3PLs Engage in Too Much White Labeling

When a shipper decides they need to significantly lower their freight spend while maintaining or improving on time deliveries, there are two main paths forward. They can implement a transportation management system (TMS).  Or the shipper outsource transportation planning and execution to a 3PL; This is a managed transportation services (MTS) engagement. A 3PL white label strategy involves buying software solutions – like TMS – from leading providers, but then giving this solution their own branded name, leaving the implication that they developed the solution themselves. A TMS is a critical application if a 3PL wants to provide robust managed transportation services. Here are some examples of 3PLs providing managed transportation services, what they call their technology, and the true supplier of that solution.

3PL White Label Name TMS Provider
DB Schenker SDS Control Tower Services Some client solutions are based upon Oracle Transportation Management (OTM)
DHL/Exel Transportation management solutions; Standardized on Oracle OTM.   Exel mentions that they use a leading TMS, but not who it is. DHL does not mention this.
Ewals Cargo Care/e-Logistics Control Cross Chain Control Center (4C) ORTEC LoadDesigner and Quintiq to provide transportation management capabilities.
Fedex/Genco Genco Managed Transportation They mention they use a leading TMS, but not who. They use MercuryGate’s TMS and Manhattan Transportation Procurement.
Geodis Geodis Flow Management Oracle OTM plus Descartes WinRoute if routing is needed.
Menlo Logistics/ Con-way Menlo Transportation Services Oracle OTM
OHL Transportation Management Mention that they use a “state of the art web-based TMS” but not who it is. It is MercuryGate.
Penske Logistics Penske Transportation Management A mix of OTM, JDA TMS, and proprietary solutions
Ryder Transportation Management Their primary TMS is JDA TMS
Schneider Logistics Transportation Management Oracle OTM

My perspective is that a 3PL can’t possibly internally develop and continue to enhance a TMS solution that will be as robust as the best solutions on the market. There are exceptions. LeanLogistics, Transplace, and C.H. Robinson TMC all provide both managed transportation services and off the shelf TMS, while CLX Logistics both implements the Kewill Transport TMS solution and provides managed services based on that solution. All four of these companies are willing to sell and implement their TMS for customers that would prefer TMS to managed services. In the case of LeanLogistics, Transplace, and TMC, their ability to continue to sell their TMS solutions in a competitive software market is evidence they have developed a mature solution and are continuing to enhance that solution.

A word of warning. The table above is based primarily on the supplier profiles from the last MTS market study that ARC completed at the beginning of last year. We are updating that work again, and will have more updated data on 3PL/TMS relationships when the study is complete. In conclusion, I believe 3PLs are making a marketing mistake when they white label the software solution used to provide managed services. Logistics executives are increasingly knowledgeable about who the leading TMS suppliers are; in fact, they are usually more familiar with TMS than with MTS.  In most cases, it will be a comfort to potential customers to know their 3PL is using a robust off the shelf solution that is not going away.

Comments

  1. Hi Steve,

    An interesting point of view regarding the “white boxing” of TMS software. we have also noticed the trend you described in your comments.

    I agree with your statement that TMS buyers, as they should, are becoming more sophisticated in their knowledge of solutions, but more importantly, they have done more research into their needs. I’m not certain that “white boxing” is essentially bad or intentionally misleading as long as the buyer understands what they are purchasing.

    In my opinion, using a provider that both manages transportation as 4PL Next Generation Logistics, Inc. does AND builds focused software such as FreightMaster TMS and Dynamics TMS to create efficiencies within their own operations, are best suited to help shippers of all sizes. I gather people call these TMS solutions, “best of Breed”, with almost all of the company R&D spending allocated toward enhancing TMS. On the other hand, Enterprise solutions with TMS modules on the other hand have many different areas of focus aside from TMS that will draw dollars away from TMS.

    Many of the “white box” solutions you profiled are part of enterprise ERP applications that perhaps the host company is using in their day to day business operations, TMS may simply be a module that they offer to their customers.

    Thanks for an interesting discussion!