CSCMP's Supply Chain Quarterly
February 23, 2018

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Current events

Two recent articles in Supply Chain Quarterly look at fast-moving developments that bear watching.

Because it is a quarterly publication with lead times that are measured in months, it's rare that CSCMP's Supply Chain Quarterly is able to publish "ripped from the headlines" articles that reflect current events. But we've managed to do that in our last two issues, and I'd like to call your attention to those stories, as they address newsworthy trends that could have a significant impact on your business.

Our Q2 cover story, "Uncertainty on the high seas," by Erik Peterson and Stephen Klimczuk-Massion of A.T. Kearney's Global Business Policy Council, looked at such issues as climate change and geopolitical tensions, and their potential impact on supply chains. We're not talking about something that's hypothetical or far in the future. Two of the developments Peterson and Klimczuk-Massion discuss in their article—China's aggressive expansion of its territorial claims in the Pacific and potential threats to the undersea data cables that carry the world's Internet communications—have become front-page news around the world in the months since their article was published.

These are not subjects one generally thinks of as "supply chain issues," yet, as the authors point out, they could have a profound impact on supply chains. For one thing, shipping lanes may have to shift and cargo may have to be rerouted if hostilities break out as a result of China's move to take control of a number of tiny islands in the Pacific and claim territorial waters around them. For another, if any harm—deliberate or otherwise—should come to undersea data cables, Internet traffic around the world would be seriously disrupted—not a good thing for any supply chain organization that relies on the Internet for collecting, transmitting, and managing data across its global network. "Uncertainty on the high seas" is a must-read for anyone who is involved in international trade or transportation.

The very timely article in our Q3 issue is "Consolidation in the 3PL industry: Why is it happening, and what does it mean?" by Robert C. Lieb of Northeastern University. Dr. Lieb, who has been studying the third-party logistics (3PL) industry for more than two decades, leveraged his research relationships to find out the reasons behind the unprecedented series of large 3PL mergers and acquisitions that have occurred over the past two years. And they're not over yet: More M&A announcements hit the wires after we went to press, and there almost certainly are more to come.

While the article reviews why so many deals have been concluded recently, it also considers their potential impact on logistics service providers and their customers. Post-acquisition problems 3PLs may face are fallout from leadership changes, damage to employee morale, and poorly executed systems integration, among others. These and similar challenges could affect service quality, competition, and shipper-3PL relationships. If you do business with 3PLs of any type or size, you'll want to read this article about the startling changes in the industry's competitive landscape and what it could mean for you.

Toby Gooley is Editor of CSCMP's Supply Chain Quarterly.

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