blog-banner.png
supply-change.png
Supply Chain Innovation
Logistic-cost.png
Reducing Logistics Costs
management.png
supplier + 3pl management

Avoid 3PL Fallout After an Acquisition With These Tips

Posted by Greg Recht on Nov 15, 2016 11:21:44 AM

3pl-relationship-avoid-fallout.jpeg

If you were paying attention to any of the international trade headlines this October, Hanjin Shipping surely rings a bell. It was the very end of August this year when Hanjin Shipping filed for bankruptcy, leaving approximately 60 regular lines worldwide and 140 container or bulk vessels in limbo.

Hanjin is ranked as the world's 9th largest container shipping company and ships over 100 million tons of cargo a year—meaning there are a lot of hands tied up in its operations.

This bankruptcy has led to complete closings, loss of shipping terminals, and asset takeovers—plus there is the constant talk of an acquisition or merger. While all of this is troubling for those in the international shipping arena, the most difficult decisions, in the end, could fall to the customer.

The situation is holding up customers' containers, and their products are stranded (which becomes especially stressful as we move into holiday season).

It is the same story with a different headline—company goes bankrupt, the company gets acquired, and everyone working with the company is left to deal with the fallout.

So as a business, how do you prepare for the worst?

Ask the Right Questions

We cannot say it enough: it is so important to vet your 3PL and ask them the right questions when looking for a partner.

Sometimes, it is as simple as asking if they plan on getting acquired or merging with another company. Some companies, like Kenco, are in it for the long-haul and will be prepared to answer those questions. However, there are new companies popping up every day waiting to make a quick dollar as soon as an offer from a larger company is on the table.

Dig In

The size of a 3PL and their client base can also tell you a lot about their operations. Smaller firms may be financially unstable or leveraging a lot of debt, making a partnership rocky. A bigger 3PL may be fast approaching the too-competitive line, where other "big fish" providers may buy them out to eliminate competition. Just check out this graph from JP Morgan showing global merger and acquisition data over the past decade. 2015 led to a record year.

There is a fine line you must walk to find the right partner. We often relate it to the Goldilocks story. You have to find the 3PL that is just the right fit, somewhere in the middle. Not too big, not too small.

Kenco's Promise

Whether it's a 3PL or an intermodal, international shipping company, the frustrations that come from a merger or acquisition infuriate stakeholders across industry lines—especially the customer. We frequently work with customers fresh off their 3PL's acquisition; we have seen the complicated breakup of operations and fear a halt in product transportation and handling when a 3PL is changing owners.

We know how challenging the process is.

That's why at Kenco, we have a promise. You are not just a number; you are a person and a valued customer who we strive to serve. Our manageable client base and privately owned operation we will not be selling, merging or falling off the map—leaving you in the dust.

To Sum It All Up

As you move forward in your 3PL partnership and optimizing your relationship, keep this cautionary tale on your mind.

If you want to see what the Kenco promise is really about, check out our newest eBook: Uncommon Value.

New Call-to-action

Greg Recht

Written by Greg Recht

Sales and Marketing Executive with eighteen years experience providing business process outsourced and 3PL services to Fortune 1000 organizations combined with powerful operations, client services and business development skills.