Third-party logistics providers (3PLs) are more essential than ever in today's evolving global trade environment, playing an increasingly valuable consultative role with a variety of businesses across the economy. In fact, according to a recent Harris Williams executive survey, 91% of procurement and supply chain executives plan to invest in their ability to rapidly adjust their supply chains in response to changing conditions. Nearly half (48%) are planning to make significant investments in this increasingly vital capability. That imperative reinforces the growing strategic importance of 3PLs to a vast swath of businesses laser-focused on supply chain resilience. 

Our Transportation & Logistics Group recently discussed these dynamics with CEOs from companies spanning the 3PL landscape, including those focused on international trade, domestic trade, warehousing, and transportation:

Below, we discuss four key topics from these conversations and how best-in-class 3PLs continue to drive success amid uncertainty.

1. Navigating Supply Chain Shifts

Leading 3PLs are finding a variety of ways to better support their shipper clients amid ongoing tariff and geopolitical shifts. Many CEOs discussed improving data-driven insights and visibility for their customers, harnessing real-time and historical logistics data to enable smarter operational, sourcing, and pricing decisions. The increasingly integrated metrics such 3PLs provide can enhance visibility into the total landed cost of sourcing decisions, helping clients identify and execute more meaningful cost-saving initiatives.

While there are differences in approach between large scale enterprise level shippers that can withstand shocks in somewhat of a “wait and see” approach, and small- to mid-sized shippers that must be able to adapt quickly to supply chain impacts, many CEOs discussed real-time strategies they are implementing with their customers. An example would be a quick pivot in the early discussions of tariffs by offering bonded and FTZ warehousing options. “These facilities can help shippers keep their supply chains moving during tariff policy shifts while mitigating tariff impacts,” says Jason Bass, a managing director. “It’s often a better option than just ‘hitting pause’ on imports to minimize the supply chain shock when demand normalizes.”

Relatedly, a range of 3PLs noted the importance of visibility into the inbound flow of goods to ensure timely and accurate supply and support better-informed inventory placement and replenishment choices. “Supply chain redesigns will require warehouses to be in different locations and regions if shippers meaningfully alter their international sourcing strategies,” explains Jeff Kidd, a managing director. “3PLs that can better support these goals through end-to-end warehouse visibility will be poised for growth.”

2. Optimizing and Future-Proofing Supply Chains

3PLs told us their clients are focused on getting their supply chains ready for a dynamic and fast-changing future. “Shippers must constantly evaluate supply chain options to stay ahead,” says Frank Mountcastle, a managing director. “Going forward, there will continue to be micro and macro supply chain shocks, and shippers are relying on sophisticated 3PLs to gain agility and flexibility.”

Indeed, today’s ever-changing global supply chain requires a comprehensive logistics strategy. As one 3PL said, “Clients need accurate data, proper planning, cost and transit visibility, access to sophisticated optimization tools, and a team that understands how to execute such strategies.”

Another focus area is true cost analysis. With significant fluctuations in transportation costs across domestic and international modes, it’s crucial to accurately measure logistics expenses, including duties, down to the SKU level. This detailed cost analysis can support more strategic nearshoring or supply base adjustments.

And, in today’s geopolitics-driven world, shippers are increasingly reassessing where they source, store, and distribute goods. In fact, 84% of procurement and supply chain leaders we polled said they are focused on sourcing more domestically, or from less-tariff-impacted trading partners. Top 3PLs are advising customers on building this optionality into their networks.

“It’s important to balance costs with flexibility by layering in multiple port, warehouse, and carrier options,” says Kidd. “In addition, many 3PLs are working with shippers on logistics network redesigns that leverage hub-and-spoke networks to position inventory closer to end customers and offset potential volatility.”

3. Long-Term Shipper Strategies

With uncertainty remaining in the market, geopolitical and trade-related developments will continue to influence shippers’ supply chain strategies. For instance, many of the CEOs we spoke with expect these dynamics to increase domestic production. One participant discussed how they are actively analyzing the cost implications for clients to shift certain production activities back to the U.S. from regions heavily impacted by tariffs.

“Onshoring and nearshoring continues to be a strategic priority among our roundtable participants’ customers,” says Kidd. “Localized, resilient supply chains remain critically important, prompting many to increase their emphasis on nearshoring as a long-term strategy.”

In addition, multi-nodal network design is vital to avoid brittle, globalized supply chains. Many anticipate this to cause greater adoption of hub-and-spoke or multi-node regional networks that support distributed fulfillment and localized inventory buffers.

However, while shippers may move more manufacturing to North America, a shortage of skilled labor limits the viability of fully relocating supply chains domestically. “Immediate changes will be gradual, but the groundwork is being laid to enhance domestic or near-domestic manufacturing capacities,” adds Kidd.

In this environment, larger companies have the financial resources to more easily adapt and invest in optimal manufacturing sites. For smaller companies, this is more difficult. “Without the buying power of large enterprises, small and medium-sized businesses need 3PLs now more than ever,” says Bass. “3PL experts can help them find cost-effective transportation, which is particularly important amid potential spikes in product costs.”

4. Key Industry Verticals

Among the roundtable participants, many shared certain industry verticals that have a particularly strong need for supply chain solutions in the current environment.

The CEOs mentioned that a wide range of sectors contain companies with significant geographic distribution of their inbound raw materials, assembly, and end-customer locations, and 3PLs are well-positioned to help solve these challenges. Prime examples include consumer packaged goods, retail, e-commerce, manufacturers, food and beverage, and healthcare.

“These areas are being impacted by shifting consumer demand, heightened tariffs, rising employment costs, and inflationary pressures, with companies prioritizing nimble logistics solutions for cost savings, better inventory management, and a strategic advantage in the market,” explains Kidd. “In addition, certain end markets have more insulated supply/demand trends, creating a steady need for 3PLs across economic conditions. Healthcare, for example, has more stringent capacity and security requirements, while needing specialized 3PL capabilities like temperature-controlled shipping.”

Ready for the Rebound

With a rebound in demand on the horizon, leading 3PLs will be poised for growth by bringing a greater range of differentiated, value-add, and data-driven services to their shipper clients. For many of the CEOs we spoke with, M&A will play an important strategic role in gaining these capabilities.

“Throughout the 3PL market, there’s significant potential to add complementary services, create synergies, invest in technology, generate more data-driven insights, and drive efficiencies via M&A,” says Bass. “All these opportunities can help best-in-class 3PLs better navigate the next evolution of global trade, while providing more value to their customers.”

To further discuss the 3PL landscape and its M&A opportunities, please contact our senior professionals.