Adapting to a tough market

WE WANT to know what is changing in terms of what customers are looking for from their logistics service providers (LSPs) and also how they are adapting to the challenge.

Dan Myers, managing director – UK and Ireland, XPO Logistics

"Our customers are increasingly considering handing sustainability challenges to a logistics partner along with cost challenges. Rather than fully outsourcing to one provider, brands seek more partners and benchmarking.

"The significant changes creating this push to outsource fuel transition, for example, include the switch from reliance on fossil fuels to greener alternatives such as hydrotreated vegetable oil (HVO) and electric vehicles and the added resilience that working with a logistics specialist can offer a business.

"XPO Logistics has enormous flexibility in the framework options we offer, plus in matching the cost element management to the client’s objectives. So, we could manage capex investment to suit the client’s needs, for example. We also have a rounded capability to offer hybrid, core, and flexible solutions within the networks, allowing us to move with the client's journey, whatever that may be.

"Since the start of 2023, we have also seen that brands are thinking more strategically and long-term as they realise the importance of creating strategic alliances with partners to avoid any repeat of supply chain difficulties in the future. This is along with short-term bridging solutions and contracts being sought. Logistics suppliers now must give options in commitment, costs, sustainable solutions, multi-modal, phased investment planning and flexible fleet types, and dynamically balanced core with a 4PL provision."

Saul Resnick, chief executive officer UK&I, DHL Supply Chain

“The whole market is in a challenging position. There’s no question that higher inflation and higher interest rates have had an impact on consumer spending and confidence. That has translated into certain segments of our business, where our customers are feeling the pinch. There are other sectors that are doing well, for example, we’ve seen the microchip issues of 12 months ago easing off a great deal.

“Taking a macroeconomic look at the whole market, customers are looking very closely at costs, but they also want the things large companies can help them with, for example, around sustainability.

“We have to be cost competitive, and we have lots of programmes on continuous improvement, but we are also making investments for the future, so we have assets that are more environmentally sustainable. There will come a point when that is not a ‘nice to have’, it will be a hygiene point for our customers. We are rapidly approaching that time.

“It’s a complex market, and that’s how we like it, because we get to showcase the wide array of skills we have.”

Paul Durkin, chief customer and innovation officer, Wincanton

“Customers are looking for their LSPs to be leaders in technology and innovation, invest in end-to-end solutions and deliver true collaborative value.

“At Wincanton, we are adapting to this challenge by creating ready, scalable technology solutions which unlock value by optimising assets. Examples include our Transport Control Tower, which optimises planning and execution, to shared user and single user robotics and automation. This is offering capabilities that the customer does not have today to solve their problems.

“As an LSP we are investing to build, deliver and run the end-to-end solution, enabling our customer to allocate their capital to their core business. If the LSP can create new value or accelerate it, there is a win-win. Underpinning this approach is a more equitable share of risk and reward. 

“We are also the orchestrators of a larger community, including customers and partners, ensuring that the sum of the parts is greater than the whole. From the optimisation of transport subcontract partners, we manage through Transport Control Tower to our shared user robotic solution for eFulfilment. We are solving problems through the benefits of scale, avoiding costly capital investment for the customer. We see the value in LSPs collaborating for the benefit of everyone.”

Mark Catley, business development director, GXO

"Businesses want supply chains that are more efficient and resilient, especially in the current trading environment. They are looking to reduce cost, minimise risk and optimise output – while also enhancing quality for consumers. Accordingly, customers look to logistics service providers like GXO to design supply chains of the future.

"To address this challenge, we are leaning on our world-class technological capabilities. At GXO, we use the most advanced technology – including AI – across our services to increase speed, improve productivity and enhance safety. We are constantly innovating to automate customers’ warehouses because we know failure to do so could endanger their competitiveness. Better yet, automation takes up the repetitive tasks and empowers our employees to perform more additive tasks. 

"A good example of how we’re meeting customers’ evolving demands is through GXO Direct, our shared warehousing offering. Shared warehousing provides flexibility in terms of space, with lower cost and workforce resources, while still giving access to that cutting-edge technology. It’s attractive to SMEs who need something modular as they scale, but also appealing to larger players who are going through periods of change.”

Dionne Redpath, chief operating officer and head of Europa Warehouse

“In a world of inflationary costs, customers are searching for specialist 3PL providers who can present flexible, high-quality 3PL services at a competitive price. To achieve this, you need innovative warehousing solutions in place that can help businesses tap into scale during peak periods. 

“We've launched a campaign to offer high quality storage for £1.49 in Corby and for clients with a holding of more than 3,000 pallets.

“The Europa Warehouse team ethos (across three sites) is about nurturing brands from start-ups to scale-ups, providing the best quality services at a fair price. Our £11m shared user automation system, at our Corby site, is an example of this, offering 100 per cent accuracy pick rates, streamlined operations and efficient order fulfilment and pick and pack services. A business can tap into the system without having to make a big, long-term investment — instead, they can invest in growing their business.”

Stéphanie Hervé, executive vice-president, GEODIS Global Contract Logistics 

“In view of the global situation this year I would describe it as the end of the Covid crisis. The very strong growth in eCommerce during the health crisis slowed down in 2022, but other market lines developed, notably healthcare. GEODIS has been present for over 25 years in the healthcare market, we took advantage of the 2022 period to invest more heavily in developing new cold room capacity in our warehouses.

“We are seeing interesting trends in developing sectors. There's the emergence of a "second-hand" ecosystem, in textiles as well as in the high-tech sector. Currently, we have initiatives to meet these new needs, particularly in the management of returns, with quality control and/or refurbishing. We're also seeing the emergence of Giga Factories for the manufacture of electric batteries. Several projects are in development to adapt logistics services, with a specialised infrastructure to handle this type of product. 

"Finally, I'd say that CSR is now at the heart of all logistics issues. For several years now, we have been developing a tool for calculating the carbon footprint of our logistics activities, used to respond to calls for tender.”