Exclusive interview with Evan Armstrong on state of 3PL marketplace: Part III

San Francisco— As noted in a recent LM website post,  Armstrong & Associates has announced the release of its latest report, “Increasingly Strategic: Trends in 3PL/Customer Relationships.”

This news comes in advance of our annual magazine feature in June on “Top 50 Global & Domestic 3PLs.” 

In this exclusive three-part interview, Evan Armstrong, president of the consultancy, explains the current volatile and uncertain business environment, an increasing number of logistics providers are being forced to take dramatic action to generate positive impact rapidly.

Part I

Part II

Logistics Management (LM): Should we expect to see more AI, Robotics, and Block Chain?

Evan Armstrong: Yes, yes and yes for A.I. and Robotics. Block Chain is still a problem child with very little industry adaptation. A.I. is being deployed across the 3PL segments but has had the largest impact on DTM where it is truly disrupting traditional freight brokerage models. Autonomous robots by manufacturers as Fetch and Locus are supporting warehouse workers in picking and putaway. It seems like they are dropping in price every day and have a short, less than one-year ROIs. Deploying new technologies such as these to improve operations for customers is key to any 3PL’s growth strategy. 

LM: How about the M&A landscape? Any big deals on the horizon?

Armstrong: M&A activity has slowed to a virtual halt with the pandemic, but we are starting to see a nice window for primarily strategic-driven buy-side acquisition activity for those 3PLs who have strong balance sheets and realize the potential risk/return benefits. There is a lot of money on the sidelines and valuations have been declining since 2018. It is very hard to crack the Top 50 global 3PL list without making acquisitions, so they need to be part of every major 3PL’s strategy. 

LM: What about human resources? Are 3PLs finding the skilled workforce they need for growth?

Armstrong: There is still strong demand for experienced executive management, salespeople, and managers at 3PLs. But layoffs at lower levels in DTM due to the pandemic have loosened up some of the freight broker and customer service positions for now. In ITM, VAWD and DCC warehouse workers and truck drivers are still in demand. 

LM: Which particular 3PLs are heavily reliant on Cold Chain? Will this continue to be a vibrant sector?

Armstrong: Cold chain service demand tends to be less cyclical because much of it is tied to basic consumer staples and to a lesser extent healthcare. Providers in this area are weathering the storm well and should have an okay year. 

LM: When will the barriers-to-entry finally come down to permit new players to enter the “Top 50” marketplace?

Armstrong: To break into the Top 50 requires a well thought out strategy to drive organic business growth as well as inorganic growth through M&A. It is important to know your strengths in terms of value proposition, service offering, customer satisfaction, vertical industry expertise, and execute an operational model that builds upon your strengths and fills gaps to overcome weaknesses. Organizational alignment to focus on customer needs and optimizing service performance is critical to grow organically. If you are a customer of a 3PL and it isn’t consistently communicating its value to you in terms of performance or cost savings, then it may be time to look for other options. As they say, every 3PL’s best customer is another 3PL’s best prospect.