David Broering | NFI Industries
Ever since the early ’80s, when deregulation came to be and 3PLs were truly born, the intermediary’s role in the supply chain has been challenged by the idea of transparency. This was especially true before the advent of the internet and cell phones when a carrier needed to rely on a driver using a pay phone to check in with them when they stopped for food or fuel. With the rise of the smartphone—and all associated technologies—one would expect that our ability to know the location of a truck would be a given by now. But somehow that is not the case in today’s market.
3PLs take technology for granted. The relative infancy of the 3PL space compared to trucking means that most of us have always had technology as a fundamental tool for the execution of our service. As the role of technology in our industry has accelerated, so has the assumption that its pace will continue to make our jobs easier and our service provision to customers and carriers better. The expectation from the shipper community about a 3PLs role in providing certain components of the service—like tracking—has also accelerated along with this wave of technology that continues to challenge us to keep up. In fact, most shippers seem to have higher expectations of the ability to provide real-time location tracking and visibility than is the reality for many in our industry.
That leaves 3PL service providers trying to connect with carrier partners in ways that fulfill the increasing demands of our customers. So here we stand, with big shoes to fill and a true gap in the ability to connect visibility and transparency in our industry with the way consumers receive it from companies like Amazon and Domino’s Pizza. Yes, there are some really good products out there to fulfill those customer demands, but they can be tough to implement on a load-by-load basis and truly do not add much value for the carrier.
This leaves 3PLs stuck between a rock and a hard place with a lot of open-ended questions. How are we going to get to a place where we can make the sort of progress toward consistent and reliable visibility that our customers feel we should be providing? How do we navigate the myriad of transparency providers to find the right ones to partner with in order to get to that euphoric, automated tracking world? How do we find value for the carrier in contributing that treasured location information that they can often be reluctant to provide?
These and other questions are what 3PLs are grappling with each day as we try to find our way through this ever-changing marketplace. Being a part of TIA affords us the ability to leverage our peer network to find the right answers to these questions, so we will start here with some perspective on how this can be approached.
So here we stand, with big shoes to fill and a true gap in the ability to connect visibility and transparency in our industry with the way consumers receive it from companies like Amazon and Domino’s Pizza.
Finding the Right Technology Partner[s]
One of the most consistent issues that 3PLs face today is finding the right provider or providers to partner with for a specific service provision. The tracking and visibility space has quite a few options to choose from across a couple of different methods of approach. Providers like FourKites and Project44 are a couple of examples of well-known providers to partner with for these endeavors.
There are two main methods that people use today to get automated location-based tracking in today’s market—ELD-integration and app-based tracking. While each has their own strengths, they are certainly different in their engagement style and approach. The key is recognizing that there are different use cases for the different ways we engage customer and carrier partners. In addition, there are different burdens placed on the carriers for providing the information via each of these methods. Put simply, there is currently no cut-and-dry solution that will solve all of a 3PLs problems related to tracking and visibility.
At present, ELD’s are officially the standard for the management of HOS for carriers. This also means that location-based tracking can now be a standard concept as well, since most ELDs also have a geo-location concept. Integrating with a carrier’s ELD means the ability to get shipment level location information via the carrier’s permission and a tractor number. This has the least friction for both parties, but takes a bit longer to set up and is harder to get over the finish line. These types of integrations are best used for relationships based on consistent higher volumes of freight.
The other option is the app-based tracking concept. In talking to carriers, one of the biggest problems with the app is that everyone has an app. Drivers can be asked to download as many as 10 different apps weekly. Another problem with apps is that many carriers do not provide their drivers with smartphones, so there is very little that can be done to drive further compliance. App-based tracking is a path to take for transactional shipments, but choosing the right partner for that app is key. Finding partners that have well-known names and apps that are well-downloaded can be a key to getting more traction with the tougher transactional/one-off freight.
Finding Value to Get Better Visibility
One of the biggest problems with the drive toward consistent and reliable automated tracking with carriers is the trade-off that is being asked of the carriers. Essentially, carriers are being asked to give real-time truck location away for free. While there has always been a burden on the carrier to provide this information at certain junctions of the shipment process, the real-time location concept is very different than a check call. Moreover, companies are developing technologies to create other uses for data derived from truck locations, and carriers are waking up to the idea that there is real value in this information. That being the case, why should we expect them to give it up for free?
The reality is that they shouldn’t. However, with margins headed in the wrong directions and customers constantly pushing for lower costs, how can a 3PL find room to compensate a carrier for the real-time location data our customers are demanding?
One of the ways to really work with carriers is to find ways to create value for them through the use of the tools that help to make our business more efficient. The first and most important way to provide carriers with value is to give them the efficiencies the tools create. If the carrier engages the visibility tools and you are getting real-time location, don’t follow-up with them via email or phone as well! Give them the time back that the tool creates so they can use that time for something else. This can be a huge win for our carrier partners—getting actual operational efficiency from the tools.
Another way that can create value is to offer quicker pay terms for partners that use visibility tool. Setting up programs that scale up or down the pay terms based on opt-in percentages or other engagement metrics with the tracking tools is a great way to keep carriers engaged and coming back to work with you on future shipments that match their networks.
Bringing It All Together
Our 3PL marketplace is changing right in front of our eyes. Things that were not possible a year ago can be considered commonplace overnight if the right group picks up on the concept and runs with it. Real-time transparency and visibility have become table stakes in conversations with customers big and small. The key to being relevant in these conversations is being real about what is available in the market and how to engage with those tools and partners.
The author, David Broering, is Senior Vice President, Integrated Solutions with NFI Industries in Cherry Hill, NJ. He may be reached at firstname.lastname@example.org.