Third-party logistics providers (3PLs) are poised to dramatically shape the supply chain landscape in 2018 and beyond. In a recent survey of supply chain executives that are either using, not using, or considering using 3PL services, only 87% of survey participants currently use or engage in activities or services with 3PLs, reports In turn, more companies are choosing to drive costs down and increase market share and competitive advantage through the use of 3PLs. To understand this dramatic toward the use of 3PLs, supply chain managers need to understand some of the top 3PL trends to expect to come to fruition in 2018.
The Freight & Transportation Management Trends to Know in 2018
Communication and Collaboration is the Backbone of 3PL Trends
In tandem with major trends occurring in manufacturing and logistics throughout the globe, communication and collaboration will take center stage in the 3PL trends between shippers and their partners in 2018. Communication and collaboration are key to increasing visibility into freight, services available, services rendered, services billed, value-added services, such as audits and demand forecasting, as well as the increasing complexities of dimensional freight classification and pricing models.
More Shippers Will Invest in and Use 3PL Services
Since several shippers have already begun to take advantage of 3PL services, 2018 will be a year in which shippers will increase their integration into 3PLs by upping investment in the services and technology power of 3PLs. This includes companies that start using outsourced transportation management systems (TMS), like our very own Thomasholmes Rater by adding on modules like e-commerce, parcel, vendor management, and last-mile capability in order to meet changing consumer demands.
3PLs Will Leverage Technology to Reduce Last-Mile Costs
Speaking of the Thomasholmes Rater, the use of technology brings up yet another of the 3PL trends to expect in 2018. 3PLs will need to look for ways to reduce the last-mile costs associated with freight transportation. Major players, like Amazon and Walmart, have recently launched last-mile delivery services, such as Amazon Key and free grocery pickup, so 3PLs must make last-mile services stand out from the crowd. The best way to reduce costs is through the increased use of new technologies in logistics. The heart of these technologies are the ever capable TMS that either includes or will include such features as advanced analytics, artificial intelligence, machine learning, and automation. Further, a TMS will soon work with new modes and capabilities of transportation like drones or autonomous delivery trucks.
Value-Added Services Will Make 3PLs More Attractive
3PLs, or those 3PLs who are also freight brokers, have traditionally not had the best reputation. But this is changing. In reality, 3PLs are increasing their value and transparency and are now essential partners for shippers who have the need to manage a complex world of global trade and commerce. Beyond technological 3PL trends, shippers will come to expect more value-added services from their 3PL partners. No longer will the procurement of trucks for shippers’ freight be the only thing a shipper requires from a 3PL. Shippers want more guidance to navigate tricky challenges like the capacity crunch, how to better analyze data to create actionable insights, and a stronger look at how you can utilize technology and services to reduce total landed costs. Shippers should evaluate their current 3PL or in the process of hiring a 3PL to see if the company offers value-added services that go beyond technological capability.
Big Data Will Make a Splash in the 3PL Pond
Big data is not a new topic in the 3PL conversation, but 2018 will be a year in which big data truly comes to the table for e-commerce, last mile delivery and less-than-truckload shipping. Big data is a self-propagating technology, and with each passing year, the value of big data grows more important. Big data gets bigger and more influential in everyday operations. In the 3PL Pond, this equates to better cost savings, less inconsistency, more accountability and better insights for increased production.
Integrated, Cloud-Based Platforms Will Boost Responsiveness to E-Commerce and Optimize Processes
3PLs can also increase responsiveness to e-commerce and optimize existing processes using integrated, cloud-based platforms. Integrated, cloud-based platforms have the added benefits of being accessible from any location or area with Internet connectivity residing within the cloud virtually eliminating much of the headaches associated with upgrades and perpetual IT needs.
Amazon Continues to Set the 3PL Gold Standard
Amazon is continuing its trek toward worldwide dominance in both the shipping and 3PL industries. Although shippers may have reason to fear the gradual on Crouch of Amazon, Amazon’s new services tend to spur change. As a result, 3PLs are more likely to reinvest and reinvent standard processes and services, which companies will want to take advantage of in the coming year.
Automation Will Become More Important
Inherent in any 3PL trends, as we’ve clearly stated, is the adoption of technology. But, technology is not enough. 3PLs will also seek to increase use of automation in 2018, found the Automated technologies, including automated identification and data collection (AIDC), Bluetooth-enabled technologies, radiofrequency identification (RFID), robotics, drones and autonomous vehicles, have the potential to dramatically reduce the manual, labor-intensive tasks, which are responsible for the uptick in freight shipping rates.
3PLs Will Help Curb the Driver Shortage
The driver shortage is also another burden on the shoulders of shippers, and outsourcing services through 3PLs will continue to increase as woes over the driver shortage loom. While the Trump Administration has promised great investments on infrastructure and signed legislation to reduce corporate tax rates, shippers still face uncertainty in advance of the 2018 election cycle. Therefore, more companies will seek a safer route to addressing the driver shortage, regardless of regulatory reform, such as outsourcing more shipments to 3PLs.
This concept can also be applied to growing fears of the skills and IT gaps. 3PLs have the experience and wherewithal to help shippers attract and retain new talent, explains so the role of the 3PL will begin to change from outsourced partner to strategic partner, helping individual shippers and clients attract, retain and maintain new talent.
3PL Differentiators Will Come Under the Microscope by Shippers
Shippers will also look more intensely at available 3PL and 4L services before making a defined decision. We know we’ve seen an uptick in more mature procurement practices with an increase in RFPs. In a sense, this means 3PLs will take on the added role of explaining their services and how they are different from the services of other 3PLs. Potential 3PLs seeking a client-3PL partnership will need to understand more about their competitors’ services and pricing.
The Time to Act on Partnering With a 3PL Is Now
These top 3PL trends affecting the 3PL industry in 2018 have great potential, but they also serve as a reminder of a caveat in the coming year. Supply-chain executives that fail to see the value in working with outside entity will be ill-equipped to respond to market fluctuations, including potentially diminishing quality of customer service levels. If they haven’t already, shippers must begin searching for a 3PL today that understands the complexities in modern supply chain management, ranging from basic principles affecting today’s manufacturing trends and all points we’ve covered in this trends series.