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January 6 2020

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Januar y 6 2020 | The Journal of Commerce 111 www.joc.com ANNUAL REVIEW & OUTLOOK 2020 Logistics announcing it would become a third- party systems integrator for custom- ers already using systems they don't want to relinquish. Redwood is pre- dominantly a domestic 3PL and broker, but the technology approach of being agnostic to existing systems — whether from a software provider or another 3PL — could be a roadmap for how global 3PLs turn the technol- ogy threat into an opportunity. Minneapolis-based Navegate, a mid-sized forwarder, has taken a similar approach. "Our software is agnostic to our freight forwarding division," Navegate CEO Nathan Dey told The Journal of Commerce. "Our whole tech stack is based on middle- ware. We aggregate data from anyone who touches the shipment. For us, the most important thing is to own the relationship with the importer." If 3PLs aren't going to be crowded out by technology, then 3PLs should start to embrace technology's ability to enhance their existing positions in the industry, a way to increase stickiness and amplify their already established customer relationships, not replace them. JOC email: eric.johnson@ihsmarkit.com twitter: @LogTechEric rise over time, signaling that shippers often want to involve a service pro- vider outside of the direct capacity provider upon which they rely. It's instructive, however, to think about size and vulnerability among global 3PLs as it relates to technology and service stickiness. As Amazon grows its logistics pres- ence, and as container lines seek to become end-to-end service providers themselves, shippers may seek to deepen ties to 3PLs with a strong track record and a focus on customer service. In that light, small and mid- sized 3PLs would be less threatening than a retailer with bold logistics ambitions, or controllers of ocean capacity seeking to control more aspects of a BCO's shipment. Technology needs to be the great leveler. The single-provider approach is enticing on paper, but it can create vulnerabilities and dependencies that BCOs are generally keen to avoid. On the other hand, BCOs don't want to manage information across a dozen websites from various small and mid-sized 3PLs to coordi- nate their shipments. One interesting approach to emerge in mid-November was Chicago-based Redwood Logistics' THE MOST NOTEWORTHY develop- ment in the domestic transporta- tion management system (TMS) market in 2019 was the way digitally enabled freight brokers keyed in on direct integrations with TMS provid- ers as a way to build the demand side of their businesses. Virtually every notable new player in the brokerage space tied up such an integration with at least one major TMS provider. That includes Uber Freight striking up TMS inte- gration partnerships with SAP and MercuryGate, Loadsmart integrat- ing with Oracle's TMS, and Convoy with BluJay Solutions' TMS. Those developments speak to the continued power that estab- lished TMS brands have in drawing shippers into their networks, and also how critical incorporating an in-built base of shipper demand is for newer freight brokers. Many of the newer entrants into the domestic brokerage space ini- tially sought to reshape the industry through the idea that shippers and carriers would gravitate to a single platform (often referred to as digital freight marketplaces). That visions was gradually adapted to the ground realities of the market, on both the supply and demand sides. Budding partnerships Digital freight brokers team up with established TMS firms By Eric Johnson Shippers prefer new sources of capacity exist alongside their contract carriers and existing broker relationships.

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