As intermediaries of the transportation and supply chain industry, 3PL’s are a vital point of connection between shippers and carriers. Their intrinsic customer value is in their ability to provide consistent capacity at high levels of service while mitigating risk of shippers working with too many carriers, negotiate and source competitive rates, provide value add services such as dedicated support, tracking and tracing, efficiencies through technology and many more. To the carrier, 3PL’s help to fill trucks that might otherwise be travelling empty miles to their next reload or offer headhaul loads they may not have to begin with. They ensure on-time payment and adhere to stringent payment terms that shippers direct would not be able to meet. They offer technology integration, visibility of their freight network and mutually beneficial partnerships. There is no doubt that 3PL's are an essential service in the supply chain world.
The 2020 Margin Crunch
Brokers profit margins have been unstable throughout this pandemic and were heavily impacted during the first few months of the outbreak. While COVID-19 has been the mainstay headline, there are other factors that played into these changes. Tariffs and trade disputes changed the way many industries were doing business. The Lebanon port explosion, COVID lockdowns, strikes and cyberattacks have created a marketplace unlike anything we could have imagined just a few short years ago.
As challenges continue to mount, trade routes, sailing schedules, and domestic shipping lanes and volumes have impacted reliability and the normal course of sourcing capacity. Brokers are working overtime while facing these challenges head on. They are rising to the occasion in one of the most difficult domestic shipping periods to offer capacity and value to their customers and long-standing partners.
Rerouted shipments pose the biggest risk and create the most additional work. Brokers don’t often get reliable data from carriers about rollovers and it is increasing difficult to get ahead of problems when shipping schedules and routes are altered.
Adding to the struggle to keep costs down is the impact of simple supply and demand economics – fewer drivers on the road paired with increased demand – this is a driver market. Shippers are looking at different ways to mitigate any potential capacity shortages by near shoring production, using local warehouses to facilitate faster service and running shorter haul and expedited lanes.
While it is not impossible for a broker to thrive in this climate, it is a situation that requires agility. Top players set themselves apart by prioritizing customer service, offering transparent and proactive communication, invest and facilitate technology efficiency gains, hire the right people while promoting a positive culture, and look at their customers as long term partners instead of short term gains. 3PL’s like TRAFFIX continue to grow in challenging times by holding true to its mission to anticipate variables, reduce risk and deliver meaningful value in everything the company does. TRAFFIX has spent four decades putting people first and offering high performance logistics to their customers.
Connect with the TRAFFIX team to learn more.