Letters: Brokers & 3PLs, EOBR Mandate
These Letters to the Editor appear in the April 22 print edition of Transport Topics. Click here to subscribe today.
Brokers and 3PLs
Your article on brokers and third-party logistics providers raising their share of less-than-truckload freight shipments immediately caught my attention (“Brokers, 3PLs Raise Share of LTL Freight Shipments,” 4-8).
The article was well done, and I can’t dispute its contents nor the trends. In fact, I have spent a good amount of time over the past two years preaching to LTL carriers various strategies they can take to mitigate the broker/3PL trend.
While my preaching hasn’t fallen completely on deaf ears, the LTL carriers are slow to react, as this situation causes quite a conundrum.
As you stated, approximately one-fourth of an LTL carrier’s revenue is derived from a 3PL. If they blatantly dismiss 3PLs and brokers, they face the potential loss of substantial business. However, given the path they are on, LTL carriers are losing their most profitable segment and becoming wholesalers.
For the smaller carriers, such as Frontline — a fleet example given in the article — using a 3PL as a sales force makes great sense. For the larger LTL carriers, the “cost of sales” is too great.
For midmarket shippers, traffic and transportation managers have gone the way of the travel agent. They basically don’t exist. With downsized administration, it can be fundamentally more efficient for a company to use a broker or 3PL to manage LTL.
And, you have to admit that LTL carriers don’t make it easy to do business. With discounts ranging in the mid-80 percentiles and still using National Motor Freight Classification commodity classifications and laborious and hidden rules tariffs, it can be downright confusing for many shippers.
And, as both Bobby Harris [founder of BlueGrace Logistics] and Ted Alling [CEO of Access America Transport] stated in the article, the technology that a broker/3PL provides is far superior to navigating multiple carrier websites to obtain quotes, book shipments and track, trace and obtain reports.
The broker/3PL is filling an unmet need, and that is, they provide simplicity, speed and convenience. It’s not too far-fetched to think that progressive LTL carriers can provide this unmet need, but they first have to understand what the customer wants and how to fulfill it. And the LTL carrier doesn’t have to create its own 3PL (as so many have tried) to do it.
It actually baffles me why LTL carriers continue to let this environment exist. Rather than focusing on pricing the
broker/3PL out of the market, they should think about how to actually make the life of a shipper easier and simpler. If they don’t, then this trend will definitely continue.
I know a few initiatives under way where a select group of carriers are actively trying to counter this trend. It’s too early to tell if they will be successful, but they are thinking correctly. However, the LTL carrier industry as a whole hasn’t figured it out. If and when they do, the broker/3PL had better learn how to deliver solutions other than prepackaged rates with transportation management technology. After all, carriers can and will someday be doing that to cut out the 3PL.
It was a very timely article, and I greatly enjoyed it.
Chief Operating Officer
Thanks for using your publication to advance the agenda of the manufacturers of electronic onboard recorders (EOBRs). There’s nothing like using your government to mandate companies to use your equipment for the low, low price of $500 per truck — not to mention the drivers you will have to retrain after the good ones have left because they don’t want Big Brother looking over their shoulder.
Sivertson Brothers LLC