Revealed: How to Really Solve Your Top 3PL Logistics Issues

Third-party logistics (3PL) providers are in high demand as e-commerce grows globally. The global market for 3PLs is forecasted to reach $1.68 trillion by 2029. Accelerated by the COVID-19 pandemic, the market breached the $1 trillion mark in 2020. Under the new normal, outsourced logistics has become a major driver of the global economy, helping different companies ensure seamless operations.

These days, 3PL providers are working even harder to adapt to changing market conditions so they can improve their clients’ logistics performance. Each logistics service provider must maintain a cross-functional, interconnected, and integrated network across all business processes in order to stay competitive.

As the 3PL/logistics market has grown, consumer expectations for timely, reliable, and accurate deliveries have also increased, creating a new set of challenges for shippers and 3PL providers alike. Global businesses have to grapple with more complex problems than ever before: unexpected demand changes, supply chain hurdles, fuel price fluctuations, labor shortages. However, the  best 3PL software and the right best practices can help you solve these 3PL logistics issues. 

The Top 3PL Logistics Issues

To be agile, a company needs all its processes and functions, as well as the insights it generates, to be visible throughout the entire process. Logistics operations are inherently complicated, which can present challenges. Logistics providers need to be able to overcome these challenges, especially as supply chains become more fragmented.

Unexpected demand surges

During the COVID pandemic, unusual consumer behavior drove up sales as stockpiling increased. It was a challenge for even the biggest e-commerce players to handle unexpected demand given that high order volumes require extensive planning, resource allocation, and demand estimates. While that kind of behavior is less common now, demand volatility is still a defining market feature. 

Supply chain hurdles

In both the retail and CPG sectors, unpredictability of customer behavior contributed to an unsteady inventory management flow. During periods when finished goods are scarce and warehouse distances are long, deliveries often wind up delayed.

Insufficient end-to-end visibility

When everything else is unpredictable, it can feel impossible to gain visibility into—and control over—what’s happening with your delivery operations. Gaining true, end-to-end visibility is tough, and it’s even tougher when your systems lack end-to-end connectivity.

Fluctuating fuel prices

Companies with delivery operations must contend with fluctuating fuel costs. Most companies spend a large portion of their operating budgets on fuel, and a large fuel bill can rapidly erode a company's profits—especially if you’re driving more miles than you need to. 

Lack of integration

Lack of coordination and process integration between different actors cause problems and create inefficiency. The disruptions caused by the pandemic did have one positive effect, pushing suppliers, shippers, retailers and delivery operators to improve integration across the supply chain.

Driver/personnel shortages

Getting new talent to join the supply chain and logistics industry is one of the industry's biggest challenges. Many firms are complaining they struggle to find qualified candidates for their open positions, as many candidates do not possess the skills or experience required for the job.

Transport companies have been struggling with a driver shortage for years, which doesn't help the situation. Every year, the American Transportation Research Institute (ATRI) surveys industry players for the top five concerns they have for the upcoming year, and driver shortages have perennially been among their primary concerns. Current shortages top 80,000 and those could double to 160,000 by 20230 according to the American Trucking Associations. 

Simply put, when you don't have enough people to do the job, you can’t keep your delivery promises. 

Regulations and compliance

Different states and local governments have varied regulations, so 3PL companies must keep track of and follow local rules. . This can include things like fuel tax reporting and driver hours of service tracking. Those regulations are not static; they are frequently changed at every level of government. Managing this task is difficult when you lack the human resources to keep up with compliance requirements.

Best Practices for Solving 3PL Logistics Issues

The technology solutions 3PLs implement today are vital in addressing the many challenges they face. A successful 3PL needs to invest in technology wisely to deliver excellent service to clients and customers. Solutions that enable 3PL companies to efficiently deliver items to end customers, facilitate real-time communication, integrate with their clients' system, and provide end-to-end visibility are key to 3PL companies' success.

Here's how ways technology helps logistics providers overcome 3PL logistics issues:

Automation

Logistics employees are involved in many tasks that are easy to automate with the right solutions. For example, route planners still relying on outdated methods using spreadsheets and pen and paper can now find the most efficient and cost-effective routes in a few clicks, thanks to route optimization software.

By automating workflows for everything from routing, to customer communications, to reporting, 3PL companies can work more closely with their clients and delight end customers with less overall cost and labor.

Real-time visibility

By investing in real-time visibility, 3PL companies can improve every aspect of their operations. With real-time visibility across operations, it is easier to manage the unexpected by taking proactive measures to address potential problems in the work processes and delivery of services.

Insights into your operations

When your supply chain data collection and reporting is automated, executives have better access to operational data, which they can use to pinpoint process inefficiencies. If you use 3PL software that allows you to customize reports, you can focus on the specific metrics that need to be improved. Having all the facts at hand also makes it much easier to be proactive when it comes to ensuring the efficiency of your operations. 

Enhanced collaboration

In order to improve collaborative efforts and boost trust and visibility between 3PLs and their clients, supply chain systems and processes need to be integrated and automated. The integration of systems makes it easier to optimize final mile deliveries by ensuring that data flows at the speed of business—all while giving clients greater insight into the great work you’re doing to solve their delivery challenges and power delivery optimizations.

Cutting edge technology — especially SaaS cloud-based last mile delivery software — is the key to overcoming the many challenges facing 3PL operators. By investing in and implementing these advanced solutions, operators can reduce wasted labor and lower operating costs while actually boosting customer satisfaction.