Why 3PLs Must Adapt Now to Survive in 2025

The logistics sector is facing mounting pressure as costs continue to rise. 

According to the Road Haulage Association's latest cost report, non-fuel costs increased by 5.95% in 2024, driven by higher labour, maintenance and compliance expenses. Combined with competitive pricing pressures, this has pushed pre-tax profits for the sector to just 1.58%, according to Motor Transport’s latest Top 100 results.

Here, Sam Wilkinson, Chief Revenue Officer at Transport Exchange Group, outlines the key priorities that will enable 3PL companies to safeguard profitability and build supply chain resilience.

How can data help 3PLs justify price increases and maintain supplier relationships?

We’re seeing record cost pressures across the industry which mean margins are shrinking and businesses are at risk. If carriers and 3PLs are unable to move pricing, then margins disappear and ultimately businesses will fail. 

The key is approaching pricing discussions with independent, fact-based market insights rather than gut feel or anecdotal evidence. When both parties can see clear data showing market trends, cost fluctuations, and operational realities, it transforms what could be confrontational negotiations into collaborative problem-solving.

At TEG, we see this data-driven approach creating more sustainable, long-term partnerships as both sides work from the same factual foundation.

What smarter processes can 3PLs use to offset rising costs?

Today's market demands greater operational agility. Adopting an agile approach lets 3PLs adapt quickly to changing demand while reducing overheads. We’re working with an increased number of 3PLs to help them optimise their supply and demand more effectively. 

For example, instead of running 100 trucks on a customer contract and having the high fixed costs, we’re helping them to run 25 or 50 trucks, and lean on a secure network of on-demand carriers to handle the rest. 

Though it's easier said than done - compliance and finance teams are often used to managing a smaller, steadier supplier network. That's where technology platforms like TEG come in, helping automate and streamline these expanded supplier relationships reducing heavy asset costs in favour of more flexible models.

Why is collaboration crucial for supply chain resilience?

True collaboration is the only long-term solution to supply chain resilience. Whether it’s with suppliers, customers or colleagues. 

For customers and 3PLs this means proactively suggesting smart options. Do you need a dedicated fleet for 100% of shipments? Could moving collection times create shared efficiencies with other customers?

For 3PLs and carriers, effective collaboration requires a deep understanding of capabilities and requirements with a proactive approach to solution design. We’re in the age of AI – sending emails to subbies for availability is no longer acceptable!

Internally, it’s about embracing change with a “how can we do this” mentality. I've seen several large 3PLs adopt this collaborative approach recently, and their pace of progress has been remarkable.

How can 3PLs balance competitive pricing with protecting margins?

Firstly, understanding the reality of the market is crucial - you need to know what ‘competitive’ really means. Having the right data helps make informed decisions and negotiate customer pricing effectively.

Next, it’s about buying effectively. Again, data is key to understand what good looks like and enable fact-based negotiations. We see significant opportunities for 3PLs to be more agile in their procurement and realise huge benefits in margin, sustainability and more. 

What’s the next big challenge or opportunity for 3PLs?

There can be no doubt that it’s challenging out there. Cost prices are higher than ever, margins are squeezed and there is uncertainty in the broader economy. We see clear opportunities for 3PLs to embrace these challenges and drive much-needed change. Specifically by taking a fresh approach to solution design and evolving beyond the traditional fixed-fleet model. 

Large, dedicated customer fleets are expensive, require extensive planning, consistent demand and sit heavy on the balance sheet. Customers are looking for flexible, on-demand options that scale up (and down) with their core business. The 3PLs that will succeed will be the ones that navigate this change and adopt flexible, technology-enabled solutions that can scale with demand.

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