Top Challenges Facing 3PL Industry in 2024

It is important to understand the top seven obstacles for 3PL because it allows businesses to avoid the same fate as the largest 3PL organisations that have succumbed to these challenges. This knowledge is key to staying ahead in the industry.  

Adapting To Ecommerce

By 2024, ecommerce revenues could surpass 6.3 trillion US dollars. As ecommerce grows, it presents even more 3PL problems to accommodate. 3PL warehouses have to realise the importance of including automated order processing and tracking technologies. Adapting to these modern technologies will result in increased customer satisfaction and online shoppers getting their orders rapidly and accurately. There are several advantages of human AI collaboration in ecommerce and customer service. From making positive relationships with customers to optimising inventory, it does all. 

For example, when Zappos began trading shoes online, people hesitated to buy them without trying them on. To fix this, they ensured customers were happy by shipping for free and making it easy to return items both ways. They created a fun, customer-focused business culture and used technology to keep track of their goods and find out what their customers liked. Zappos was able to develop into a successful online business by taking these measures.

Increased Customer Expectations 

Customer expectations are increasing, and the 3rd party logistics industry must meet these expectations to thrive. These expectations include same-day delivery and good quality service at low prices. 86% of customers are searching for good customer service for which they are willing to pay more, such as personalisation, transparency, and good communication. Utilising Generative AI has influenced the $5.920 trillion ecommerce market. How can 3PL increase their customer satisfaction? They can do so by:

• Streaming their operation by fixing problems in the process and speeding up tasks to help get products to customers faster and with fewer mistakes.
• Investing in the worthy tech that can help manage warehouses and deliveries more efficiently. It can also help predict what’s needed and find the best delivery routes, saving time and money.
• Improving their supply chain operations by working closely with everyone involved in the supply chain to ensure that products move smoothly from start to finish and that customers are also happy.

Using Amazon’s third-party transportation (3PL) providers is a sign of what can happen when customer standards rise. The procedures of Amazon’s 3PL partners have had to be significantly enhanced in order to meet customer standards for service that is on time, reliable, and transparent. It indicates that you should implement tracking systems in real-time, bring the most up-to-date office technology, and always find the best delivery routes to make your deliveries faster. These changes are caused by customers’ wants for same-day or next-day delivery and the chance to track their packages as they are shipped. Because of this, 3PL providers must always come up with new ideas to meet Amazon’s high standards for a customer-centred company strategy.    

Global Trade Uncertainty 

Global trade uncertainty is a significant challenge for third-party logistics providers (3PLs). This uncertainty can arise from changing trade policies, tariffs, and geopolitical tensions, making it difficult for 3PLs to plan and manage their operations efficiently. These external causes could be unmanageable from a company’s perspective but can be a reason to cause collateral damage or loss.

The trade war between the US and China is an example from real life. Tariffs on goods moving between the US and China messed up supply chains, which caused prices to go up and shipping times to extend for 3PL companies that handle packages between the US and China. Several 3PLs had to arrange contracts, take different routes, and change their logistics plans in order to keep their businesses running as smoothly as possible during the trade war.  

Sustainability Pressures

As people become aware of environmental issues and the role of eco-friendly products, their demand for sustainability also grows. Companies are also being held accountable for not abiding by their environmental obligations. 

It is also among the important 3PL challenges to incorporate sustainable practices into their 3PL industry and rise above these sustainability pressures of society. Companies’ evolution towards sustainability is important for increasing their customer satisfaction and abiding by their corporate responsibilities, too. 44% of people are interested in buying from a sustainable brand. 

The third-party logistics sector has a significant carbon impact as well, which seriously compromises the environment. Now, what is the carbon footprint?

The carbon footprint in the logistics industry includes the greenhouse gas emissions from all supply chain activities, measured as carbon dioxide equivalent. Stated differently, it describes the quantity of greenhouse gases, such as carbon dioxide, released into the atmosphere during the manufacturing and delivery of products.

What are the sustainable majors that the 3PL industry must take to mitigate these adverse effects? The 3PL industry must:

• By spreading green packaging
• By using biodegradable materials
• By availing trains, biofuel-powered cars, electric vehicles, and ships, which would result in less carbon emission. 
• By optimising warehouse energy use through utilising LED lamps and solar energy. 

Prolog Fulfilment, a leading order fulfilment company in the UK, is carbon neutral. This means that this 3PL company addresses sustainability issues by utilising sustainable practices. This way, it successfully fulfils its responsibility as a globally operating company to its customers and the environment. 

Rising Costs

From labour to fuel, warehouse space, and transportation, 3PL service prices are rising and it is a fact of life. No doubt, these challenges provide chances for development and creativity. Companies may go above these obstacles by lowering costs and boosting income with the correct tools and strategies, therefore inspiring optimism and possibilities.

ABC Supply Chain Solutions is a major 3PL supplier for the automotive sector and needs help with growing expenses. Raw material prices and world transportation rates have surged, affecting inventory and freight costs. While more insurance premiums increase the financial load, modern logistics technologies require large upfront costs. These difficulties compel ABC to rethink its pricing policies, streamline processes, and embrace new technology to maintain profitability and service quality with growing expenses.

Supply Chain Disruptions

Supply chain disruptions are caused by global crises, geopolitical events, and natural disasters. These unfortunate disruptions are rendering economic problems, costing organisations around 184 million U.S. dollars per year. In order to mitigate these unpredictable disruptions, having a flexible and resilient supply chain strategy is important. These strategies involve:

• Investing in tech that offers real-time visibility into the supply chain.
• Making plans for emergencies
• Extending suppliers

Warehouse Shortages 

About 40% of 3PL sector warehouses now are running between 90-99% capacity; the proportion of 3PL warehouses running above 100% has increased to 20%. For 3PL firms trying to meet growing consumer expectations and control rising inventory levels, this situation presents a major problem.