Major changes in the logistics industry began taking place in 2021 when the global logistics market was worth $10.41 trillion already. According to Statista, this market is expected to grow up to $14.08 trillion by 2028.
The Asia-Pacific region continues to remain the largest 3PL market, where customer expectations for faster deliveries have changed rapidly. As a result, supply chain resiliency is strengthening, especially after the economic volatility and supplier disruptions that marked the first half of 2022.
Logistics companies are heavily relying on Industry 4.0 technologies, including Artificial Intelligence (AI), Robotics, Machine Learning (ML), Blockchain, and more. This changing face of logistics is expected to change further to help individual teams improve throughput capacity and meet customer needs.
Keep reading to know in detail the top trends driving business growth opportunities in the 3PL market.
1. Supply Chains Will Continue to Become Greener
Sustainability concerns are on the rise, with the climate change issue springing up. Green trends in supply chain management began catching up in 2020 and are expected to influence the industry’s direction in 2023 and beyond.
Consumers are showing greater support for brands that prove their materials are eco-friendly and ethically sourced. Even in 3PL logistics, more and more companies are using packaging and printing techniques that are sustainable. For instance – toxic chemical inks and plastic packaging materials are discouraged. Additionally, many businesses are turning to sustainable packaging companies for cannabis, for instance, to ensure environmentally friendly packaging and to make customers satisfied with using the right materials and designs.
Another way the supply chain is becoming greener is through the efficient transportation of packages over larger distances. The US Environmental Protection Agency (EPA) even developed the SmartWay initiative to help companies choose sustainable freight carriers that reduce their carbon footprint.
Finally, most companies are using the closed-loop system to recycle, reuse, and repurpose products that may be returned by customers due to defects. Over the years, the supply chain is only expected to go fully green.
2. Customers Will Demand More of the ‘Amazon Effect’
Modern-day customers are growing increasingly impatient. Thanks to retail juggernauts like Amazon and eBay, customers expect their orders to be delivered as soon as possible, that too in the most inexpensive manner.
Now, Amazon has the resources to make this feasible because it is a logistics beast – the Giant has over 1100 fulfillment or distribution centers across different US states. Besides these, the company is constantly expanding its logistics network to make it more efficient and closer to the customer.
This sort of close-knit supply chain network is only a distant dream for other small-scale businesses. However, customer expectations are still the same. This is where the importance of 3PL fulfillment services comes in – these companies usually have a network and resources that can rival those of Amazon.
According to Red Stag Fulfillment, achieving the Amazon effect is not simply about optimizing a singular link in the supply chain. It is about ensuring all areas – warehousing, shipping, fulfillment, etc. are equipped for accurate and quick deliveries. When 3PL companies optimize each link with the help of advanced technologies, they can empower small and mid-sized businesses to compete with Amazon in terms of logistics.
3. Last-Mile Delivery Will Become a Brand Differentiator
Did you know that the last-mile delivery market segment is growing at a CAGR of 13.21%? Customers do not remember or care about the entire supply chain, only the last mile or nearest hub from where the product was handed over to them.
They want logistics companies to make that last-mile process as accurate, quick, and effective as possible. In most cases, customers even demand that their orders be delivered on the same day itself, which is closest to the retail-store experience.
This means logistics companies will need to improve customer-warehouse proximity in the last-mile supply chain. Moreover, they need to use AI and ML capabilities to get real-time information on dynamic route planning. For instance – the technology can help plan the best possible route to a particular customer based on the time, traffic, location, etc.
Finally, there must be an effective real-time order tracking system that lets both suppliers and customers know the status of the package. This can reduce problems associated with route optimization and missed schedules, among others.
4. Analytics Expertise Will No Longer Be an Option
Even a few years ago, data analytics was a bonus to have for logistics companies. Today, analytics expertise has become a must-have. Firstly, customers are showing zero tolerance for unpredictable and delayed deliveries. Unless logistics providers know where every package is in the supply chain, they can never convey accurate information.
Secondly, analytics expertise only improves operational efficiency as companies are well-aware of delivery routes, addresses, different shifts, traffic densities, etc. This process also helps in mitigating risks involved with delivery delays. For instance – Predictive analytics can help companies know the maintenance requirements of delivery fleets beforehand so that unexpected breakdowns can be avoided.
Finally, customer experience improves considerably. They get real-time information on when they can expect their package to arrive. Moreover, many companies give delivery control to the customer’s hands by letting them decide the day and time. This offers peace of mind and assurance that their package will reach them safely and when they’re available.
5. Robotics Will Fill in Labor Gaps
According to the Society for Human Resource Management, 2023 may be the year for labor shortage normalization, and the issue may even persist for years. Since hiring challenges are not expected to evaporate anytime soon, logistics providers need some extra “robotic” hands.
The concept of delivery robots is no longer a new one, at least in the food delivery segment. Gradually, delivery robots and drones may be employed by logistics companies to fulfill orders in an accurate and timely manner. In fact, FedEx already has its delivery robot called Roxo, designed to fulfill contactless customer pickups and deliveries.
The scenario will be the same within warehouses and inventories. Companies are employing self-driving machines to pull down packages from the aisles, shuttle clothes from high stacks, and hand over the right package to human operators for faster order fulfillment. In essence, this move will be reserved for taking care of jobs that companies find difficult to fill through human workers, not about allowing technology to take over human roles.
Given the dramatic changes taking place in the 3PL logistics landscape, companies need to take huge strides in terms of versatile software and advanced technologies. Some of the key areas where 3PLs need to focus the most include scheduling, labor management, real-time analytics or visibility, operational efficiency, and warehouse distribution.
Only when a meaningful relationship is established between logistics providers and customers can supply chains become truly efficient. When that happens, e-commerce will flourish, customers will be satisfied, and operational costs will reduce.