3PLs have become a dominant force in handling the logistics and supply chain networks of large companies around the world, but where are 3PLs headed next?
According to Allied Market Research the 3PL market was valued at $869 billion in 2017. Furthermore, it will come close to doubling that by 2025. In roughly a 40-year span it has gone from being a insignificant industry in the 1970’s to becoming a ubiquitous presence vis-a-vie the supply chain process. With that being the case, it’s become apparent that 3PL is very much an adaptable industry. One that caters to the demands of modern day market pressures. As well as one that is set to navigate future demands.
However, for that to be the case, 3PLs have to identify what those future demands placed upon it will be. More importantly, be willing to act upon those demands, even if those actions come with a degree of risk. As logistics and technology researcher, Haley O’Donnell wrote:
3PLs tend to be risk-averse, which deters technology investment. Gaps in data leave 3PLs in a reactionary mode.
In this article, Morai Logistics covers where 3PLs have been and can continue to be successful, as well as areas of potential future success.
Areas of Continued Success
The rise of globalization has been taking place for decades. And 3PLs have done a remarkable job at rising right alongside it. As the world has become more interconnected, the number of multinational businesses have grown. Their influence has spread. Consequently, the demand for the movement of their goods as a result of those connections has grown exponentially. 3PLs have helped businesses meet that demand. And that demand isn’t slowing down any time soon. Despite some pushback in certain parts of the world, for the most part globalization is still increasing as an economic force.
In turn, the boom in the e-commerce industry in these past couple of decades has meant its heavy reliance on dependable supply chain processes. This has resulted in 3PLs playing a supplementary role that has seen it soar alongside e-commerce. Again, just like with globalization, e-commerce is set for continued growth in the years to come. With it being projected to grow in revenue by over a $100 million in the next four years in the U.S. alone.
Areas of Future Success
Going forward the expectations for improved transparency, responsivity, efficiency, communication, and predictive accuracy are only going to grow with the development of technology that can meet those expectations. Innovations in all kinds of technologies are coming thick and fast:
- Blockchain technology
- Machine learning
- Transport management software
- Mobile applications
- Big data
Each area of innovation is varied and addresses multiple market demands. We’ll touch on several here. Firstly, blockchain technology provides transparency, security, and ensures quality as it allows for real-time feedback along the supply chain network. TradeLens, having just launched in the last year, is set to be the biggest blockchain-enabled trading platform going forward.
Equally, automation can bring down costs and increase productivity as logistical hurdles like manual data entry are replaced. Moreover, machine learning makes precise predictions about supply chain routes possible, so that risks can be anticipated, avoided, and solved for.
On top of that, transport management systems will drive down the cost and time along supply chains. With technologies such as voice commands greatly helping with communication along each stage of the transportation process. At the same time, mobile applications from which orders can be made, processed, and tracked, providing flexibility and ease for clients and 3PLS alike, unlike ever before, are being rolled out. Finally, big data will see 3PLs have the ability to prognosticate potentialities that enhance performance as a result. Addressing a plethora of the expectations mentioned earlier.
Thus, the future of 3PLs involve much of what’s seen them flourish already, as well as plenty that is novel. If the 3PL industry wants to remain a big player in the supply chain market, it has to continue to adapt. Not languish in the face of potential risk.