Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.
Inside this edition: What is everyone upgrading? … 2021 was the MVP year … More acquisitions in Q3
Process improvement is amazing. Being able to work more efficiently and boost your margin is the endgame for everyone. However, what happens when you accidentally improve your processes too much and suddenly you’re back where you started and it’s taking twice as long to get something done? Sure, there are new apps and things to help. But just like you get tired of downloading a million apps for your iphone, working through five windows to book one shipment is too much.
Improvements that matter. It can take you to an awkward place where you want to upgrade and move away from a legacy system that is slow and doesn’t fully integrate with everything on the market but also not go full-bore on a new system that comes with a host of other issues. Tools that can improve two things for the price of one are key to cutting down on tech waste. Constantly audit your processes and workflows to ensure you aren’t paying for services you don’t need or aren’t receiving full value.
What’s the hottest upgrade? Good thing FreightWaves just had a summit to talk about the future of supply chain and the financial technology future. If you missed any of it, catch up here. Main takeaway: Manual processes are out; automation is in. Paper checks will soon be a thing of the past and days to pay are the future.
A time to remember. 2021 was basically the yearlong transportation version of the small-town quarterback making a memorable play to help the team win the state championship. Everyone was having record years, hiring almost anyone and outgrowing space. Turns out every 3PL and freight brokerage was making the game-winning touchdown as Armstrong & Associates Inc. has released its annual 3PL market research study. The U.S. 3PL industry is expected to post $414.1 billion in 2022 gross revenue, a 22% gain from 2021 levels. Net revenue, which backs out transportation expenses, is expected to close in on $140 billion, a near 17% increase.
All about the gains. When there is a 75% gross revenue gain last year to $122.4 billion, you know everyone was performing at the top of their game. That is one of the leading reasons 3PLs were targets in the eyes of investors. 2021 saw 25 mergers-and-acquisitions transactions valued at more than $100 million (three times the amount in 2020). The future of 3PLs will certainly not see a large increase in revenue, but the key lies in contract negotiations. Locking in rates with shippers, sooner rather than later, will help preserve some of the success at the beginning of the year.
TRAC Thursday. This week’s TRAC lane of the week is Denver to Kansas City, Missouri. A casual 604-mile jaunt through Kansas, the seventh flattest state in the country, just feels like it goes on forever with nothing to look forward to. The spot rate is aggressively consistent and a dollar per mile under the national average. Capacity is loosening in Denver, making a truck easier to find as the Outbound Tender Volume Index dropped 16 index points, and the Outbound Tender Rejection Index has fallen to 4.5% in the last few days. An all-in rate of $1,081, including a 10% margin, should get this load covered with minimal issues.
Who’s with whom? Geodis acquired Need It Now Delivers, a provider of final-mile delivery and omnichannel logistics. This acquisition would give Geodis roughly $3.7 billion for yearly revenue. The final-mile game has been referred to as the next big thing in transportation. Those without reliable final-mile solutions will quickly lose their competitive edge. Failure in the final mile is not an option. As more consumers are expecting faster deliveries to keep up with the Amazon effect, 3PLs with a strong final-mile program will be crucial.
Quotable moment from Brian Straight’s FreightWaves article: “The acquisition of Need It Now Delivers is a key step through which we will strengthen and diversify our offerings in the U.S., providing our customers with a global and integrated end-to-end freight network in the United States, from international transport to last-mile delivery,” said Marie-Christine Lombard, CEO of Geodis.
The More You Know
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