The research conducted a survey of 50 LSPs in April, and found that respondents see shippers bringing logistics functions in-house as their biggest threat
LONDON: A majority of logistics services providers (LSP) see digitization as the most important facet of their strategy, but not necessarily the biggest threat they face, according to new research from Logistics Trends & Insights.
The analyst conducted a survey of 50 LSPs in April, and found that respondents see shippers bringing logistics functions in-house as their biggest threat, not necessarily automation, blockchain technology or other technology-related trends that are purported to be disintermediaries for LSPs.
“I believe more shippers are going to bring supply chain operations back in-house because supply chains are considered a competitive advantage,” Cathy Roberson, President of Logistics Trends & Insights, said recently. “Forwarders are reinventing themselves by offering more niche services, data analytics and trade consulting.”
Also noteworthy from the survey is that three times the percentage of respondents said they see online freight rate marketplaces as an opportunity as they do a threat. Forwarders and non-vessel-operatin common carriers have long dismissed such transactional systems because they don’t adequately capture all the elements of service typically involved in a shipper-LSP relationship. But more recently, intermediaries have begun to adopt tools to provide online pricing, either to counter the impact of digital forwarders and marketplaces on enterprise customers, or to capture smaller shippers that are more likely to gravitate to marketplaces.
Taking digitization to the next level
Leading forwarders “are going beyond this ‘Expedia’ of services by connecting all services to a single global platform for visibility, collaboration and management of freight, reports and payments,” Roberson said recently.
“But most importantly, leveraging the data and turn it into action whether it’s a new service, optimizing routes for a shipper, forecasting capacity needs and/or rates by route, evaluating carriers and more.”
The research also found respondents most excited about the opportunities available through the e-commerce sector over more traditional cargo verticals like high-tech, retail, healthcare, automotive, or food and beverage. That excitement, however, comes amid a push by e-commerce retailers to expand into logistics services themselves, a sign that the lines between opportunity and threat are often quite blurry.
“I believe forwarders and 3PLs have a lower position in importance in today's environment with the likes of Amazon and Alibaba becoming more like 4PLs in managing such relationships on behalf of their customers,” Roberson said.
Either way, tight margins were cited as the industry’s prevailing pain point by respondents, with 46 percent naming margins as their biggest hurdle (over capacity concerns and an uncertain global trade environment).