The impact of ecommerce and ever-faster shipping has led to a steady increase of 3rd party logistics companies in CT, CA and nationwide over the last five years due to a steady increase in demand. So far in 2019, total 3PL revenue is at $194B, with a 3% annual growth, and more than 425,000 industry employees.
The confluence of a strong economy, higher consumer demands and shrinking capacity are creating a robust, more aggressive environment for 3PL providers as shippers increasingly outsource to meet tighter delivery deadlines and increase their customer’s satisfaction.
Big Numbers In 3PL
The 2019 22nd Annual Third-Party Logistics Study on the state of Logistics Outsourcing includes some very interesting takeaways that give a “big picture” view of how 3rd party logistics companies see themselves and their customers. Both shippers and providers are working to both improve their partnerships and accomplish the goals they’ve set out for their supply chain.
What’s the top function these shippers outsource? A full 81% outsource their domestic transportation, while 71% outsource international transportation. Respondents who outsource warehousing came in at 69%, and those who outsource their freight forwarding numbered 50%. Customs brokering was outsourced by 40% of the respondents.
Shippers are very aware that if they don’t have the tech capabilities to keep up, the best thing they can do is to partner with a 3PL company that can pick up the slack. Third-party logistics providers regularly invest in technology upgrades, as well as keep up with improvements in logistics technology that helps them keep up with their customers’ operations and the increasing amount of data that’s available to them.
Logistics providers use the technology for a range of processes, including load planning, network design, warehouse slotting, and more. The increase in this data means that both 3rd party logistics companies and shippers can use it to their advantage while the providers will use it to analyze shipping operations. Of the respondents, 93% of them believed that strong IT capabilities are an important component of a 3PL partner, with 55% stating that they’re satisfied with their 3PL’s IT abilities.
The study also indicates that the global market for 3PL increased 8.1% from 2016 to 2017. 3PL revenues increased from $804.2 billion in 2016 to $869 billion in 2017. While increases were up worldwide, Russia saw the biggest increase of 17.5%. Factors that contribute to this growth include:
- Increased capacity and demand
- Rising prices overall
- Data-driven technology
Additionally, 63% of shippers indicated that they would increase their use of 3PL services. This correlates with 86% of 3PL providers who stated their customers increased their use of outsourced logistics services, up from 81% in the previous year.
However, 28% of shippers indicated that they would be insourcing many of their logistics, and 36% of 3PL providers agree that their customers are returning to insourcing, but that number is down from 42% the previous year.
The 54-page study is available online in its entirety as a PDF file.
Let 3PL WorldWide Help In Connecticut
With warehouses in both Connecticut and California, we have a presence on both coasts. 3PL WorldWide has the resources and equipment to handle your entire supply chain from start to finish. Contact us at (888) 456-1920 or use our online contact form to talk about outsourcing your company’s supply chain so you can concentrate on your business.