Category: 3PL

Third-party logistics is a growing area, and expectations are that this upward trajectory will continue into 2023 and beyond. In fact, ReportLinker’s Third-Party Logistics (3PL) Global Market Report 2022 found that 3PL is expected to jump from a $906.98 billion USD valuation in 2021 to a $1,418.70 billion USD one in 2026 worldwide. That’s a compound annual growth rate (CAGR) of 9.2%.

This rosy outlook almost belies recent events that have affected trade everywhere. As we all know, the sharp bounceback from the Covid shutdowns created bottlenecks that resulted in inflation. Transportation costs shot up, packing costs shot up, and the high demand for almost everything produced shortages.

But let’s not forget that Covid was a boon to online sales. Shut indoors, consumers relied on ecommerce for almost all their needs, from goods to groceries. And this reliance has turned into a habit, a new way of shopping for almost everyone. Because of this, more and more companies are using online platforms to showcase and sell their offerings, and that means more business for those organizations that specialize in taking care of fulfilling these orders and shipping them out to the customers: the 3PL companies.

Given this increased focus on 3PL and its growing importance in the supply chain, we thought it would be interesting to jump ahead and take a look at trends that are expected to take hold in the space in 2023.

 

5 trends in 3PL to watch out for in 2023

NTT 2023 Third-Party Logistics Study reported that the most frequently outsourced activities are as listed below:

Activity	Percentage of outsourcing
International transportation	52%
Warehouse operations	43%
Domestic transportation	69%
Freight forwarding	60%

Let’s use the NTT 2023 third-party logistics study as a basis to figure out X 3PL trends to watch out for in the coming year.

1. Success through synergy

71% of the shippers said partnering with a 3PL company contributes to improving customer satisfaction. Naturally, they plan on leveraging this partnership increasingly in the future.
The trend of consolidating the powers of shipping and 3PL providers is creating a synergy beneficial to every party involved – manufacturers, customers, shipping companies, and 3PL providers. This synergy not only improves the effectiveness of logistics but also cuts costs. This year might see more consolidations as both shippers and 3PL providers realize the power of synergy.

2. More reliance on IT capabilities

Shippers expect more technological advances from 3PL providers. They believe 3PL providers should not only provide shipping but should also give tactical advice on transportation management and potential improvements for their supply chains.

For 3PL providers, this means they should invest more in technological advances in 2023 to gain a better hold on the market. When shippers were asked about the IT capabilities expected in 3PL providers, they listed some of the execution and transaction-based technologies as crucial. Sixty-two percent of shippers believed 3PL providers could assist them in transportation management planning (an increase of 11% from the previous year), 57% said transportation management scheduling (an increase of 6% from the previous year), and 40% said warehouse automation (an increase of 23% from the previous year). Thus, if you’re a 3PL services provider, investing in these areas could reap huge benefits for your company and your clients.

3. Efforts to counteract labor shortages

Right now, there’s a shortage in labor. In fact, 78% of 3PL companies say they are short staffed.

In answer to this, we predict that while 3PL companies will be offering higher hourly rates to low-level staff like pickers, packers, and drivers, they will be more reliant on technology like robots and storage and retrieval systems. The stats are that 84% of 3PLs are either replacing workers with tech already or considering it. We expect this trend to expand.

4. Banking on reverse logistics

The reverse logistics market – or goods that are returned by the shopper – was valued at $635.6 billion USD in 2020 and is projected to reach $958.3 billion USD by 2028, which is a CAGR of 5.6%. In other words, it’s huge.

There’s a lot that has to be taken care of when goods are returned. They have to be checked out and the inventory has to be updated. Plus, some items may need to be repaired or have parts replaced. It’s a whole logistical process in itself, and it needs a dedicated staff and planning. All this can be costly, but it’s important to remember that freely accepting returns without question encourages customer loyalty.

With this in mind, we expect reverse logistics to take a bigger slice of the business 3PL companies handle in 2023, and we predict that that will grow even more.

5. There’ll be more emphasis on sustainability

The entire world is moving towards sustainable practices, and 3PLs are no exception. Consumers expect it, and it’s the right thing to do.
For 3PLs, sustainable practices mean using electric vehicles and products like cleaners that are recyclable. We expect this trend to continue and expand in 2023.

 

Conclusion

As the online-sales market grows, so will 3PL companies. In that regard, 2023 should be a challenging but exciting year for them.

In anticipation of that growth, if you’re part of a 3PL company, you should have a good automated system in place. We suggest our Cin7 Omni. To learn more about our software and the superior advantages it offers, click here to request a demo.

Nowadays, when it comes to businesses moving their goods through their internal systems, disruption seems to be the new normal. Events like a pandemic, trade sanctions, and war can seriously affect this supply chain, creating problems for internal logistics, and ultimately, the delivery of goods. To avoid this, companies should be thinking of ways to overcome these obstacles, putting strategies in place to ensure the smooth running of their supply chains.

