Adapting to Change: How 3PL Companies Can Thrive in Uncertain Times

The logistics industry currently faces strenuous dynamics, including inventory surpluses, lower freight volumes and volatile fuel pricing, all underpinned by shifts in consumer spending. To navigate these challenges, third-party logistics (3PL) providers need to build effective strategies that can guide the way. 

Adapting to Market Changes

As carriers do their best to weather the storm of the freight downturn, 3PL companies can adapt their business strategies to the changing market dynamics. For instance, they can adjust transportation routes in response to import patterns, integrating shipping efficiencies where possible. They can also revisit their custom portfolios and optimize as needed. For example, some 3PLs are reducing rates temporarily to attract more customers in the near-term, while others are leaning in to long-term contract agreements. Some experts also suggest that now is a good time to invest in their future with internal solutions, like technology, which can improve operational efficiencies and boost visibility. 

Improving Communication At Every Turn

At the heart of all these strategies is effective employee communication. By continuously updating customers about market changes and adjusting to meet their needs, 3PLs can not only maintain their current customer base but, in some cases, they can even boost sales by improving customer relationships. And it’s important to recognize that this does not only apply to customers and carriers. Transparency and timely updates can go a long way in managing expectations and building trust within the organization as well. 

In an exchange with Transportation Today News this past spring, WorkHound CEO Max Farrell explained how communication between employers and workers has become such a critical piece of operations. 

“Three years into a supply chain upended by COVID, driver feedback about logistics has really honed in on communication challenges,” he explained. “Drivers want reassurance that their company has their best interests in mind and that they’ve planned ahead to ensure drivers have what they need.”

When we think of employee communications and strategy, we tend to think of outbound messaging from the company to its customers and workers. But real communication — effective communication — features two-way dialogue. What will your workers say if given the chance to provide feedback? In our Annual Driver Trends Report, more than 58% of comments about logistics were negative. Drivers‘ concerns ranged from downtime and slow freight to disrespectful interactions and ineffective communication. These issues often lead to frustration and high turnover rates among drivers, and they shine a spotlight on where communications break down within organizations and how the breakdowns impact the frontline workforce. 

Drivers want to do their jobs in the most efficient way possible. So, when there is confusing or conflicting information, it’s a huge disruption.

“A lack of information or clarity around things like addresses or directions, wait times, policies, and procedures can lead to frustration — and turnover,” says Farrell. 

Our Trends Report data also shows that, while 59 percent of driver feedback surrounding pay was negative, the majority of concerns were not about rates — a clear sign of a broken communication loop. Max explains again:

“Drivers are expressing frustrations with pay systems, wasted time, lack of work, and the communication around pay. If a driver is uncertain how and when they will get paid, frustration will mount and retention will suffer.” 

As the logistics landscape continues to shift due to macroeconomic factors and changes in consumer behavior, 3PL providers should position themselves to adapt and innovate. Effective communication strategies, both externally with customers and internally among employees, are central to this improvement. By fostering transparency, timely updates, and two-way dialogue, 3PL companies can better manage expectations, which will help them build trust and improve relationships with their customers and their workforce. 

Ultimately, these practices not only help 3PLs navigate the current challenges but also position them for future success in a dynamic world. Those who listen, adapt, and communicate effectively will be best equipped to thrive in the evolving business landscape.