3PLs Balance Decreasing Order Volumes and Rising Costs While Maximizing Technology and Capacity to Achieve New Industry Standards
EL SEGUNDO, Calif., Oct. 24, 2024 (GLOBE NEWSWIRE) — Extensiv — a leading provider of warehouse, order, and inventory management software to the third-party logistics (3PL) industry and the brands they serve, today announced the results of its fifth annual Third-Party Logistics (3PL) Warehouse Benchmark Report. The readout is the only benchmark report focused exclusively on the 3PL warehouse industry. This year’s report revealed decreased order volume growth, increased profitability for those operating at high warehouse capacity (over 80% capacity), and a convergence between AI advancement and network fulfillment points for 2025.
The Third-Party Logistics Warehouse Benchmark Report aggregates data from more than 250 3PL warehouses and provides insight on more than 30 industry-specific topics. The report builds on prior data and provides year-over-year changes and trends to help warehouses understand market growth opportunities and industry challenges.
Key takeaways from the 2024 report include:
- Adapting to Challenges is Key. The 3PL industry is navigating through tough times with slowing growth in order volumes and profitability (only 69% reported progress on profitability in 2024). Yet, businesses are showing resilience and adaptability. 3PL’s operating at larger scales seem to be best suited for navigating today’s market volatility.
- AI is the Future. Artificial Intelligence (AI) is gaining traction, with significant interest in its applications for optimizing various aspects of warehouse operations. The number of respondents saying they were looking into AI rose sharply from 16% last year to 25% this year. While the industry is still exploring the best use cases, integrations with AI are looking like an inevitability.
- Fourth-party Fulfillment Strategies. There is a clear trend towards adding warehouses to obtain geographic disbursement. The percentage of organizations with 2 to 5 warehouses has followed an upward trajectory by an average of 2% each year. This year, it sits at 51%. This growth also reflects a growing interest in utilizing fourth-party logistics (4PLs) to drive efficiency and reduce risk while strategically positioning inventory to better serve customers.
- Optimizing Labor. While the percentage of 3PLs expecting to add workers is the lowest it has been in the past four years (57%), the focus has shifted to optimizing labor productivity through management tools and efficiency measures outside of a reliance on robotics. While worries about employee turnover are declining, ensuring maximum efficiency among workers is still top of mind for the industry.
- Better Billing is Crucial. Cash flow is still king in 2024 and more 3PLs are looking to automate their billing processes to maintain financial stability. This year, the time spent billing customers increased, however those who spent less than 16 hours on billing and invoicing per month were 2.8 times more likely to see high profitability growth. With the correlation between time spent on billing and profitability, more 3PLs are looking for ways to leverage invoicing functions directly within their WMS.
Other key areas of the report include an outlook for 2025, as well as trends and metrics related to growth opportunities, technology adoption, warehouse operations, and industry challenges. Despite concerns about decreasing order volume and cash flow constraints, 3PLs are approaching 2025 with resilience and optimism.
“With this, the 5th edition of the 3PL Warehouse Benchmark Report, Extensiv equips 3PLs with the information needed to best navigate the evolving supply chain,” said Aaron Stead, CEO of Extensiv. “It further displays the market leadership position Extensiv holds and connection to the pulse of our industry.”
To see more critical 3PL trends, download the 2024 Extensiv Third-Party Logistics Warehouse Benchmark Report here. For additional insight, listen to an on-demand discussion of the results.
About Extensiv
Extensiv, formerly 3PL Central, is a visionary technology leader focused on creating the future of omnichannel fulfillment. We partner with warehouse professionals and entrepreneurial brands to transform their fulfillment operations in the radically changing world of commerce and consumer expectations. Through our unrivaled network of more than 1,500 connected 3PLs and a suite of integrated, cloud-native warehouse management (WMS), order management (OMS), inventory management (IMS), and integration management software, we enable modern merchants and brands to fulfill demand anywhere with superior flexibility and scale without painful platform migrations as they grow. More than 25,000 logistics professionals and thousands of brands trust Extensiv every day to drive commerce at the pace that modern consumers expect. Learn more at www.extensiv.com.
Media contact:
Jill Hillen
jhillen@extensiv.com
