Global financial meltdown. Frozen credit markets. Insolvent blue chips. If the last few months have taught us anything, it’s that it’s no longer business as usual.
Third-party logistics providers are no exception, battening down the hatches for the roughest seas the sector has seen in decades. Weakening demand and its implications for global supply chains are having a dramatic impact on 3PLs facing softer revenue projections, reverse globalization and downward pricing pressure.
How dramatic the impact will be depends to some degree on whether the providers are public or private companies, asset-based or non-asset-based. With the equity markets in disarray, the latter appear to be in a better position to navigate this economic sea change from a position of strength.
Among the advantages of private vs. public ownership are greater flexibility, faster decision-making, freedom from the short-term horizons of Wall Street and, ultimately, more control over one’s destiny. In addition, some 3PLs are encumbered by increasingly idle hard assets, making them particularly vulnerable to the slowdown in global trade.
The ability to anticipate and adapt quickly to changing economic conditions has never been more vital than now. Indeed, it may well spell the difference between the quick and the dead, to borrow a phrase from the Wild West.
Yet the bureaucracy and undo emphasis on stock price that come with public ownership can stifle timely action and, in many cases, doing what is best in the long-term interests of the company and its customers.
2009 will be a difficult year for the logistics sector, but it is going to be more difficult for some companies than others. The quick will still be in business in 2010, and the dead will be, well, dead.