The great retail logistics divide: Are LSPs keeping up or falling behind?

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The great retail logistics divide: Are LSPs keeping up or falling behind?

  • The great retail logistics divide: Are LSPs keeping up or falling behind?
2 minute read

The retail logistics provider market is split in two. Blue Yonder research reveals that 52% of retailers consider their logistics service providers (LSPs) to be strategic enablers. The rest don’t.

For LSPs, being in that strategic enablement category is an imperative to avoid commodification. Embedding into retailers’ strategic plans is a great way to retain more business and grow existing accounts. It means more new business too, as they’re able to demonstrate excellence not just in the essential qualities (cost, service levels) but in those value-added services which differentiate them from the market: order and returns management[AP1.1], technological integration and flexibility.

So how can LSPs stand out and leap into the strategic enablement category, winning new business and growing existing accounts?

 

The context: Retail is at a pivotal technological moment

  • 54% of retailers say that AI is already changing how they operate (in the Blue Yonder Supply Chain Compass survey)
  • 87% of retailers are already using or actively implementing a unified data platform (Blue Yonder LSP research)
  • 71% are actively implementing or investigating machine learning (Blue Yonder LSP research)

 

Retailers are upgrading and upskilling technologically, and they expect their LSPs to follow that curve. In our research, we asked retailers which area they currently see LSPs underperforming in. The most common answer? Technology.

40% of retail leaders told us that LSPs don’t meet their expectations in terms of technology capabilities and integration. This is a huge issue, and an insidious one that might not have an immediate impact on new business, but which quickly limits growth, and which, over time, adds up to falling behind the competition.

Getting to a technological level that allows LSPs to invest together with retail clients, rather than patching together a solution, is essential. Without it, LSPs cannot become embedded in retailers’ strategic development and future growth.

LSPs are expected to reliably deliver on time, in full, at a competitive low cost. Those are all high priorities for retailers. But when the market is tight and many players can claim to meet those standards, what are the differentiators, and how can LSPs innovate to deliver the essentials even more efficiently and reliably?

The key is to understand what else retailers need.

In 2026, retailers are dealing with major supply chain disruptions like the blockade of the Strait of Hormuz, a changing economy, inflation, consumer behavior shifting rapidly, tariff impositions, and more. It’s no wonder that risk management, disruption warnings and post-disruption responses are becoming integral parts of retail logistics RFPs. 

Above all, retailers want end-to-end visibility that connects to their broader unified data platforms and AI adoption, enabling the kinds of sophisticated disruption pre-warning they’re looking for. 

For LSPs then, meeting retailers’ needs is about showing excellent reliability and competitive pricing, but also about convincing retailers that they have the technological capabilities to deliver peace of mind through risk management and real-time visibility. 

It’s becoming harder to achieve this without investing in end-to-end digital networks. These allow LSPs to connect directly with trading partners, enabling disruption pre-warning, intelligent decision-making on the fly, and rapid disruption response coordination.

Luckily, those same investments also help LSPs deliver the basics better and to begin their own AI journey towards a cognitive supply chain. Find out how Blue Yonder supports LSPs to grow and win more retail business.