The Complicated Era of LogTech Partnerships
Welcome to the 96th edition of The LogTech Letter. TLL is a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I explored how logistics’ last leg role in supply chains has not been ideal with ocean freight taking a greater proportion of total landed cost. This week, I’m explaining why this era of partnerships in LogTech is good for buyers but complicated for vendors.
As a reminder, this is the place to turn on Fridays for quick reflection on a dynamic, software category, or specific company that’s on my mind. You’ll also find a collection of links to stories, videos and podcasts from me, my colleagues at the Journal of Commerce, and other analysis I find interesting.
For those that don’t know me, I’m Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com. I can be reached at eric.johnson@spglobal.com or on Twitter at @LogTechEric.
Not to get too political this week, but to me, the defining moment of the Trump era was “I alone can fix this”, before he even took office. Interesting to juxtapose that with “It takes a village.”
In the world of logistics, Trump is hardly alone in having a bit of ego around what can and can’t be solved by one person or entity. Every 3PL wants to be seen as an end-to-end provider, and every technology vendor wants to be seen as the single suite that does everything. For some, that’s the aspirational state, while for others, that’s the image they’re portraying today.
But let’s be honest. Behind every great services or solution provider is an array of partners. 3PLs need agent partners in different regions, they need data partners, software partners, maybe customs partners, implementation partners, integration partners, etc. But the rise of technology vendor partnerships is what’s even more noticeable. It’s hard to find a core technology provider that isn’t sitting on top of a structure of named and unnamed partners. Some of those partners, the software vendor is proud to advertise (and can be found in the vendor’s “Partners” section). Others are considered more “under the hood,” whether it’s because the name of the partner doesn’t bring its own inherent brand recognition, or because a reliance on a certain partner could be seen as the core partner outsourcing something it should have built itself.
Big picture, I’m not sure it matters much anymore to buyers in the market. A forwarder or shipper absolutely overrun by day-to-day operations and inundated with different solutions to consider is probably not going to fixate on the nature of its core provider’s partnership network. Those buyers only have so much time in the day to engage in corporate pop psychology. More important is whether the core vendor can answer questions like “do you offer this feature” or “can you give me access to this data point” or “can you connect me to this source of capacity.” If the answers can be “yes” by integrating with a partner, then what does it matter if the core provider builds that internally or not?
Well, the reason that does matter is margin. If the core provider can indeed build the the capability it gets from a partner and sell it at an acceptable margin, it should. But most of the things companies do are hard to build better than the partner would itself. It’s the same thought exercise that the software vendor brings to prospective forwarder or shipper buyers: why do this yourself when we can do it better, faster, and cheaper for you, and constantly maintain it? Core software vendors are turning to niche providers and applying that same logic to their own businesses.
Does this “partnership era” have a natural end point? Maybe, maybe not. If we have truly entered the platform era of global logistics, the number of end points those core platforms need to touch is theoretically limitless (data points, new supply side segments, new ancillary product areas, automation and efficiency accelerators). But there’s a human element to this as well, and I’m not talking about the operators of the systems. I’m talking about how, as companies grow and seek to themselves take more share of their customers’ technology spend, the lines between partner and competitor can blur. It means that vendors need to be completely open-minded about the opportunities that partnerships generate, while also being eyes-wide-open about the dangers of getting too close to partners that might want to eventually eat their lunch.
As companies scrutinize their cost structures these days, I expect partnerships to be eyeballed more closely. On the one hand, partnerships present a chance to enhance products with minimal internal costs. On the other hand, they require vendors to build event more defensible moats around what they actually do build.
No one alone fix this (sorry Donny!). It does take a village. But this ain’t child-rearing and not everyone in every village has the same end goal.
TPMTech Registration is Live!
Last week, we launched registration for the second annual TPMTech, Feb. 23-24 in Long Beach, Calif. We were blown away by the attendance and energy at last year’s first edition and we have big things planned for next year. I’ve already made major headway developing the program for next year and we’ll have some very cool elements that weren’t a part of last year’s event. So get your early bird passes while you can! It’s a 30 percent savings off full price until Oct. 2.
Neal Peart Lyrics of the Week:
Wheel within wheels in a spiral array
A pattern so grand and complex
Time after time we lose sight of the way
Our causes can't see their effects
Here’s a roundup of recent pieces on JOC.com from my colleagues and myself (note: there is a paywall):
I finally got a chance to write about the Slync.io saga in JOC.com last week. My view throughout has been that because Slync is not yet a massive player in the space, any fallout from what has happened internally is fairly limited in scope. Hence, it was more important to write about what comes next, especially since other outlets have gone into great detail about the human impact and the alleged (but definitely juicy) details of co-founder and ex-CEO Chris Kirchner’s spending habits.
I also followed up this week on the ongoing DAT-Convoy lawsuits, getting some opinion and perspective from attorney Matthew Lefler and Metafora consultant Ryan Schreiber on what this all means.
And here are some recent discussions, reports, and analysis I found interesting:
You can do worse things than absorb everything Transporeon’s Jonah McIntire has to say. In this blog, he goes deep on exactly how AI fits into logistics procurement.
Really excited to attend the Supply Chain Insights Global Summit (which happens to be right in my backyard) this year. They have a virtual option if you can’t attend in person.
I’ve plugged Jason Miller a bunch here over the past few months, but virtually all of it has been about his can’t-miss LinkedIn posts. If you want some more background on him and why he does what he does, as well as a deep dive on freight economics, highly recommend this hourlong chat he did with Lefler (aka The Armchair Attorney).
But wait, there’s more Jason Miller. He joined my colleague Bill Cassidy and trucking legend Mike Regan for the half-year trucking outlook JOC webcast this week. You can catch the replay free by registering here. He also wrote a salient commentary on JOC.com about how freight demand in ‘22 is robust, even if it likely won’t match the historic highs of ‘21.
A very solid read about whether or not we’re in a recession.
Good convo here between Sar Haribhakti and Kamal Akanni, founder of trucking software vendor Nauvus.
Just passing this along as a first person view of what ails international transportation these days.
An international trade tech founder’s belated view on the Forbes article on Ryan Petersen from earlier this year…
Haven’t yet chatted with the folks at BlinkFreight, a forwarding software vendor, but found this blog about the complexity of digital quoting quite interesting.
And finally, if you missed my LogTech Live episode with Emma Cosgrove last week, make sure you catch the replay. Tons of knowledge on last mile and labor issues at UPS and FedEx dropped.
Some upcoming events I’ll be involved in:
Next week my guest on LogTech Live will be Raghav Viswanathan, CEO of Freightify, one of the more interesting forwarding software providers to emerge the past few years. Freightify helps forwarders amp up their digital and customer interface presence, especially around quoting. The show is live at 10 am ET Aug. 19 and the best way to keep track of new LTL episodes and updates is to subscribe here.
I’m participating once again in the Parnity Forwarders Online Conference Sept. 14-15. Reach out if you want a discount code, which the organizers have kindly offered to my readers.
Our Inland Distribution Conference in Chicago Sept. 26-28 is now less than two months out. I’ll be doing a one-on-one with Emerge CEO Andrew Leto and then leading four tech-oriented discussions, including the one on small carrier tech, as well as sessions on LTL tech, freight procurement advances, and venture’s future role in trucking. Don’t miss this - it’s the most substantive surface transportation conference in the market.
Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or S&P Global, and any opinions are mine only.