Third-party Logistics Grow at an Unprecedented Rate

Third-party Logistics Grow at an Unprecedented Rate

Third-party logistics (3PL’s) are responsible for the outsourcing of portion or all of a firm’s distribution and achievement services. Their specialist solutions have noticed a sharp rise in the market due to the increasing volumes of global supply chains and interdependent economy. Presently, it is reckoned that 86 percent of Fortune 500 and 96 percent of Fortune 100 organizations use 3PL services.

The 3PL industry has witnessed an unprecedented growth of late and is expected to surpass $1.1 Tn in 2020, and around 25 3PL businesses already have incomes exceeding $1 Bn. In the last four years, the 3PL market has seen ten major acquisitions totaling $ 18 Bn driven by the need to expand the array of services offered, increase the geographic footprint, and speed scale.

3PL value chain actions mainly involve local and global transportation and warehousing, logistics control services, customized value-added services, and customer relationship management.

Third-party logistics groups also provide much of the base investment and diversification of assistance needed to supply B2B, B2C and e-commerce solutions. According to experts, 65 percent of shippers are increasing their use of outsourced logistics help to benefit from time-saving, constant optimization, increased expertise, and decreased costs.

As the global 3PL business advances to rise, there are a growing number of difficulties to deal with; continuously improving customer service, maintaining inventory, regulations, safety, global fulfillment, and policy implementation to name just a few. However, the number one challenge perceived by 3PL continues the decreasing of costs.

According to stats, 71 percent of shippers rank real-time analytics as the most significant factor relating to 3PL performance, but only 12 percent of 3PL’s see technology implementation as a top hurdle.

Unsurprisingly, in the last three years, 74.1 percent of shippers had to deal with at least one third-party linked incident, and 20 percent of shippers faced a complete 3rd party mess. Investing in technology and analytics provides the capability to deliver enhanced customer service and ROI for 3PL’s. Inherently, 91 percent of shippers consider that IT solutions are a requirement for 3PL activities and that technologies contributing more execution with transaction-based inclinations are among the most valued.

Presently, 60 percent of 3PL’s use of technology to enhance visibility, 40 percent for planning within transportation management, and 48 percent for scheduling inside transportation management systems. Even though big data has been recognized as being important in creating a smoother supply chain only 4  percent of 3PL’s were found to finance in digitization and automation to handle and analyze data.

The future of logistics is shaped by cutting-edge technologies which are assumed to change the way logistics businesses will operate dramatically. The supply chain will become steadier, faster and prompt, self-orchestrated through the incorporation of machine learning algorithms or self-driving cars.

On the flip-side, the rise of e-commerce presented a considerable change in how logistics is used to transport organizations increasing need of 3PL services. E-commerce that involves same-day delivery is a requirement for some businesses to maintain customer satisfaction and maintenance. For increased visibility among the supply chain or a faster flow of information, existing solutions are slowly being integrated by those who wish to deliver smarter and more efficient logistics. So far, 65 percent of 3PL respondents would be involved in the potential of Blockchain technology to generate visibility.

The Internet of Things (IoT), the technology permitting devices to communicate with no need for human communication, is currently the most embraced technology by 3PL’s and is only expected a rise.