DC Velocity - January 2015

52 DC VELOCITY JANUARY 2015 www.dcvelocity.com str at e g ic i ns i gh t

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gy. Here are just a few examples of this type of expansion from the first half of 2014, in the form of headlines from press releases:

b Transplace and Celtic Expand Intermodal Services in
Mexico
b XPO Logistics Completes Acquisition of Pacer
International
b Menlo Launches Freight Brokerage Service in Europe
b Coyote Logistics and Access America Transport to
Merge
b UPS Continues Global Healthcare
Expansion with Purchase of UK
Healthcare Logistics Innovator
The trend toward the convergence
of logistics services, coupled with
the trend toward geographic and
vertical industry expansion, will cer-
tainly continue in the months and
years ahead as 3PLs fend off the risk
of commoditization by position-
ing themselves as one-stop-shops
or end-to-end solution providers.

(Exhibit 1 shows the growth pattern for some of the major 3PL service segments.)

But there’s another convergence taking place in the market, one that’s driven by the changing needs and expectations of customers. This second convergence is transforming the very definition and value proposition of 3PLs. What we are seeing is the convergence of business models, specifically the business models of service providers, technology companies, and consulting firms.

There already are examples of logistics service providers offering their own software-as-a-service applications (C.H.

Robinson and Transplace, to name two), and some consult-
ing firms and software vendors are providing managed ser-
vices (enVista, Transportation Insight, and LeanLogistics,
for example). But that was just the beginning. In recent
months, Amazon has embedded itself in Procter & Gamble
(P&G) warehouses to fulfill online orders. Google has
invested in its own fleet of vehicles to provide delivery ser-
vices to consumers. And Uber has launched UberRUSH, a
local delivery service that lets consumers use a mobile app
to arrange for foot or bicycle messengers to pick up and
deliver items weighing 30 pounds or less.

Simply put, the traditional definition of a third-party logistics provider is stale and limiting. It’s becoming more outmoded every day as innovations in technology and business models continue to transform the competitive landscape. Logistics service providers that focus solely on the convergence of services and ignore the convergence of business models will, at best, limit their growth potential, and at worst, cease to exist.

WHAT BUSINESS ARE YOU IN?
What business are you in? That’s a
question every 3PL needs to ask itself today. As Anthony
J. Tjan, chief executive officer and founder of the ven-
ture capital firm Cue Ball, wrote in a Harvard Business
Review blog post titled “The First Strategic Question Every
Business Must Ask,” “It seems like a straightforward ques-
tion, and one that should take no time to answer. But the
truth is that most company leaders are too narrow in defin-
ing their competitive landscape or market space. They fail
to see the potential for ‘non-traditional’ competitors, and
therefore often misperceive their basic business definition
and future market space.”