AI and Effective Technology Adoption Will Help 3PLs Build More Adaptable Businesses
Extensiv (formerly 3PL Central) — delivering omnichannel software solutions for warehouse, inventory, and order management — today released its State of the Third-Party Logistics (3PL) Industry Report, which examines industry trends and details best practices for companies in the supply chain and logistics industry. The 2024 report, its eighth edition, reveals that 3PLs facing intensive cost pressures, continued industry disruptions, and skyrocketing customer demands are seeking relief through new technology, reimagined geographic fulfillment strategies, and acute focus on cost-cutting strategies as they approach the new year.
“Rising costs, fluctuating demand, and supply chain disruptions are forcing 3PLs to evolve and effective adoption of technology will drive the winners versus the losers,” said Rachel Trindade, chief marketing officer at Extensiv. “Today, uncertainty is part of the reality for our industry. To achieve growth and longevity, 3PLs have to be agile. The most successful 3PLs are combining forces, leaning into mutually beneficial network partnerships, diversifying carrier networks, and investing in tools and solutions that deliver instant value in cost or efficiency. Extensiv’s State of the Third-Party Logistics report explores these trends and offers critical guidance for 3PLs who don’t just want to survive but are serious about success.”
Despite having had years to adapt to pandemic-related disruptions—warehouse scarcity, product shortages, and soaring customer fulfillment expectations—many industry players have not developed the supply chain resilience and agility necessary to navigate 2024. 3PLs ranked managing costs as their top business challenge—and relief doesn’t look to be arriving soon. Whether it’s a sustained increase in pallet prices, which shot up by 120% in 2023, general rate increases (GRI) that remain at near record levels of 5.9%, continued uncertainty around inflationary pressures, or new supply chain shocks, many 3PLs are struggling with profitability and their survival is at risk. Add in a continuing freight recession and geopolitical events, and 3PLs are looking to the future to embrace new strategies and tools.
Extensiv’s State of the Third-Party Logistics Industry report highlights key industry trends and offers guidance for navigating this evolving market. Four trends that will impact 3PLs in 2024:
- Rising Cost of Doing Business: Operational costs will continue to rise in 2024. Forward-looking 3PLs will seek to increase cash flow through optimized billing and payment processes and diversified revenue streams.
- Shipping Landscape Chaos: The chaos created by drastic increases in parcel volume should ease in 2024. Agile 3PLs will evaluate where they can benefit from residual flexibility in carrier and rate negotiations and from implementing new shipping technologies.
- Geographic Spread of Modern Fulfillment: To compete with industry giants like Amazon or TikTok, the most innovative 3PLs are leaning into the geographic spread of modern fulfillment by investing in 4PL networks and standardizing multi-facility fulfillment operations by achieving better network visibility through technology.
- Embracing Cutting Edge Technology: With the rise of transformative technologies, supply chain leaders are racing to capture data better, embrace data analytics, and create seamless system integrations to forge an agile, flexible, and efficient approach for a future shaped by artificial intelligence (AI).
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