How Carriers And 4PLs Can Benefit From Collaboration

Tim Fawkes of 3T Logistics explains how 4PLs can support carriers to improve their business and create a better transport solution for customers.  

The transport industry is going through a radical technological transformation which offers fantastic opportunities for both carriers and their customers. From autonomous vehicles to delivery by robot or drone, to same day delivery and live final mile tracking, initiatives that seemed light years away at the start of the decade are now a reality. 

Overcoming barriers to change

Logistics as a sector has been a little slow to embrace some of this technology. However, the tide seems to be turning as more and more organisations realise the potential that technology has for transforming their transport operations. This represents a real cultural shift: transport solutions have traditionally been manual pen and paper approaches, with an overworked workforce that may not have the time to adapt to the technology available. There have also been other hurdles to overcome along the way which have delayed the adoption of these new technologies.

  • Firstly, the stability and availability of data mobile data networks that provide a consistent service on a wide geographic basis – nationally or internationally.
  • Secondly, the investment required for hardware to utilise the data mobile networks – this has significantly reduced as a result of the success of the smartphone.
  • Thirdly, the lack of investment in transport technologies as a result of low margins requiring a much longer term return on investment approach.

The human factor

Technological hurdles are not the only pressures that carriers are facing in the current political and economic environment.  The industry is facing a serious driver shortage, compounded by the fact that the average age of a UK driver is 56. In fact, there is an estimated 25,000 shortfall of drivers at any one time and it is the first time that carriers have actually had to stand vehicles because they cannot get drivers.  And Brexit is only going to exacerbate the situation. If we are unable to pull drivers from our European neighbours, the driver shortage is likely to escalate in the near future. As a result, it is becoming a seller’s market, with increased driver wages and increased rates to ensure that service is available as and when the consumers require goods.

Managing customer demand

Working against these trends, e-commerce is pushing the boundaries of what is expected as a standard offering.  If a ‘Joe Bloggs’ consumer can have their delivery on the same day with live tracking from despatch to delivery, why can’t large businesses?

The pressure on manufacturers to provide more efficient transport solutions to offset year-on-year cost increases which are not in line with their sales price increases has driven a move to a 4PL type approach. This solution offers a combination of services provided by different carrier partners that provide an overall lower cost than that of a single 3PL.  This fragmentation of services can undoubtedly deliver a lower overall cost for most shippers. 

Ultimately, the end customer expects more control of their delivery:  they want more frequent, quicker delivery with product when they want it, and in the right format and quantity.   This may involve shipping in many different formations of service levels, geographies and consignment size.   Utilising a variety of carriers who can provide the right service and cost for a variety of service levels, geographical territories and delivery sizes not only saves money, but also improves the delivery service experienced by the shippers’ customers.   

Why 4PLs are the intelligent solution

This approach requires organisation and control.  It involves tapping into different carriers’ systems with different planning and tracking capabilities.  Furthermore, it may be the case that carriers who are operationally superior are technologically inferior as putting high tech systems has not historically been the priority for their business. It may be that buying a truck that makes money for them is where their investment has traditionally been focused.

Utilising a 4PL can provide the expertise and systems that join all the services together to create a single platform for the end customers.  A 4PL operating a platform transport management system will integrate with carriers and provide a single portal for visibility and control to the customers.  Capturing each carrier’s tracking information can provide visibility at customer consignment level. This means that customer service departments are able to provide the information that their customers require in real time, notifying them of any issues before they occur.  These portals are specifically designed to organise information intelligently to help customer services understand issues and priorities at a glance.   A 4PL will also be in touch with the market trends and ensure that rates are aligned with the market, an approach that can help both customers and carriers. 

This scenario supports a genuine partnership and a collaborative approach. The customer gets the most cost-efficient and flexible transport solution which they can adapt as their business changes.  The carrier gets to work with large customers that they would normally not be able to work with on their own. They get to grow with the 4PL as a direct result of quality, as well as having access to industry-leading technology to support their business.  And finally, the 4PL gains from a genuine long term partnership with the customers and carriers. So, with a truly collaborative system, everybody wins.