Why Adding 3PLs Can Backfire on Shippers

Managed transportation is a complex system, and misunderstanding it can lead to costly mistakes for shippers. John Conrad, Chief Revenue Officer at Evans Transportation Services, sheds light on the nuances of managed transportation, the role of artificial intelligence, and the potential pitfalls of using too many third-party logistics providers (3PLs).

Conrad warns that shippers who distribute their freight across multiple 3PLs in search of lower rates may actually end up paying more. When too many 3PLs compete for the same lane at the same time, carriers recognize the bidding war and may delay accepting loads, leading carriers to extract higher rates – a phenomenon Conrad refers to as "broker poker."

This phenomenon of carriers deliberately waiting for higher rates when faced with multiple bidders can be counterproductive to shippers looking to save money. Conrad advises that shippers should only use multiple 3PLs when there is a pre-existing, trusted relationship in a specific segment of their business, rather than for the purpose of rate arbitrage.

Looking at the broader freight market, Conrad notes that fuel prices have not yet translated into lower per-mile rates, and when fuel costs rebound, rates are likely to climb again. He highlights the Gulf Coast markets around Houston and Louisiana as particularly vulnerable, with load-to-truck ratios reaching hundreds per truck. He warns that an approaching tropical storm could exacerbate fuel costs and spot rates further.

Conrad also emphasizes the volatility of the open-equipment and heavy-haul segment, which he attributes to AI data center construction, as large equipment orders arrive in batches and absorb available capacity. He notes that demand for these services is unlikely to slow down as long as consumers and businesses continue to demand faster data processing.

Evans Transportation, a family-owned company founded in 1985, serves around 300 customers and has an MC number that reflects its status as one of the earliest licensed 3PLs following trucking deregulation. Conrad describes the company's managed transportation approach as "outsourcing done right," combining proprietary technology with off-the-shelf tools and a new agentic AI voice system to handle initial calls before directing them to live staff.