3PLs Gain Market Share but Face Rising Fraud, TIA Leaders Say

Market Report Indicates Freight Brokerage Outperformed Transportation Market During Pandemic
Anne Reinke
TIA President Anne Reinke outlines the opportunities and headwinds for 3PLs at the association’s 2023 Capital Ideas Conference in Orlando, Fla. (Seth Clevenger/Transport Topics)

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ORLANDO, Fla. — Although the freight bonanza of the past few years has cooled, third-party logistics providers remain poised for long-term success after helping shippers navigate the supply chain turmoil wrought by the pandemic, 3PL industry leaders said.

Freight brokers and logistics providers proved their value and earned customer loyalty by keeping the supply chain operational during those extraordinary times and boosting efficiency through their industry relationships, technology and access to capacity, said Anne Reinke, president of the Transportation Intermediaries Association.

“Shippers’ use of 3PLs in my view will only increase,” Reinke said at TIA’s 2023 Capital Ideas Conference, held here April 19-22.

“Congratulations to all of you for showing your worth and proving that you deserve to stand at the center of the supply chain.”

TIA’s incoming chairman, Mark Christos, also highlighted the unprecedented challenges — and opportunities — for 3PLs during the past few years.

Incoming TIA Chairman Mark Christos

Incoming TIA Chairman Mark Christos by Seth Clevenger/Transport Topics 

“Through the journey, our industry’s had a sharp jump in exposure and awareness, and we became more important than ever before,” said Christos, who is president of logistics and technology firm SolvLogix Inc.

TIA’s 3PL Market Report indicates that freight brokerage, in general, outperformed the overall transportation market during the pandemic, he said.

“What that means is that we really took more market share as a collective entity because shippers relied on our services,” Christos said. “It didn’t occur just by accident. We were not standing still. We were prepared. We had solutions and services, we adapted quickly, and no doubt technology aided us. Customers recognized that. They trusted us, increasing their reliance [on us] to get their products moved.”

Nonetheless, 3PLs continue to face several prominent challenges to their growth and future success, such as rising fraud in the freight marketplace and threats to the industry’s existing business models.

2023 TOP 100 LOGISTICS COMPANIES: 3PLs in growth mode

“Many of you have told me you have never seen as much fraud as you’ve seen over the last six months,” Reinke said.

She emphasized TIA’s commitment to ethical business conduct in a market where reports of illegal activity are increasing. A prominent example is double-brokering, where a carrier accepts a load, then illegally re-brokers it to another carrier. Outright cargo theft and fictitious pickups also are on the rise.

“We want to make sure we are the secure link in the supply chain,” Reinke said.

She also called on the Federal Motor Carrier Safety Administration to step up enforcement efforts and investigate fraud complaints.

“Make no mistake, fraud in the marketplace cheats everyone,” Reinke said. “It cheats the shipper, the broker and the carrier, and it hurts the public by increasing the cost of doing business.”

Safety represents another key challenge for the industry moving forward, Reinke said, noting that FMCSA does not provide a safety rating for 92% of motor carriers. “This is untenable.”

On a separate note, Reinke voiced TIA’s opposition to FMCSA’s decision last month to begin a rulemaking to consider potential regulatory changes pertaining to broker rate transparency.

“A safety agency should not be determining what provisions and rates are fair in an arm’s-length negotiation,” she said.

Outgoing TIA Chairman Michael Riccio

Outgoing TIA Chairman Michael Riccio by Seth Clevenger/Transport Topics 

TIA’s outgoing chairman, Michael Riccio, founder and CEO at More Than Miles Consulting, also emphasized the importance of industry advocacy on key issues for 3PLs and their carrier partners.

Challenges to the independent contractor model, such as California’s AB 5 law, affect not only owner-operators but also the brokers who work with them, he said.

“Your carriers are small carriers. A lot of them are owner-operators,” Riccio said. “You need to support those guys. You need to figure out a way to make those guys profitable, because if those trucks aren’t profitable, you’re not profitable.”

The conference, which drew about 1,900 attendees, also featured an exhibit hall where vendors showcased technologies and services geared toward 3PLs, including transportation management software, freight visibility technology and dynamic pricing capabilities.

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