Thursday, November 12, 2015

Carriers vs. 3PLs: Being stabbed in the back?

The, for years now, attempt of carriers to enter the lucrative global forwarding market, in competition with NVOCCs and third party logistics service providers (3PLs) is not succeeding. If one casts a cursory look at the financial results of both players, he will notice that 3PLs are more stable and robust, with consistently higher EBITs. The answer is simple: being asset light, 3PLs adjust easier to demand and thus wither the downturns of the economic cycle. In the opposite, carriers, in their strife for survival, build increasingly larger ships, which they are unable to fill, and then sell, wholesale, capacity to their competitors (3PLs). To me, this looks like giving someone the knife to stab you in the back. Is this a clever strategy? I wonder… HH