Warehouse Space Constraints, Industry Consolidation, and Ongoing Labor Crises Driving 3PLs to Automate and Innovate
Extensiv delivering omnichannel software solutions for warehouse, inventory, and order management released its seventh annual State of the Third-Party Logistics (3PL) Industry Report, highlighting best practices and key trends for companies in the supply chain and logistics industry. This year’s report details market shifts, automation trends, fulfillment innovations, the state of 4PLs, and customer service opportunities to help 3PLs best respond to developments in warehousing, shipping, fulfillment, and overall supply chain management.
Despite facing continued challenges of capacity constraints, labor shortages, and rising operational costs, 94% of 3PLs reported an increase in sales within their last measurement period, an increase from the 88% who reported the same in 2021. To sustain market momentum during expected 2023 market turbulence, 3PLs will need to focus on meeting evolving consumer demands and optimizing technology throughout the coming year. Extensiv’s report offers insights into industry trends and guidance for 3PL warehouses looking to successfully navigate sustained market uncertainty.
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The report finds four trends impacting 3PLs in 2023:
- Digital automation will accelerate through 2023, creating opportunities for supply chain leaders to build a tech stack that cuts costs, increases visibility, and improves the customer experience.
- The fourth-party logistics (4PLs) market will continue to grow, and collaboration between 4PLs and 3PLs will help counter industry consolidation, relieve warehousing space constraints, and support sustainability initiatives.
- 3PLs will create value through vertical specialization and finding ways to deliver premium customer service, in part by evaluating customer fit based on workflow alignment.
- Omnichannel fulfillment will continue to grow for direct to consumer (DTC) and business-to-business (B2B) markets as 3PLs look to leverage technology, experiment with trends like micro-warehousing, and optimize fulfillment times.
“The growth of 3PLs and the acceleration of 4PL business models last year clearly shows that the logistics industry has reached an inflection point fueled by global disruption and uncertainty,” said Andy Lloyd, chief executive officer of Extensiv. “3PL warehouses are at the convergence point of technology and fulfillment strategy transformation. There’s never been a greater opportunity for 3PLs to create value and drive innovation, and the State of the Third-Party Logistics Industry report offers critical analysis to help 3PLs position themselves for success in this ever-evolving market.
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