DC Velocity - February 2011

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operate and maintain the software. The high price tag may keep some of the smaller family-owned 3PLs from truly competing on technology, he says.

Some of the smaller players have found success through the specialized services route. This might include focusing on a specific product category or providing regional expertise or highly customized solutions. For example, Weber Logistics, which counts a number of Fortune 500 companies among its clients, has also carved out a niche serving small yet growing companies that tend to be overlooked by the mega-3PLs.

THE NEXT GENERATION

Ultimately, however, the future of family-owned 3PLs rests with the next generation—specifically, those in line to take over today’s operations. Speh, who has been consulting for family-owned 3PLs for more than 30 years, says he sees fewer entrepreneurs entering the business. That means as family-owned businesses exit the market, they’re less likely to be replaced.

And as much as heads of family-owned enterprises like to brag about the business’s being in their blood, that’s no guarantee their descendants will prove equally enthusiastic. After all, only 15 percent of family-owned businesses make it to the third generation, says Butler of Weber Logistics.

Butler adds that increasing consolidation in the marketplace, driven by factors like international competition and an infusion of private equity dollars, will likely further diminish the role of family-owned businesses. “I don’t see family businesses as a dying breed, but the increasing consolidation in the industry will mean that you see fewer of them,” he says.

Others remain more optimistic. Ness of ODW Logistics believes that there will always be a place for family-owned businesses in the 3PL industry. “I am an advocate of family business,” he says. “I believe it represents some of the best business stories in our country. I’m regularly encouraging my peers to fight the good fight and stay private, but I recognize that selling the business makes sense for some people. For me, a better path is building a business that sustains the values of the family and flour-ishes for multiple generations.” ;