Article appearing in The Enterprise April 23-29.
Written by Andrew Haley, The Enterprise
England Logistics, a wholly owned subsidiary of C.R. England Global Transportation, is reaping the benefits of a new business model called third party logistics (3PL). Joe Stevens, director of National Sales at England Logistics, called 3PL "a non-asset based approach" to trucking and freight shipping. While Stevens said he disliked using the term "broker" because "anyone can hang up a shingle and call himself a broker," England Logistics is essentially a brokerage firm that custom-crafts transportation solutions for its customers.
Founded in 1997, England Logistics has grown into a top 50 3PL company that is now the 10th largest freight brokerage in the country. With office in China, possession there of the exclusive Wholly Owned Foreign Entity status and what Stevens called a "very robust" container and transoceanic shipping division, England Logistics is poised to expand into a global freight company. That spectacular growth is made possible by the strange nature of 3PL, an industry that provides much greater flexibility than a traditional "asset-based" transportation company principally because it is not encumbered by the trucks, drivers, warehouses, timetables, contracts and traditional clients that are the flesh and bone of businesses like parent company C.R. England.
"Logistics, for lack of a better word, is a facilitator. England Logistics is a facilitator from soup to nuts," Stevens said.
While 3PL has been around over a decade, the industry has taken off in the last three to five years because of problems with asset-based transportation companies, Stevens said.
"Given the economic volatility of the last several years, it's really come to the forefront," he said.
3PL had arisen as a market solution to supply unsatisfied customer demand. Additionally, the rise in 3PL mirrors recent changes in the military that have followed advances in communications and computing technology, and which enable large, complex digital networks to radically shrink communications time while significantly expanding the complexity and leveragability of available data. The theorists of so-called network-centric warfare contend that complex digital networks, linked by computers, allow for the translation of an informational advantage into an operational advantage, which is easily translatable into the business world by substituting operational advantage for market competiveness.
To illustrate the benefit of 3PL solutions to a potential consumer, Stevens gave the example of a hypothetical shipping scenario where a long-time client of a transportation company had a sudden increase in productivity, either as a result of ramped up production or because it released a new product. If this hypothetical client approached his or her long-time transportation provider and requested 100 additional trucks worth of volume for the coming month, in the majority of cases that asset-based provider would be unable to meet the demand because of prohibitive capitalization costs for a temporary volume surge. The very nature of asset-based transportation requires traditional shipping companies to maintain a minimum of unproductive capital, meaning they simply do not have the flexibility to meet temporary or sudden changes in clients' shipping needs.
A company like England Logistics, on the other hand, has a network of 14,000 carriers to draw from, and the ability to do so on a temporary basis, Stevens said. Odds are one of those 14,000 carriers can meet the need of the hypothetical client with an unexpected demand for 100 trucks. As a "soup to nuts facilitator," England Logistics would handle the entire transaction, from ascertaining the client's exact needs to finding and customizing the right solution for them.
"Don't tell me what you need. Tell me what you want," Stevens said.
In a sense, 3PL is the cloud computing of shipping and transport. Its rise parallels similar trends in computer collocation that, like 3PL, provide the benefits of intensive capital as a fee-based service rather than an investment. To a degree, these modern approaches to business, made possible by computing, allow for something like the crowd sourcing of capital acquisition, granting a customer the production capacity of a heavily capitalized company with none of the inherent inflexibility of an organization built on large building and heavy machines.
"Me and my staff go into an operation and kind of fit and mold and customize a transportation solution for them. We're very flexible. I have multiple resources to pull from, whereas an asset-based [company] may be fixed. I've got a multitude of avenues to pull from. Multiple avenues and multiple price points," Stevens said.
By tapping into carriers with available, provisional capacity, England Logistics is able to provide shipping at lower costs, much as online airfare providers do. Its flexibility allows England Logistics a nuanced range of operations. The company has six divisions handling anything from parcel delivery to the 2010 transportation of a 400-ton electric transformer from China to New Hampshire via container ship, intermodal railroad, Schnabel car - a specialized type of railroad freight car - and Goldhofer trailer, a specialized heavy-haul trailer.
The company's six divisions are Truckload, its largest division; Less Than Truckload, which handles parcel [as well as refrigerated ltl and dry ltl] shipping]; Global Logistics, an international freight forwarding operation; Intermodal Transportation, which handles rail; Supply Chain Management, which helps lower costs and improve systems efficiency; and England Carrier Services, which works with C.R. England to provide carrier services. The company's Special Projects Engineering team handled the 400-ton transformer job, devising complex solutions for a unique problem. The different divisions allow England Logistics to reach as wide a market share as possible.