A good solution to these problems is third-party logistics (3PL) software.

In this article, we’ll take a deep dive into 3PL and show how partnering with a 3PL company can streamline your business and make it more efficient.

 

What is 3PL?

There’s 1PL, 2PL, and 3PL, and PL stands for party logistics. The first, 1PL, describes  a business that directly delivers its orders to its customers. The second, 2PL, means that a business hires an outside courier service to deliver goods to customers.

In 3PL, a business outsources its supply chain management to a third party. This could include everything from internal logistics to order fulfillment, or any aspect of it.

3PL services you can use include:

• Warehousing,
• Transportation,
• Picking up,
• Packing, and
• Last-mile delivery.

You can choose the services offered by 3PL according to your needs. However, since 3PL providers focus totally on logistics, using their expertise to streamline your internal processing and order fulfillment can only improve your supply chain.

How does 3PL work?

Well, that depends on which services you use. But as an overview, this is how a typical 3PL arrangement works:

• Your entire inventory is stored at a 3PL warehouse. Here, SKU numbers are assigned to your items for easy identification, and they are separated into designated bins.
• When a customer places an order with you, it’s forwarded to the 3PL company for  fulfillment. To make it even easier, modern order management software will  automatically send the order to the 3PL provider’s warehouse. You don’t have to do anything.
• At the warehouse, a team breaks down your customer’s order, identifies the storage location for each item, and retrieves them.
• When all the necessary items have been collected, they are packed in a delivery box, which is sealed shut. An order receipt and shipping label are then printed and attached to the outside of the box.
• A shipping carrier, organized by the 3PL provider, picks the box up from the  warehouse and delivers it to the customer.

This is how a 3PL provider helps you with order fulfillment.

 

How leveraging 3PL in a supply chain can help your business

Let’s discuss how a 3PL provider can benefit you.

1. Cost benefits

If you choose to do it alone, you’ll have to buy or rent your own warehouse space. That, of course, would mean hiring and training staff to work in the warehouse.

3PL can eliminate this expense, enabling you to put more money into other areas of your business, such as sales and marketing. A move like that could increase your revenue. What’s more, since 3PL providers specialize in logistics, extensive networks they have in the supply chain means they can negotiate better rates.

2. Focus on core competencies

Handling the fulfillment process on your own, means going through a painful trial and error period while you set the system up. Inefficiencies in your warehousing and order processing will cost you time and money.

You won’t have to worry about any of that if you use 3PL. They’ll take care of warehouse management, carrier selection, the paperwork, and choosing the best shipping routes. After all, who better to handle your fulfillment than those who specialize in it, right? Using 3PL will free up time you can spend on your core competencies, leaving the 3PL you use to leverage theirs.

3. Access to expert knowledge

In the logistics industry, 3PL companies are well regarded. Their deep knowledge and  technical know-how could be a game changer for your business if there’s a disruption in the supply chain. That’s because if an unforeseen circumstance occurs, they are able to make the necessary adjustments to ensure that your order gets fulfilled as quickly as possible.

The fact that they specialize in supply chain management means that they’re constantly   upgrading their systems and using sophisticated technology like a warehouse management system (WMS).

All this helps track inventory in real time, giving you information you need to make good, data-driven decisions for your business.

4. Flexibility

If you are planning to expand into new territories, a 3PL can offer you flexibility. It can enable you to test new ground without having to put money into warehousing or staffing.

It means, in short, that you can try out a new market with limited upfront cost to see if it’s  worth it or not.

5. Ensures compliance

Whether you plan to fulfill orders locally or globally, you need to comply with many federal, state and local laws. Joining hands with a 3PL provider can help.  Regulations can be complex, and constant updating means they change over time.  Working with a 3PL ensures that your logistical operations are compliant with the law.

For instance, if you deal with consumer packaged goods (CPG), a 3PL can make sure that  perishable items are not only kept at the stipulated temperature, but that they’re handled properly until delivered to the customer’s doorstep. This includes proper labeling, like clearly showing when a product is hazardous. Taking care of these issues shelters you legally.

When it comes to international compliance, 3PLs are especially helpful. They can take care of all the required paperwork, from customs to transportation documentation,  ensuring that your international deliveries are smooth and stress-free.

 

Let Cin7 help you integrate 3PL into your business

Now that you’re clear about the advantages of 3PL, you may want to use it to streamline your business.  Cin7 could be a good way to do this.

Cin7 works with 200+ 3PL providers, and the list is constantly updated. By using Cin7, your orders will immediately be routed to a 3PL warehouse for fulfillment,  freeing you from the cost and hassle of having to take care of that yourself.

