2021 State of the Third-Party Logistics Industry Report
Trends for Becoming a Resilient
and Innovative 3PL
This was especially true for third-party logistics warehouses who were hopeful to take advantage of what was predicted to be a year of growth.
Fast forward only a few months into the new year and the world changed. Many logistics and supply chain businesses experienced unprecedented challenges and were left to navigate a quickly evolving landscape due to a global pandemic. Overall, the impacts to the supply chain were varied based on the fulfillment or services offered. For businesses who were able to pivot, the latter half of 2020 offered valuable opportunities. For example, many warehouses that offered ecommerce fulfillment actually thrived in spite of an uncertain economy in the background.
With ecommerce revenue seeing a record 45% jump from Q1 to Q2 in 2020, the challenges of last year bring to light just how crucial the supply chain truly is and how third-party logistics businesses must prepare for flexibility and growth in 2021.
Now, as we enter another new year, the 3PL industry continues to develop amid a shifting landscape. One of the greatest opportunities for growth will be for businesses who are looking to transition to offer ecommerce and omnichannel fulfillment, as well as warehouses who have proved their abilities to adapt and diversify. Whichever bucket a 3PL warehouse is in, they must continue to meet the rising demands of consumers and learn how to maneuver the COVID-19 era of logistics.
With unprecedented growth and disruptions facing many players in the supply chain, third-party logistics warehouses must look for new strategies to meet revenue goals and remain competitive in an already assertive marketplace. In many cases, this means new customer acquisition and finding fulfillment opportunities. The most common in 2020 was ecommerce.
Ecommerce fulfillment comes in many shapes and sizes. For 3PLs, it is the process behind fulfilling orders placed online for their customers. Basic services include storing inventory, picking, packing, and shipping orders placed on websites that are linked to shopping carts integrated with their warehouse management system (WMS).
The rise of ecommerce and omnichannel fulfillment is slated to make a direct impact on 2021. For third-party logistics warehouses, that means they must have the right technology to meet customer demands for a seamless experience. It is also expected that modern 3PLs will be able to help guide their customers to new opportunities—such as new marketing channels or marketplaces to increase order volume.
However, 3PL warehouses must make sure their investments and strategies will do double duty. Warehouses need to adopt technology that will not only improve their own customers’ experiences but also optimize the experience for consumers. For many 3PLs, this starts with their WMS software—which ranked as the number one system used to manage warehouse activities, serving as the backbone of their operations. One of the best ways to scale a warehouse business is to consider which additional systems need to integrate into a warehouse management system to improve efficiency throughout the supply chain and ecommerce lifecycle.
This year’s report shares the latest trends and best practices today’s warehouses need to consider to be successful in 2021—including technology, outsourcing, and Amazon. It also reveals why 51% of warehouses polled have already invested in creating long-term shifts in diversifying their warehouse businesses to adopt ecommerce and omnichannel fulfillment.
It was not that long ago when the entities in the supply chain captured and reported “their” portion of data. Manufacturers, retailers, warehouses, and transportation providers operated separately and focused solely on their areas of expertise within the ecosystem. As with many things in logistics, ecommerce connected these fulfillment chains. The demand for data to improve customer experience led to the need to optimize the supply chain network and turn the players into collaborative partners.
In a study of 400 logistics professionals, 62% of third-party logistics warehouses placed an emphasis on data and analytics. Today, many 3PLs already use dashboards for real-time visualization to track daily productivity—but it is the historic data that plays a vital role in future ventures. Analyzing data can help warehouses learn where to automate, invest, cut back, and more importantly, build predictive business models for growth.
The Amazon Effect impact on the retail market—both online and brick and mortar—shows no signs of stopping. While this past year offered unique challenges for many logistics business, Amazon registered a record-breaking 2020 fourth quarter with a year-overyear revenue increase of 39.3% —solidifying the term “The Amazon Effect”. In addition, Amazon continues to dominate the ecommerce marketplace and accounts for 39% of all retail ecommerce sales in the United States alone.
Love them or hate them—Amazon offers consumers unmatched convenience when looking to shop and buy online. With 110 fulfillment centers and 300 delivery centers in the United States, Amazon is the king of free two and next-day shipping, as well as last-mile delivery. In addition, Amazon continues to remain competitive with third-party logistics warehouses as they extend their service offerings.
3pl warehouses that also offered omnichannel fulfillment were 271% more likely to be fast growers. Don't miss out on this year's full State of the Third-Party Logistics Industry Report to learn where to invest.
Many logistics professionals are familiar with and likely use Software as a Service (SaaS). SaaS solutions offer businesses an opportunity to increase efficiency, speed, reliability, and savings. The same is true for Supply Chain as a Service (SCaaS).
While many businesses are still handling supply chain activities in-house, last year taught us that companies can still be productive with remote workforces—even logistics. It is predicted that as technology evolves, especially the IoT and Big Data, Supply Chain Management teams are expected to shrink. Supply chain businesses are already experiencing faster growth, more customer-centric improvements, and smarter technology. As access to these processes becomes more readily available across multiple channels, it is expected to see outsourcing grow.
It helped many 3PL warehouses uncover hidden risks, locate opportunities for growth, and unveil vulnerabilities. But overall, it demonstrated that resiliency and innovation are the hallmarks of the logistics industry.
For warehouses looking to succeed in 2021, they must focus on planning, innovation, and building resiliency to remain competitive—whether it is from diversifying with ecommerce and omnichannel fulfillment, building new business models like Supply Chain as a Service, adopting new technology, or using the IoT or Big Data to drive new revenue opportunities. Now is the time to cultivate a clear path to meet customer demands head-on in this evolving landscape. 3PL businesses who can expand or build upon existing warehouse operations, invest in new growth opportunities, or use innovation to get ahead of the curve will gain an advantage over others. 3PL warehouses who develop the muscle to quickly pivot will separate themselves as the definitive winners in the coming year.
3PL Central is the leader in cloud-based warehouse management system (WMS) solutions built to meet the unique needs of the 3PL warehousing community. Serving as the backbone of our customer's operations, our platform quickly transforms paper-based, error-prone businesses into service leaders who can focus on customer satisfaction, operate more efficiently, and grow faster. Offering a comprehensive warehouse management platform, we make it easy for 3PLs to manage inventory, automate routine tasks, and deliver complete visibility to their customers. As the proven industry leader for over a decade, 3PL Central accurately manages billions of dollars in inventory and processes more than 1 million orders a week from any of our customer’s and their customers’ systems.
Interested in learning how 3PL Central can help your warehouse implement a comprehensive WMS platform and share our expertise in building best practices across your warehouse in 2021?