The trend today is high tech logistics that provides customers with an opportunity to know precisely what is happening at every stage of the logistics project and control it. An in-house software, IT support and reporting capability differentiate a tech-driven logistics company from its competitors in the industry. The key word today in the logistics industry is innovation to enhance services and strengthen management capabilities.
In the past, consumers would go to a store when they need stuff for the home. Now they go online to purchase for goods and this changed the world of ecommerce logistics. There was an increase in forward stocking in ecommerce fulfilmentcentres. Now, logistics has to take care of products while they travel from port to distribution centre to fulfilmentcentre and finally to the customer. The changes in logistics from getting orders to ensuring that they are fulfilled is driving logistics costs higher and at the same time, it creates opportunities for 3PLs or third party logistics.
Ecommerce is the fast growing sector of 3PL market as proven by reports that 2017 ecommerce accounted for at least $12.8 billion of the $185.7 billion 3PL market in the US. It is expected that figures will rise to $20.9 billion by 2020. However, the difficult part in the 3PL market is how to make money.
Amazon has pretty much driven the expectations of consumers regarding free shipping and the 2-day service. In order for 3PL to make money and satisfy customers, good strategies must be developed. Ecommerce logistics is different from traditional value-added warehousing and distribution because a lot can happen from outbound less-than-truckload to full-truckload movements to meet consumer demands.
In terms of strategy, there must be emphasis on technology to streamline operations and enhance the required abilities to handle business. There are challenges that have to be overcome depending on the product that moves through the supply chain.
No two customers are the same, hence the need for high tech logistics to meet and comply with varying areas of customer demand. Technology provides logistics companies with a competitive advantage because it can restructure the entire distribution setup and achieve higher levels of service with lower supply chain costs.