The Changing Face of 3rd Party Logistics
The Three Factors Driving Change, by Benjamin Gordon
Originally published in Supply Chain Management Review
The third party logistics (3PL) industry is undergoing a huge transition. Currently competing in a highly fragmented, high growth market, 3PL providers will soon be swept up in a massive wave of consolidations. This trend will be driven by three factors: the increased demand for lead logistics providers, the emergence of new technology, and an increase in cash-rich buyers seeking logistics targets. Shippers need to start scrutinizing their 3PLs and decide how well these providers are positioned to survive in the new era.
We are living in an unprecedented time of consolidation in the supply chain management industry. In the past three years, we have witnessed such mega-mergers as Deutsche Post-AEI-Danzas, UPS-Fritz, Kuehne & Nagel-USCO, and Exel-Mark VII. The conventional wisdom holds that these large deals, which were all completed from 1999 to 2001, are a relic of history and that no mergers of this magnitude remain to be done.
But I will argue that the exact opposite is true. The logistics industry is actually in the early stages of a massive wave of even greater consolidation that will reward a small number of third-party logistics (3PL) companies with…
