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Is your SMB shipping process at risk from 3PL systems mergers?


If you are a small to medium sized business that sells or distributes products, you have most likely heard of Unishippers and Worldwide Express, the 3PL parcel and freight rate re sellers. They both offer discounted shipping rates through their online shipping systems (TMS) and both offer multiple shipping service coverage ranging from parcel all the way up to truckload.

For the years I spent managing distribution and supply chains I probably had the privilege of meeting dozens of representatives from both of these companies. Each one offering me better rates or better services than the other. At times, I utilized their shipping systems to my companies advantage. 

When I learned that Worldwide Express and UniShippers were merging I couldn't help but recall the countless times the reps would question the others system, process or service offering. Most of this was to try to gain my shipping volume, I understand that, but sometimes it even turned personal, one agent despising the other because of the direct rivalry they were in . Now that I am in the 3PL business myself, reselling my rates, I understand how competitive this business is. 

The merger of Unishippers and World Wide Express will create a 3PL dominant rate reseller at over $1B, yes 1 Billion, in freight management, with the vast majority of that coming from SMBs and SMEs. and in the parcel and LTL shipping segment. Small business owners who use their online systems to ship their products should be fine for a while, but these mergers happen for a reason, and sometimes the reason isn't to make things better for the customer.

There is no reason for the new merged company to continue development and to support both TMS systems, one will have to go and all the client base will be merged into one system. There is also no reason to keep replicated offices, sales staff and customer service personnel. Mergers are made to trim the fat, or in business terms provide for better economies of scale.

If you are currently using the Unishippers or Worldwide Express Platform some changes may be coming your way, not just from the system you use but also from the customer service you have been accustomed to. Both of these companies are non-asset based 3PLs whose business model relies on Franchisees, the majority of whom work from their home to sell to you.

There are a number of 3PL rate resellers in the parcel, LTL and TL segment that will step in where the new merged company has left businesses feeling disenfranchised. Although these 2 companies are at the top of the complete online TMS offering competing against each other, soon they will be one, which means less competition at the top of this segment.

I was involved in the early development of a TMS system back in the early 90s that ported to a few of the well known ERPs (Oracle, SAP) That system was designed more for large corporate enterprises, because back then, they were the only companies who could afford this type of technology development. Today however, access to advanced rating, routing and tracking software is offered to even the smallest of companies through these online systems. 

There are many Transportation Management System offerings out there available today, although some are limited in service offering. Most will offer LTL services, rate shop, book, track but then don't offer the small business owner the parcel shipping service (Carrierrate) or vice versa the system offers you parcel shipping (Shipgooder) but not truckload and LTL management.

So when two large companies in one space, here its the 3PL Non-Asset based TMS providers, merge what can SMBs and SMEs do to prepare for this change?

Now may be a good time to run an RFP of your shipping data with another 3rd party provider. This is always a good exercise anyway for small businesses to analyze cost and service. If you are happy with your system and customer agent ask them what they know about the changes coming from the merger so you can be prepared.

A large merger like this, in this space, is not uncommon, in fact M&A among similar logistics companies has been on the upswing for the last decade, but make sure the moves that are being made benefit you as a small business. Make a plan to help you make a smooth transition whether that's staying with the system changes currently happening or changing to a new system and process altogether.

Steven Tittle is owner and partner in Gateway Optimum Transportation a Federally licensed Motor Carrier and Gateway Crate and Freight an Asset Light 3PL located in Tempe, Arizona offering Freight Management and Logistics services to its clients. For more information visit www.gatewayot.com or www.gatewaycrateandfreight.com

     




        











     

Comments

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