Dependable, successful relationships are essential to dynamic and effective supply chain partnerships, but the power dynamics in relationships — the different ways partners behave to influence each other — can shift over time.
Given the disruptive and significant shifts in capacity experienced in recent years, this year’s study looked at how the power dynamic in 3PL and shipper relationships has changed over the past three years. Both parties said shifting power dynamics impacted them, with 39% of shippers and 3PLs agreeing that shippers have gained leverage.
That shift can be apparent during contract negotiations. Many shippers (89%) said cost savings were a top priority when negotiating new terms. During negotiation, both parties also value service-level agreements (SLAs) and flexible terminations. The length of contracts is on the rise in some areas, with 38% of shippers and 3PLs reporting an increase in average contract length.
More than half of 3PLs (63%) said they’ve adjusted their proposal qualification process. Reasons for declining potential business opportunities include low profit margins, requested services didn’t align with their capabilities and a lack of confidence in a potential customer’s RFP process or maturity levels.