Why There is Increasing Demand for Third-Party Logistics

Did you know that in 2019, the global third-party logistics (3PL) market was estimated to reach more than $1 trillion by 2024?

But by the end of the year, the 3PL industry had already exceeded that figure. It’s currently forecasted to continue to grow at a compound annual growth rate of 9%. There are no signs of this slowing down.

Part of the reason for this unprecedented growth is the rise of eCommerce. It has led to an increase in the number of shipments that need to get processed and delivered. A 3PL fulfilment service can easily handle the volume of orders and the complexity related to getting products into the hands of consumers.

But this isn’t the only factor leading to the increase in demand. It’s not just merchants and retailers that are realising the benefits of using a 3PL. Manufacturers have also begun partnering with providers. Here are some of the reasons why the industry continues to grow, and more businesses are looking to team up with a 3PL fulfilment service.

What is 3PL?

A 3PL provider offers outsourced logistic services to companies looking to reduce costs and improve efficiencies in their supply chain operations. They can help a company with anything from warehousing and distribution to order fulfilment and customer service.

One of the core services is Pick and Pack. It refers to the process of collecting products from the warehouse and packing them for shipment to a customer. This can be done by hand or using automated equipment. It’s primarily used for smaller orders, but the items can still get sent globally.

What are the Benefits of Using a 3PL Fulfillment Service?

There are many reasons why businesses explore the use of 3PL logisticsservices. It could be to expand their offering to new markets or improve upon customer experiences. But here are some of the benefits a company will realise when utilising these providers.

Cost Savings

The use of a third-party logistics solution can offer businesses many cost-saving benefits. They can outsource some or all of their logistics functions to a provider who specialises in providing these services. It results in lower costs for the company due to economies of scale, as well as improved efficiency and reduced waste. There is also no need to dedicate funding to warehousing and distribution.

Ability to Scale Sustainably

One of the unique benefits many businesses are realising is that a 3PL fulfilment service offers both flexibility and scalability. When you’re operating in a peak sales period, you may need to onboard new staff to ship orders and provide customer support. However, these providers can perform these functions for you in line with your current business needs. You don’t need to worry about recruiting new staff members and having the difficult conversation of letting them go if it gets quieter again.

Productivity Improvements

Most eCommerce businesses didn’t start out thinking they would need to put too much thought into warehousing and distribution. But as the company grows, it becomes an essential function due to the demands of customers wanting their products as quickly as possible. Unless you or your staff have a history in this industry, it’s unlikely you have the expertise needed to be successful in this space. So when utilising 3PL, you can rely on their state of the art technology and expert knowledge to ensure your orders are fulfilled in the most efficient way possible.

Why 3PL Demand is Growing

As the world economy becomes more complex, businesses are looking for ways to streamline their supply chains. This has led to an increase in demand for third-party logistics providers.

They are helping merchants and retailers reduce costs, improve efficiency, and better manage their supply chains. The providers achieve this by providing a variety of services, including order management, transportation organisation, warehousing and inventory administration, and cross-docking.

There is also an increasing demand for an omnichannel experience as part of digital transformation initiatives. Customers want to seamlessly transition between web browsers, apps, in-store and even over the phone. It requires different fulfilment options and integrated systems that talk to one another. As these experiences become the norm, more businesses will need partners who can help them manage their logistics operations efficiently and cost-effectively.

The benefits of using 3PL have also attracted manufacturers. Many realise the importance of developing a strategy that allows them to deliver products directly to the customer. Much like merchants and retailers, these companies don’t have the expertise in warehousing and distribution. As such, outsourcing this activity becomes the only option, particularly if the logistics function is set to become the highest cost to the business.

How to Get Started with a 3PL Provider

There are many reasons why the demand for third party logistics continues to rise. Some companies may choose to outsource this function in order to focus on their core business. In contrast, others may do so in order to take advantage of the cost savings and efficiencies that a 3PL fulfilment service can offer. As more manufacturers start utilising the offering, it is clear that the demand for third party logistics will continue togrow and potentially at a faster rate than what is currently forecasted.

Are you looking for a 3PL logistics provider to support your warehouse and distribution needs? Whether you’re an eCommerce store or a retail merchant, Compu-Storcan help you with all of your fulfilment needs. With offices across Australia, Compu-Stor works with its customers to provide cost-effective solutions tailored to their needs.

Contact us today for a free initial discussion to see how we can help you: 1800 860 604

For more information, visit our website at: https://compu-stor.com.au/3pl-warehouse-solutions/