How Are Third-Party Logistics Companies Driving The e-Commerce Industry?

With the rapid implementation of internet-driven business tools such as e-commerce platforms, custom application programming interfaces, etc. numerous tech-savvy businesses are expanding at a fast rate.

This rate of expansion is welcome yet unexpected. When these rising companies move into new markets, they find it increasingly challenging to fulfill shipping requirements. They face challenges like – 

• Increasing Transportation Costs –Even major companies are struggling to cut transportation costs due to ever-increasing fuel prices. Managing these expenses further cuts into company earnings. 

• Heightened Customer Demands – The modern consumer demands fast deliveries and total transparency from businesses. If companies can’t promise immediate delivery, most customers will look for other options. 

• Compliance – There’s a severe shortage of drivers. It is tough for companies to create their in-house shipping and fulfilling departments. Carriers have to deal with federal, state, and local compliance requirements. Companies with lacklustre transport facilities are bound to be incompliant at some point. 

• Lack of Focus – The ever-evolving retail industry demands the utmost focus from businesses. With new technologies being released every day, it can be challenging for business managers to juggle traditional business responsibilities with making technological upgrades in the company’s transportation/shipment department.

This combination of strict compliance regulations, reduced capacity, and cost increases are compelling many businesses to third-party logistics providers. Acquiring the services of these experts could be the best thing that can happen to ambitious companies. 

What are Third-Party Logistics Providers?

In 2019, the Third-Party Logistics Providers (3PLs) industry’s market size was valued at over USD 1 trillion. This growth is mainly down to companies embracing the concept of outsourcing their logistics responsibilities to third-party experts. 3PLs can facilitate all shipping operations of its clients. Their commitment begins with collecting products from the manufacturers and ends with customer deliveries. 

They look over a company’s freight forwarders association and supply-chain management system. Companies that outsource their shipping and fulfillment responsibilities to 3PLs can expect these four services – 

Functions of 3PL Experts 

Taking Care of Shipping 

3PL providers take full care of the shipping process. They use integrated stock management tools to provide efficient and automated shipment routines.

They leverage technology to eliminate time-consuming tasks. These experts also manage freight data with utmost sincerity. The liability of carrier behavior falls solely on their shoulders. Since technology makes life so much easier for these service providers, merchants, and businesses looking for best third-party logistics companies should team up with 3PLs that are the most technologically advanced. Look for 3PLs that offer features such as real-time reports, freight data assessment, etc.

Transporting the Produces

3PL providers accelerate the process of sending goods or services across long distances by teaming up with other transportation firms. By doing so, they’re always able to fulfill orders faster than competitors.

Storage

Providing storage is one of the essential tasks of 3PL providers. They’ll integrate their warehousing system with their client’s warehousing and transportation arrangements to create customized ways of secure storage, safe distribution, and fast product transportation.

Distribution

Nowadays, 3PL providers are offering distribution services such as – 

• Custom Labeling
• Packing
• Picking Up the Goods from Delivery Points
• Outbound Order Fulfillment

These services come especially handy for smaller retail companies. Small-scale businesses cannot store or distribute large product quantities. Their only option is to outsource distribution responsibilities to a 3PL provider. Some 3PL providers even offer trade compliance services, domestic and international transportation. 

Advantages of 3PL

Between April 2019 and April 2020, there was a 49% increase in the number of parcels that shipped worldwide. The e-commerce industry is causing unprecedented amounts of increase in parcel shipping volumes.

While parcel carriers are struggling to keep up with these increases, expert 3PL providers are ramping up their efforts to optimize the parcel handling and shipping processes. These experts save their client’s resources, time, and market reputation by providing top-quality deliveries. Two other key advantages of 3PLs are- 

• Low-Cost Investment – Think hiring a 3PL provider is expensive? Think again! These experts guarantee efficiency. Their services are cost-efficient, given that building in-house warehouses, self-administrating supply chains, etc. are all costly endeavors. Companies would rather pay a fixed fee to these dedicated experts. 

• Expand the Business– With an efficient 3PL provider by their side, companies can tap into emerging markets and even countries. Thanks to these experienced professionals, it is much easier for smaller businesses to enter new supply chains. If they hand over all aspects of distribution to their 3PL providers, they are also very likely to witness a surge in customer responsiveness. 3PL providers are trained to offer high-quality customer service. Their timely deliveries, abidance with security and compliance requirements, and dedication to tech-driven logistics make it easier for their clients to focus on new market opportunities.

The Future of 3PLs

Automation will eliminate the need to invest time in tasks such as data entry or manual handling of accounts. Implementation of AI and ML will further boost 3PL providers’ efficiency. It is safe to say that 3PLs and e-commerce businesses who wish to expand cannot do without one another!