I interviewed Dean McNeely who discussed The Advantages that 3PLs Offer Both Shippers and Carriers.
Can you first provide a brief background of yourself?
Sure, and I appreciate the opportunity to share some of my thoughts in regard to the domestic service-rate supply chain community out there. My name is Dean McNeely. I’ve been in freight logistics—specifically LTL and truckload—for several years. I focus on the LTL and the full truckload.
Interestingly, I got my start in this a little different way, backing into it. I was a large customer of these carriers. I was an importer of Chinese ATVs, dirt bikes, and scooters for many years and did lots of volume with the truckload and LTL providers. I always wanted to get involved with this and thought there was a better way, specifically on the 3PL side, what we oftentimes call a single-source-solution platform. That’s a little high-level background of how I got into that in the areas of focus today.
What are the advantages that 3PLs offer?
Well, there are certainly lots of advantages. You could ask: What the benefits of a 3PL are? And for those who are new to the industry, a 3PL—third-party logistics company—as a general rule, that’s a nonasset-based company, as we are. We don’t own a truck, and we don’t own a driver. Another way—and we’ve coined this phrase—is, I am a single-source-solution platform, meaning I consolidate all the partner carriers into one location.
Back to specifically your question, what the advantages are, one thing could be: you’re going to make call, speaking to the customer. You’re going to make one call instead of multiple calls. You would make one call to a 3PL who has access to all the truckload brokers, all the LTL carriers instead of, say, ABC customer going carrier-direct, where they’re making multiple calls to multiple carriers.
There’s an enormous cost savings to that in terms of time. I also firmly believe that when a customer is going carrier-direct to many different carriers, he or she is just watering down their true spend.
Are there any challenges you have to overcome as a 3PL?
That’s another good question. Some people will say, there are all kinds of overcoming objections; it doesn’t matter if you’re a carrier or director of 3PL. one I often hear is: I don’t want to give up control. That’s one I get more often than not. You’re not giving up control; you’re basically using our tariffs, using our millions of dollars in customer spend, and we’re providing you the tariffs and the choice.
A lot of people think of 3PL as you’re going to use this carrier, and I’m going to save you this amount. No, no, no. You go in and you understand the customer, understand their needs, understand the supply chain, and, based on the customers’ needs, we basically hold hands, go to the table together, and interview these carriers to see what carrier best suits their needs. You’re actually gaining control by using 3PL when a lot of people think you’re losing control.
Where do you see the future headed for the 3PL business?
I’ve got to tell you, it’s… It was interesting. There was an old R+L rep who was in Houston—he’s since gone on to be with the Lord—and he told me years ago when he used to call on me when I was an import company, he said, “Dean, pretty soon the three-PLs are going to own it. Guys like me are going to be out of business.” The three-PL market share has increased exponentially year after year after year, and it’s taken away from these carrier-direct relationships and you see it.
Even now there’s lots of pricing pressure in the market. Freight’s falling off the backs of these trucks. Some of these guys in upper-level management, these carriers I’ve talked to, they say, “You know, Dean, we haven’t made money in years. We’re going to make money now.” They say that when I say, “Are you going to recapitalize your equipment? Are you going to buy more trucks?” And they’re just not. There’s basically pricing pressure throughout the entire industry, and that’s what you’re seeing.
To that point again, the 3PL is here to stay. One caveat to that, there are lots and lots of 3PLs. I think the truckload-brokerage folks out there, there are thousands of them, but a true 3PL, a true partner, there aren’t a whole lot of us out there. I think the cream does rise to the top. You could probably go out there and say you’re a 3PL and get some blanket pricing with a few regional carriers, but it’s just impossible to go out there and engage some of these national carriers and to truly get a platform of blanket pricing spread throughout the nation. The barriers to entry are a little difficult right now, but in terms of your question about where the industry is headed—I know I’ve been a little wordy here—it’s just shooting to the moon and will continue to over the next several years.
Do you have any recommendations for shippers and carriers when looking at 3PLs?
Yes. I’ll keep it to 60 to 90 seconds here. You can manage all your freight expenses under one umbrella. There’s kind of automated sorting and filtering things, so you’re comparing individual tariffs in one platform. There are KPIs, key performance indicators. We really like dealing with a top-down approach, and CFOs truly understand this type of thing. There are quarterly reviews that 3PLs offer.
I like to boil it down—at least me personally and my team here in Houston—we answer the phone on the second or third ring. Days of 1-800 hold are over. There’s that customer service standpoint. When I go in to customers, the last thing I talk about is price. There’s the soft-cost savings; there’s the supply chain; there’s understanding their needs. Price is just one component to the overall picture.
Thank you, Dean, for sharing today on this topic of the advantages that 3PLs offer shippers and carriers.
It’s been a pleasure talking to you, and have a good evening.
For more information or how Dean McNeely can help companies like yours please contact email him below.
About Dean McNeely
President BlueGrace Logistics Houston II CEO and Founder LTL Freight Center LLC - LTL & Full Truckload Shipping Expert