will naturally lead to one solution – applying freight analytics to make 3PLs more competitive and worthy of working with more shippers.
Access to data increases competitive advantage.
Like informed brokers, when a 3PL has access to more company and external data, its staff is better able to respond to changes within the customer base and overcome challenges. Obviously, the biggest disruption facing the industry today remains COVID-19. However, the next disruption is around the corner. The application of freight analytics and data empowers 3PLs with remarkable insights to better manage asset utilization, reduce costs for the 3PL, pass the savings along to shippers, and add value.
Freight analytics opens the door to more predictive, proactive capabilities in managing supply chain assets.
Take a moment to think about freight analytics. Freight analytics describes a series of algorithms that consider external and internal data and define what that data means for the company. For example, insights generated from freight analytics on a specific lane within the SONAR platform can be used to create a Lane Scorecard, which is a measure of the overall health and competitive nature of a specific lane.
Lane Scorecard can be exponentially quantified to provide make or break decisions regarding freight tenders, carrier selection, other logistics service provider (LSP) partnerships, and more. Furthermore, utilizing analytics allows 3PLs to better understand their needs.
For example, Joe’s tire supply moves a massive volume of shipments annually. However, rates tend to go through the roof when capacity declines due to the bulky nature of tires. At the same time, the prevalence of fraud and unethical business practices within the tire industry make tracking supplier activities and providing that information to the shipper a top priority. While providing end-to-end visibility into real-time shipment status and location ensures this compliance, it does little to keep freight spend from growing out of control. The only way to manage freight spend lies in recognizing typical costs, market conditions, and what possible lanes might have the more affordable, cost-effective shipping option.
Being a competitive 3PL with a data-driven mindset reduces confusion and lets shippers focus on other priorities.
Therefore, Joe can rethink his supplier network, choose a supplier closer to locations receiving shipments, take advantage of available lanes that have shown to be more competitive, and still manage to operate his business. This is where the real value of the 3PL that applies this data in advance comes into play. Joe does not have the time or resources to become a data scientist. Instead, he relies on the expertise of third-party providers. As a result, 3PLs that pre-compile this information, using SONAR as a secret weapon of differentiation, and have it immediately ready to ensure their shippers know that they are getting the best deal possible, will see an increase in customer service levels.
Be a better 3PL with the right forecasting and freight analytics resources.
There is a misconception in the industry that cheaper is better. However, that rarely turns out to be the case. Low-cost shipping can have massive indirect costs if the end cost is too great. If damage occurs, shippers will be upset. If the item arrives a day late, customers could have gotten it faster through Amazon or another major online retailer. This is the digital age, and any shortfall within the supply chain, even when not the fault of the shipper, will automatically fall to the shipper. Therefore, shippers need a real partner that can help them deliver on customer expectations, keep spend under control, and generate strong returns. For the 3PL, this amounts to leveraging freight analytics and data to truly provide the best service possible. Of course, it all begins with freight forecasting capabilities and the ability to see the freight data and its trends.
Request a demonstration of how SONAR can provide the actionable freight analytics needed to become a better 3PL today.