The document discusses the challenges facing CEOs of third-party logistics (3PL) companies. Technological disruption and changes in the business landscape are causing uncertainty. 3PL businesses are at a crossroads - they must change to adapt or risk becoming stagnant. CEOs are losing sleep over issues like losing business, rising costs, and the potential redundancy of their business models. To succeed, 3PLs must elevate their role to strategic partners rather than just service providers and address challenges like a lack of skills and talent. They need to customize solutions, partner with customers, and ride waves of industry disruption.

1. WHAT KEEPS A
3PL CEO AWAKE
AT NIGHT
WHAT KEEPS 3PL
CEOS AND LEADERS
AWAKE AT NIGHT?

2. 2
The business landscape is altering at a pace
that’s simply unprecedented in history. The
reasons for these unmatched upheavals are
many. Change is in the air like never before
and is sweeping unsuspecting businesses,
aided by weak economies across the globe and
a flatter world, which has magnanimously
added to the already fierce competition
pervading every business arena. Technology
has given up its “enabler” avatar and is keen on
playing the “disruptive” role across business
verticals, which is adding to the self-inflicted
chaos for many un(der)prepared businesses.

3. 3
The Impact of Technological
Disruption on the 3PL Sector
With every other player stretching to grab a bigger
piece of the pie, CEOs are finding it challenging to
seek ways of keeping their respective ships afloat
and navigating them towards the islands of
profitability. CEOs of third-party logistics (3PL)
companies in Asia—in particular—have been at an
even bitter receiving end of the “change juggernaut.”
They literally can be said to be currently occupying
the “hot seat” in their companies, which is not only
getting hotter with every passing day, but is also
shaking and swinging at a pace and amplitude that
demands—to stabilize and calm them—a much
newer and innovative approach of running 3PL
businesses from the current and future incumbents.
For 3PL CEOs, the tremors have been induced by
multiple reasons that require a complete shift in
approach, focus, and strategy.
To the persistent optimist amongst us who might
shrug off these as highly exaggerated claims and
think that this phase is yet to touch the Asian 3PL
shores, this might help: nothing can be further from
the imminent truth! 3PL businesses are at the
crossroads where they can either change to remain
relevant, or remain adamant and continue to move
towards stagnancy! On a micro level, there are a
number of factors responsible behind the ailing 3PL
sector and what CEOs can do to get hold of the
compass that’ll help them steer their ships toward
safer shores.
Let’s study the pointers one-by- one.
Macro deliberation on why these CEOs are losing
their sleep yields multiple interconnected factors:
the fear of losing business, fear of losing out to
newer and innovation-driven competition (which
seems to have gathered momentum in these
turbulent times), the anxiety of managing costs and
expenses due to dwindling profits, and the father of
them all – shutting shop in the face of adversity due
to redundancy of the business model.
3PL businesses are at the crossroads
where they can either change to remain
relevant, or remain adamant and
continue to move towards stagnancy!

4. 4
Revenue Retention
3PL players are under tremendous pressure from
clients to deliver more in less. While logistics is an
essential component of the supply chain, it is not
always seen to be adding value to a product. As a
matter of fact, according to the 2016 Third-Party
Logistics Study, four out of 10 business contracts in
the 3PL space are for the tactical needs of shippers,
and such contracts tend to be transactional in nature.
Also, with client CEOs mandating CFOs to cut costs
and rein in expenses, CFOs are trying to wriggle out
the most from logistics players in terms of cost, risk,
and quality, which further adds to the woes of a 3PL.
To successfully steer clear of these frugality
waves and emerge out unscathed, 3PLs must
find ways to add value to their customers so that
they get inclined to loosen their purse strings.
3PLs must elevate themselves to the role of
strategic partners, and not just remain labeled
as commoditized service providers.
3PLs must elevate themselves to
the role of strategic partners,
and not just remain labelled as
commoditized service providers.

5. 5
Strategic Collaborations
with Customers
As a good sign, many 3PLs are investing to improve
customer relationship management and support and to
tighten the integration of work processes and tools, but
such initiatives are mere reactionary measures in more
cases than less. They need to focus on more areas rather
than just trying to retain contracts from current customers
through the aforementioned tactics. This is because
there’s tremendous room for more, and a seasoned 3PL
seafarer must locate and grab it.
As a start, 3PL CEOs must go the extra mile and align their
outlook with their customers’ aspirations. They must hook
opportunities by trying to fathom their customers’ pain
points and providing value-adds that swiftly alleviate their
pain. They need to better understand their customers’
businesses to provide suitable solutions that work best and
help in defeating the win-lose and creating the win-win.
This is easier said than done, though. On this path, 3PL
CEOs will be up against archaic technology, processes,
systems, and workforce. They will have to brace
themselves against all these by investing in newer
technologies and a fresher workforce that will have the
right skill sets.

6. 6
In recent years, among industries facing a paradigm
shift in the way they operate, logistics has been one
of the most impacted businesses, the world over.
Technology found 3PL businesses virgin territory for
disruption and unleashed a reign of change on
them. 3PL CEOs will do good to take a closer look at
the following that are playing a crucial role in
changing the very face of their industry:
Start-ups are frighteningly agile and customize
their solutions to satiate the demands of the
changing industry. Start-ups like GoGoVan and
Carpal, for example, offer logistics services on a
smaller scale that suits the purposes of
customers just fine. Customers find such newer
players equally reliable as bigger 3PL players.
On the contrary, asset-heavy 3PL players find it
difficult to adapt and get investors in time to make it
a viable effort to change tracks. Clients always race
against time and are inclined to award contracts to
players offering a quick-fix solution to their
problems. In such a scenario, the best a 3PL CEO
can do is to keep a hawk’s eye on market trends and
metamorphose their solutions to get the first-mover
advantage. Also, they need to play to their strengths
and utilize economies of scale to compete in terms
of cost and reach.
Customized Solutions
Ride on the Wave of
Industry Disruption

7. 7
eCommerce players like AliExpress and Delhivery
offer unified delivery services, which is a huge
change to which traditional 3PL players will have to
adapt to, to remain relevant in the industry. This will
be a monumental task for them but the
opportunities that the Indian eCommerce scene
presents are too lucrative to overlook. ASSOCHAM
India estimated consumer spend during the 2016
festive season to the tune of INR 25,000 crore, a
promising number by any standard.
It will not be out of place to mention the famous
graphic that depicted how over 50 companies are
disrupting the time-tested FedEx model. 3PL
CEOs need to accept that they are now in
competition with asset-light, technology-driven
platforms that are actively courting their core
customers.
The fact that 4PL has had an impact on 3PLs is
not new. Still, these popular platforms have gone
beyond providing management services. For
instance, FlexPort offers tips on selecting a 3PL
provider, and can even liaise on a customer’s
behalf. Thus, it is important for 3PL CEOs to
network and form relationships with 4PL
platforms to leverage their strengths.
Disruptive eCommerce and
Technology wave
Platforms coming to power

8. 8
Another nagging problem that 3PL players face is
the scarcity of the right talent with the requisite
technical know-how and expertise. These
professionals can help companies transform and
hence are in great demand. Governments, on the
other hand, are encouraging innovation-based
disruption to enable the end customer to pick
and choose from the best available provider. In
this backdrop, traditional players must reinvent
themselves to stay competitive.
It is undoubtedly clear that the weather will be
rough for 3PL players in the days to come. But, by
staying close to the needs of the market and
putting in place transformative strategies, 3PL
business leaders can ensure their continued
relevance to the new generation of customers.
Challenges there will be many, but bold steps and
apt radical decisions will surely navigate them to
greener pasture.
Serious lack of know-how

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