3PL or third-party logistics is an irreplaceable part of the contemporary business scenario. For decades now, the outsourcing of operations-based logistics and systems have allowed businesses to focus on scaling and growth, developing projects and marketing for success. But as times change and how the market operates evolves, 3PL services have to adapt to the changing circumstances as well. Every year brings in new trends and updates in 3PL operations. 2020 is no different.
The biggest changes predicted for 2020 take 3PL services to a new stage. Use of artificial intelligence, rise in automated warehouses, better urban fulfilment centres and a focus on environmentally sustainable trends in logistics are just some of the new 3PL trends you can expect in 2020.
What is 3PL?
Third-party logistics involves an organization outsourcing its warehousing, distribution and fulfilment services. 3PL providers are external operators that help a business by fulfilling the roles and responsibilities of parts of the supply chain. A 3PL provider may provide a single service, multiple services, or a service package. 3PL services include transportation and delivery devices, warehousing services, the fulfilment of orders, inventory, packaging and more.
3PL services make the process of procuring, packaging and delivering products to customers more efficient and cost-effective for big and small businesses alike. A global transportation service, for example, makes it possible for business owners to ship to customers globally from any country in the world.
What are the top five emerging 3PL trends in 2020?
2020 is set to see changes in how 3PL providers operate by introducing new key players to the playing field. Here are the new trends in 3PL that are due to change how outsourced logistics services work in 2020:
A study by McKinsey shows that it won’t just be big businesses that can afford to incorporate AI and machine learning into their businesses. Collaborative robots, also known as cobots, have become more accessible, and in 2020, the number of businesses making use of artificial intelligence in businesses is expected to increase. Artificial intelligence can be used by 3PL providers to build automated warehouses that require a one-time upfront cost for the equipment, and little in the way of maintenance costs, among many other uses.
Businesses focusing on data analytics
More businesses understand the importance of using data to predict market trends and stay on top of the market. The growth of an international consumer base that is willing to buy products from different places in the world has also created a global marketplace where it becomes more important than ever to know what to expect, and pre-emptively prepare for any potential shortfalls in business. Data analytics is now a crucial part of the success of most businesses. Now those businesses expect data from 3PL as well to obtain transparency within the supply chain. The data provided by 3PL also play a role in the information and market analytics a business conducts for its success. 2020 will see greater visibility between businesses and 3PL service providers.
Customers today are very environmentally conscious, and the products they buy reflect eco-conscious choices. Millennials constitute the biggest consumer base, and the generation realizes that the need to support the environment is important before the world witnesses irreversible changes that could impact life on Earth. In this environment, 3PL services that are environmentally cautious and take steps such as reducing their carbon footprint using alternate fuels and other measures that support the environment are preferred over 3PL service providers whose performance has a negative impact on ecology.
Fast services are important to customers, and they tend to prefer service providers who can deliver faster. Speed and efficiency are two factors that fulfilment centres, especially those based in urban areas, are focusing on in 2020 to meet the demands of businesses and the market.
Growth in international business interactions
The biggest trend that will affect 3PL service providers in 2020 has to do with a rise in global business and consumption. Companies ship their products to customers across the world, and this creates a logistics and supply chain that is no longer limited to one single country, state, city, or locality. A business operating in Johannesburg, South Africa, can have a 3PL service provider in Indonesia who collects and delivers packages from the company to customers who purchase them in that country. A rise in e-commerce and online businesses have attributed to global business sales, and that will continue to grow in the future. A study conducted by eMarketer revealed that they expected global sales due to e-commerce to reach up to $4.206 trillion in 2020 alone.
2020 brings the focus on machine learning processes, global sales and the development of more efficient and transparent interactions between business and their 3PL service providers. But certain trends, such as greater use of robots and artificial intelligence, implies that how 3PL approach supply chain and management also has to evolve to keep up to date with new and evolving trends in the global marketplace. Businesses and 3PL service providers alike can expect growth in international sales and transactions as customers from around the world purchase products online from different countries. Emerging 3PL trends for 2020 will focus mainly on developing the industry to meet a rising demand stemming from growth in international sales.