Logistics List links to this story from BlogOnLog regarding “niche logistics providers” and the important role they play in today’s logistics industry.

I am in strong agreement with this thinking as I have worked for both extremely large 3PLs and extremely small “niche” 3PLs in the past. I have seen the advantages for customers in working with both kinds of players.

Companies need to look carefully at their own logistics needs and analyze carefully the pros and cons of working with a particular 3PL. Sometimes bigger is better, but far too often companies take this easy route thinking that just by working with a large established company that they will be well taken care of. Sometimes bigger is not always better, a business lesson that has been repeated over and over again, no matter what your industry or business.

Before I worked for a very small 3PL I had spent time at 2 other very large corporations who consistently ranked in top 3PL lists year after year. When I made the jump to the smaller 3PL, which was just a step beyond startup stage at that point, I remember questioning myself and asking how could such a small company ever compete with the big boys? We did not have a global network of our own offices, did not command huge volumes (which meant we had little pull or clout with the carriers), did not have advanced IT systems in place, etc etc. The list goes on and on. But we also did not have multiple levels of bureaucracy or organizations. We had little overhead and simplistic operating and customer service procedures. The lowest person in the company was never more than 2 layers of management below the CEO and President. Most of our agents were extremely strong local agents who specialized in their particular market and had incredible depth and understanding of the local market and customs.

We consistently took business away from incredibly larger companies such as Kuehne & Nagel, Panalpina, and Expeditors. We always managed to find a way to offer the same level of rates or lower (although I will admit we had to get very creative) but at a much higher level of personalized service. All the customers we snagged away from the big boys were customers who were looking for the best price with a highly personal level of service. Sometimes it took a long time and a lot of convincing before a customer would jump ship, but I can honestly say that the ones that did never looked back and would usually comment that they wished they had made the switch sooner. These were large companies, many of them publicly traded. They just happened to be looking for a personalized service that the bigger companies couldn’t offer.

That’s not to say smaller companies are always better – they’re not. You need to look at your individual needs and requirements and decide if smaller is better for you. There were many companies we tried to sell to who were perfectly happy with their current providers – their business or product simply did not require a high level of personalized service and therefore it made perfect sense to work with a large, well established 3PL.

I didn’t want to make this post too long, so I have split it up into two posts. In the next post I will discuss the advantages of using a niche 3PL and how they differentiate themselves as well as why some companies may want to look at using a number of different smaller 3PLs as opposed to a large one-size-fits-all provider.

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