In addition to 3PL, Cin7 provides a complete suite of features that do everything from managing your inventory to giving real-time visibility. Cin7 lets you manage your inventory, orders, and fulfillment in a much better way.

Book a demo with our experts to learn more about how Cin7 can help you with 3PL.

 

Order fulfillment is a key part of running a successful product-based business. In the fast-paced world that we live in, simply manufacturing quality products isn’t enough. Companies that provide the quickest delivery times are most likely to become market leaders and stand out among their competitors.

Due to the growing significance of logistics management, the world has witnessed a steady rise in companies outsourcing their order fulfillment to third party logistics (3PL) providers. Studies show that companies who outsource order fulfillment operations earn 14% more revenue per employee, compared to those who don’t.

 

What is a 3PL company?

A 3PL company is a fulfillment service that includes a range of operations, such as warehouse management, logistics, order management, returns management, and customs. Backed by years of experience, 3PL companies carry out these operations on behalf of their customers.

As a concept, 3PL is gaining momentum as the world moves towards higher and faster connectivity. Around the world, manufacturers and product-based companies are collaborating with expert 3PL companies to take care of their order fulfillment requirements, and the results are outstanding.

 

Advantages of partnering with a 3PL company

Here are some of the most important benefits of partnering with a 3PL company:

Expertise

Order fulfillment is one of the crucial aspects of a company’s supply chain. It’s also a totally different ballgame than procurement and manufacturing. Many companies that are experts in manufacturing quality products, may at times struggle with logistics, and vice versa.

By partnering with a 3PL company, you can gain immensely from the company’s years of experience. 3PL companies provide much needed technical and personnel support to your logistics operations.

Negotiate rates

Since a 3PL partner brings industry experience, it can negotiate a better deal with shipping companies as compared to if the seller does it alone. Also, a 3PL partner knows multiple shipping companies and can extract competitive pricing by constantly comparing rates.

Free up time and resources

One of the key benefits of hiring a 3PL partner is that it can rid you of worry about activities that aren’t your core competencies. If you’re primarily a manufacturer or a seller, you’d rather focus on enhancing your products or selling more. That’s exactly what partnering with a 3PL company helps you do.

Third party logistics companies essentially take over your order fulfillment process. As a result, by simply partnering with them, you gain access to a large pool of experienced and skilled resources. You don’t have to worry about training and housing these resources in your facility.

According to a Cin7 study, businesses with 3PL partners were 25% more likely to have positive year-on-year growth, compared to businesses that handled their logistics in house.

Gain flexibility and scalability

The primary goal of any business is to scale up with time. However, as you scale up your production and your sales, your logistics and order fulfillment operations must also expand.

This is where a 3PL partner can save the day. By partnering with a third party logistics provider that is capable of handling large orders, you no longer have to worry about scalability of your logistics.

 

Improve customer satisfaction

The end goal of any business is to create a customer experience that is both enriching and enjoyable. When you partner with a 3PL company, it helps you put your product in the hands of the customer in a much more efficient manner. It also allows you to focus your energy towards building better products for your customers.

All of this translates to a premium user experience, something that can easily help you stand out among the competition. This is why companies around the world are increasingly partnering with 3PL companies.

 

Source: 2021 Inventory and Order Management Trends

How to find the right 3PL partner

Check the 3PL’s ability to scale

While looking for a 3PL partner, it’s important not just to consider your present requirements but also your future needs. Your business ought to have well defined future plans. Check if the company is capable of handling the kind of rise in business that you see for yourself in the future.

Changing 3PL partners frequently isn’t advisable. Therefore it’s for the best if the company you select is capable of lasting many years.

Check technological capabilities

Technology is central to most decision-making today. Choosing the right 3PL partner should be no different. While comparing different 3PL companies, look at the quality of their technologies.

Do they use an efficient warehouse management system? A good WMS ensures that your products are handled with utmost care and little to no human interference.

A technologically advanced 3PL company will be able to track your products quickly. They will also be able to provide timely and accurate reports and analysis. All of these factors help in determining whether or not the 3PL provider is a good fit for your company.

Domain-specific experience

While choosing a 3PL, it’s also important to check whether the company has any previous experience with your domain. This becomes even more important if your products require specific conditions while shipping them to your customers.

There are 3PL companies that specialize in handling high-end luxury products, while some are experts at handling pharmaceuticals. It’s important to seek these companies out and only partner with those that are able to fulfill your requirements.

 

Conclusion

The advantages of partnering with an expert 3PL company are manifold. They not only save you money and effort, but also enrich your order fulfillment process and make it more efficient.

Businesses today want to leverage global supply chains and create products faster, cheaper and better. With the help of a 3PL partner, you can put your products in the hands of your customers faster, cheaper and better.