2019: The Year of 3PL Providers

Brent Cavanaugh| Redwood Logistics 2019

With the phenomenal growth of e-commerce, 3PLs are well positioned to provide technological and logistical solutions for shippers needing to get their products out the door.

Andrey Suslov/Shutterstock.com 1054924271

The future looks very bright for 3PL providers. 

As a matter of fact, 2019 has been shaping up to be one of the best years for the logistics industry in the United States.  A majority of the driving force behind all of this growth is actually due to a mix of two things: e-commerce and technological solutions.

This year, the logistics industry has seen a boom in the needs of shippers with the ever-growing popularity of e-commerce. Additionally, the industry as a whole has begun to embrace the integration of numerous new and exciting technologies.

E-commerce Drives Better Shipping Practices

Without leaving the comfort of their desks, companies and consumers alike can now place an order for just about anything they need or want. So, it is really no big surprise that since about 2016, e-commerce platforms have continued to rapidly grow in favor amongst consumers over the more traditional, physical marketplace.

A 2017 report issued by 3PL consultancy group, Armstrong & Associates, found that e-commerce users in the U.S. had spent somewhere in the ballpark of $8.7 billion on 3PL services in 2016. This same data also showed that revenues fueled by e-commerce platforms will steadily increase at about 19.1% CAGR; reaching $17.6 billion by the year 2020.

And just when you thought it couldn’t get any better, e-commerce orders will account for 8.5% of the 3PL sector in 2020.

With the economic growth due to e-commerce sales also comes the need for people to ship more goods. Furthermore, it creates a much more competitive market place, and shippers are quickly realizing that they need to focus their attention on simply getting their products out the door as efficiently and quickly as possible. Consumer expectations and an evolving competitive landscape are pushing shipping efficiencies to a new level. Starting this year, major retailers including Amazon, Walmart, and Target are offering one-day delivery at no additional cost.

Having said that, shippers are now harnessing the power of reputable 3PL providers like never before, so as not to divert their attention away from the core of their business; getting products out the door quickly.

Taking the time to learn all of the intricacies involved in the movement of goods, especially at the level that an experienced 3PL can provide, is a daunting task to say the least. It can take months to perfect just a few of the methods that 3Pls employ with ease on a daily basis.

The result? High demand for sophisticated 3PLs to step in and help shippers streamline their operations, increase shipping efficiency, and build more resilient supply chains overall.

Technology Is Answering the Call

With the current trajectory of e-commerce growth, shippers would be hard-pressed to continue running their logistics operations with manual processes.

Instead, shippers are now seeking technological solutions to reduce some of the legwork typically involved. Warehouse and shipping tasks that used to take days or even weeks to complete, can now be handled in a matter of minutes thanks to solutions such as transportation management systems (TMS) and predictive analytics software.

As efficient as all this technology may be, it isn’t always the most affordable option, or the quickest to install, learn and put into practice. For this reason, many shippers are turning to 3PLs to tap into their technology resources.

Looking to the Future

As we move through 2019, one thing is becoming clear; with more demand for shipment goods and shipment efficiency, 3Pls are in higher demand than ever before. Best of all, this trend doesn’t appear to be slowing down anytime soon.  

Brent Cavanaugh is the Vice President of Strategic Sales for Redwood Logistics, based in Chicago, IL. He can be reached at
bcavanaugh@redwoodscs.com.

Photo credit: Andrey Suslov/Shutterstock.com