The "Spending More Time with Customers" Crutch

Welcome to the 30th edition of The LogTech Letter, a weekly look at the impact technology is having on the world of global and domestic logistics. Last week, I addressed the idea of whether VC investment into logistics technology is inherently “fair.” This week, I’m going to take a sort of counterintuitive position on where 3PLs should be spending their time.

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@ihsmarkit.com or on Twitter at @LogTechEric.

The phrase I hear more than anything from logistics services providers (LSPs) is that they want to use tech to spend more time with their customers. Usually, it goes something like this: we used to spend X number of minutes on process Y but since we began using software Z, we can spend more time with our customers.

Software providers play up the same sentiment: just think of all the time you could spend with your customers if you didn’t have to do this task manually. Think of all the data entry people who could instead be in customer service roles.

That kind of stuff is great for a promotional website, but is that really what 3PLs want to be doing? Or, more to the point, should be doing? I know this sounds counterintuitive. Everything is about delighting the customer, getting closer to the customer, owning the customer. Saying that a 3PL’s time is not always best spent with a customer seems like it goes against everything that’s been drilled into us.

But here’s the thing: 3PLs, whether domestically- or internationally-focused, don’t operate in single-dimensional relationships with their customers. Logistics, by its nature, requires coordination between multiple entities, and for a 3PL, that means the work spent on capacity acquisition and management is as important as the work spent on acquiring customers and serving them well. Literally one cannot be done without the other. In this market, in particular, the capacity side of the equation is more important than the customer service side.

But let’s look at this more broadly through the lens of technology. If the theory is that technology - whether a management system or automation that eliminates tasks for which humans are not well-suited - allows people’s time to be freed up, why should we presume that that time should be spent primarily with customers? That actually runs counter to broad trends in other sectors. Banks want to spend less time with their customers. Airlines want to spend less time with their customers. Amazon wants to spend less time with its customers. 

Those are, of course, B2C relationships. Is it different in B2B? Do shippers actually want their hands held, or do they want a more self-service environment? To me, the answer is unclear right now. We’re in a transitional phase where shippers endeavor to eventually have more digital interaction and automated environments than they actually want to have at this moment. That, of course, makes it a tricky proposition for 3PLs that need to serve those needs simultaneously.

Most forwarders I speak with are stuck in this limbo and thus need to invest in a future state while having the service infrastructure to hold their clients hands right now. But the tech should eventually wean a shipper off of the need to have their hands held. Which, of course, runs counter to the idea that tech would allow a 3PL to “spend more time with its customers.”

In my view, what tech should help 3PLs with is flexibility in marshaling their resources for a given problem at a given time. Today, for instance, a 3PL’s time is probably better spent with carrier partners or strategizing around alternative ways to meet its customers needs. It’s not better spent “getting closer to its customers” when those customers’ grievances and anger and needs are pretty clear.

At a future time, the picture may flip. Tech, at its core, should enable its users to deploy its resources at the multitude of challenges it faces. It should not be a presumptive way for users to automatically spend more time with customers that may not want or need the extra attention at this moment.

Further thoughts of project44 and Ocean Insights

Last week, project44’s acquisition of Ocean Insights created a buzz in the niche world of cargo visibility. There’s no doubt the deal is significant, even in a niche, and for a few specific reasons. For one, it unites two worlds that tend to know little about one another. project44’s ambition to be a global multi-modal provider was well known, but the acquisition was a tacit admission that its ocean capability wasn’t at the level of its surface transportation capability.

There’s no shame in that reality - it takes time and trust to build the connections and data scraping expertise in the container shipping world, just as it did for project44 to build that connectivity in the North American surface transportation market. Buying Gatehouse Logistics in 2018 accelerated project44’s geographic reach in trucking in Europe, and this acquisition will accelerate its reach in container shipping.

There is an air of mystery surrounding the price of the deal. A week and a half later, I haven’t been able to dial in on the actual numbers beyond a whole bunch of speculation. It’s also unclear how much of the deal was in cash and how much is in future shares of a company that has been, to this point, valued by venture capital investors but not yet by public investors.

Why is the price important? Beyond natural curiosity, it’s important because it will set a benchmark of sorts for the price it will take companies with multimodal global visibility aspirations to acquire the container visibility piece of the puzzle. As Ocean Insights COO Robin Jaacks told me, his bootstrapped company always knew it would be aggregated, not the aggregator. Other mode-specific visibility providers that haven’t taken on huge amounts of venture capital are likely thinking in the same pragmatic fashion.

There’s also the palace intrigue related to Ocean Insight’s relationship with FourKites, project44’s fierce rival. On the surface, it’s a matter of addition and subtraction for project44 - they’ve added Ocean Insights’ data, analytics, and customers and subtracted Ocean Insights’ capability from FourKites. It should be noted that FourKites is quietly confident it has built its internal ocean capability to such an extent that the impact of losing Ocean Insights as a strategic partner won’t be too impactful.

There’s more to discuss, and likely more dominoes to fall.

Here’s a roundup of pieces on JOC.com the past two weeks from my colleagues and myself (note: there is a paywall):

• I used to write about the global trade management market a lot and so it’s fun to dive it into once in awhile. This space seems very ready for upheaval in terms of figuring out how and where automation fits. That’s what made BluJay Solutions’ attempt to group its trade compliance functions into what it calls an “augmented” environment very interesting. Will definitely be an upcoming LogTech Letter on this topic soon. 

• Mini-development on the online ocean freight quoting trend. Freightos is experimenting with Twill (Maersk’s small shipper sales channel) by allowing Twill to post rates on the Freightos marketplace and then redirecting people who choose that rate to Twill’s shipment management environment. Plays up the role of rate marketplaces as multi-sided platforms, not unidirectional systems. 

• More options for startups in the LogTech space, with a UPS vet and Brian and Lisa at Refashiond announcing their funds.

• My colleague Cathy Roberson on ShipBob expanding its domestic and international middle-mile and last-mile capacity. 

• And Bill Mongelluzzo wrote about Blume Global setting up an appointment system for priority containers at a terminal in the Port of LA.

And here are some recent discussions, reports, and analysis I found interesting:

• Insightful interview with former INTTRA exec and current 1010Data CEO Inna Kuznetsova here.

• Interesting data breakdown by Jason Miller at Michigan State University about alignment in trucking data from three sources using totally different methodologies, including from a JOC.com report from Bill Cassidy.

• Weekly moving update: still not moving to Florida or Texas.

• No weekly Keith Rabois update (he’s been too boring of late).

Some upcoming events I’ll be involved in:

• I’ll be moderating a free JOC webcast March 30 on a pertinent topic: The New Frontier in Global Logistics Technology: Linking Customer Expectations to Customer Promise.

• Registration is open for the IAPH World Ports Conference June 21-25. I’ll be involved in various technology-related elements of the program. Don’t miss out!

• I’ll be participating in Transporeon’s Visibility Day 2021 April 15. The focus will be on real-time visibility opportunities and challenges in Europe.

Disclaimer: This newsletter is in no way affiliated with The Journal of Commerce or IHS Markit, and any opinions are mine only.