The fight for trucking capacity is heating up and 3PLs are finding they don’t have the capacity where and when they need it to serve shippers in the best manner possible. There are new approaches emerging, however, which can help mid-tier 3PLs compete more effectively against the giants and manage their operations more efficiently.
Successful logistics companies depend heavily on sophisticated approaches to managing complexity. Innovations ranging from route optimization to GPS tracking are becoming the norm, meaning competitors need to go a step further to stay ahead of the competition. There has been less focus on one important aspect in leveraging predictable demand; that is, procuring dedicated carrier services in an optimized manner. This strategy for procuring carrier services offers a significant competitive advantage for early adopters.
While spot buying fulfills an important role for matching ad-hoc supply and demand, it is far from optimal for 3PLs who wish to grow their margins and play a smarter game. Progressive 3PLs should look to engage on a more strategic basis with carriers if they have large quantities of regular shipments or a project of interest they wish to compete effectively for. In real terms, this means running large bid events incorporating as many lanes across as many customers as possible. With intelligent bid optimization, it is possible to help engineer a more efficient network with less dwell time and dead-head.
The emergence of specialized bid-optimization tools with scenario analysis has the potential to transform how 3PLs source carriers. They can thus run large-scale requests for quotations (RFQs) in a manner that biases competitions towards dependable or favored carriers. Furthermore, they can facilitate package bidding where carriers can bundle and package contiguous lanes together offering discounts contingent on winning attractive combinations. The net result is one where carriers can balance their networks and 3PLs can leverage their purchasing power via strategic sourcing. The power of scenario analysis can be used to create a rich description of non-price objectives, also giving the buyers greater strategic control in the fight for trucking capacity.
Alan Holland, PhD. is founder and CEO of Keelvar, which specializes in advanced sourcing software. Its customers include central governments, global manufacturers, retail and transport companies. Holland has a PhD in Computer Science and has worked in optimization for more than 15 years.