Tuesday, August 4, 2009

Why 3PLs need to build their brand

Over the past several years, the global third party logistics (3PL) industry has changed dramatically. While the demand for 3PL services has grown steadily, the major logistics service providers have expanded their geographical reach and broadened their service offerings. At the same time, the structure of the industry has changed not only through mergers and acquisitions, but also through new market entry by many companies, including some funded by private equity investors. 3PL company reorganizations and name changes have become commonplace.

These changes have fostered a degree of buyer confusion in the marketplace, and many large 3PLs fear a possible “commoditization” of their services in the eyes of those who currently buy their services or are considering doing so. If this is indeed occurring, existing and potential customers will become increasingly indifferent when choosing between logistics service providers. And this, in turn, will intensify the price compression pressures that already plague the 3PL industry.

A key question that needs to be asked here is: What are executives of those 3PL companies doing in response to these market developments? Specifically, what steps have large 3PLs taken in recent years to differentiate their service offerings in the marketplace while strengthening their brands? Further, is there more that those executives should be doing in those areas?

This article addresses the typical steps that companies should take in building, refining, and strengthening their brands—and in particular examines recent attempts by major 3PLs to do so. Branding literature forms the basis for discussion of the general case, and the branding steps taken by large 3PLs were documented through data generated during 2006 and 2007 in surveys of the CEOs of major 3PLs operating in three geographic regions: North America, Europe, and the Asia-Pacific region. (For more on the surveys, see accompanying sidebar). We conclude with suggestions for 3PL industry executives concerning their future branding efforts—and the potential positive implications of these efforts on the buyers of these services.

Read the rest of the scmr.com article here.