Net Start-Ups Muscle Into Logistics Market

Traditional third-party logistics providers seem unfazed by the proliferation of their online counterparts. But some observers wonder whether the tech-savvy newcomers may one day reduce the role of the conventional logisticians to little more than package-pushers.

The presence of ventures that match freight with trucks over the Internet, say their officers, will reduce costs for shippers and improve efficiency for carriers, and thus change the way freight is tendered. Dot.com companies such as LeanLogistics, Logistics.com, Carrier Point and others are aiming to become a less costly alternative to the systems that 3PLs – third-party logistics companies – use to manage shippers’ supply chains.

In the online exchange concept, motor carriers are to benefit because they will claim backhauls from the exchanges, filling otherwise empty miles. To ease the way for carriers that want to use exchanges, software firms such as McLeod Software, Innovative Computing and TMW Systems are programming transportation management software to incorporate loads generated by exchanges.

But 3PLs argue that these Internet companies are able to fulfill only one element of the supply chain – load-matching – whereas the customer wants more. Shippers have come to rely on third-party managers to assume all the hassles of distributing their products, from inventory management and warehousing to the act of transportation itself. Using software supplied by companies such as Manugistics and i2 Technologies, 3PLs tailor automated systems to fit each of their customer’s supply chain needs.

For the full story, see the June 12 print edition of Transport Topics. Subscribe today.