It’s a ‘walls and wheels’ revolution

The straightforward
warehousing business, very
often tied to a trucking
concern, has evolved in recent
years into a more complex,
holistic business, generally
termed 3rd party logistics
(3PL), according to Martin
Bailey, director of Industrial
Logistics Systems (ILS) and
former academic logistics
specialist.
“Most 3rd party logistics
providers,” he told FTW,
“originated out of a core
trucking industry. 3PLs
quickly realised that the
vagaries of the trucking
industry left their businesses
under threat – after all, it was
really easy for a customer
to move from one trucker to
another, with minimal fuss.”
But these truckers quickly
realised that, if they had “walls
and wheels” – that is they
controlled the warehousing
processes – it was far more
difficult for the client to move
his business.
“With walls,” Bailey
added, “came the interleaved
information technology (IT)
processes, and the better 3PLs
then moved into the related
IT networks to ensure they
could control the business
processes.”
His studies have shown
that, in parallel with the
warehousing IT needs,
many 3PLs also tried to
gain a competitive edge by
introducing tracking and
routing and scheduling
systems.
“They now realised they
were logistics businesses
rather than simple transporters
and storage contractors,”
Bailey said. “However, their
opposition were doing the
same thing, so they needed
to do something else to
differentiate themselves, and
grab the prime contracts.”
This led to many of the
3PLs trying to move into the
intellectual space – perhaps
buy/create some freight
forwarders, some logistics
consultants, a 4PL business,
and the like.
“The idea is that, if you
can analyse the infrastructure
needs better than your
opposition, you can create a
significant advantage,” said
Bailey. “You also want to try
to understand the business
needs before the customer
issues an enquiry, and try to
differentiate yourself by being
‘more intelligent’.”
There are now several 3PLs
who have a complete suite
of expertise, according to
Bailey. “They are truckers and
warehouse experts (often still
the prime sources of income),
systems experts, track & trace
experts, customs experts,
modal experts, and have a
bunch of eager consultants
who can tell clients how to
improve their operations. It
seems like a sure formula for
success – and many of the
3PLs are making good money.”