2020 Third-Party Logistics Warehouse Benchmark Report

 

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See Where Your 3PL Warehouse Stands Against the Competition

Welcome to the first 2020 Third-Party Logistics Warehouse Benchmark Report.

Using aggregated responses from 250+ logistics professionals who own or operate third-party logistics (3PL) warehouses, 3PL Central has created a first of its kind report delivering 3PL Benchmarking statistics.  Download the complete report for insight on 30+ industry-specific topics including analysis of best practices, trends, current issues, and opportunities facing 3PL warehouses.

Below find highlights and 3PL industry trends from each section of the report.

 

The 3PL Landscape

On average, 3PLs fulfill for 3.3 different industries—with retail, dry storage, and bulk goods being the most commonly served. The fastest-growing 3PL warehouses have significantly higher concentrations in retail and apparel fulfillment versus lower / no-growth 3PLs. Fast-growers were also 71% more likely to service pharmaceutical or nutraceutical customers compared to slow or no-growth 3PLs.

It is no surprise that respondents revealed B2B as the most common type of fulfillment offered at 82%. Ecommerce followed closely behind at 71%. Only 25% of 3PLs indicated performing omnichannel fulfillment. Omnichannel fulfillment denotes supporting orders from the many different purchasing channels available to consumers (e.g., online, to the store, marketplaces, shopping carts, etc.) through platforms, like a 3PL’s warehouse management system (WMS), that seamlessly interact with different applications, shopping carts, marketplaces, or other order management software to manage multiple supply chain processes.

Industries Served
Fulfillment Types

Fastest Growing 3PLs

Universal to almost all 3PLs, standard inventory management and order pick, pack, and ship services ranked the highest across all growth ranges. Download the full report to learn what services logistics warehouses are providing to drive growth and the number of customers they serve.

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Growth in 2020

Growth Opportunities

In 2020, 79% of 3PL warehouses grew, which mapped closely to the growth seen through 3PL Warehouse Manager WMS in the first half of 2020. Fast-growing 3PLs had a higher likelihood of performing ecommerce or omnichannel fulfillment, while those 3PLs with declining or no growth were 271% less likely to perform omnichannel fulfillment.

Re-Evaluating the Market

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Learn more about what drove growth for 3PLs in 2020, how diversifying revenue streams helped tackle top business challenges, and how to find the best opportunities for growth in 2021.

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Number of Warehouses

Capacity Constraints

Tremendous opportunities exist for 3PL growth in 2021, but these may be tempered by warehouse capacity and available warehouse properties. With 77% of 3PLs operating five (5) or fewer warehouses and 62% having less than 250,000 sq. feet of warehousing space, bringing on new customers or expanding lines of fulfillment may require expanding warehouse facilities. In fact, 27% of 3PLs say finding and acquiring additional warehouse space ranks as one of their top business challenges.

Largest Warehouse expenses

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Costs for rent, lease, or facilities compound the concerns around warehouse capacity. With warehouse space making up the single largest expense for most 3PLs, adding space can take a toll on the bottom line—especially as rent costs have gone up an average of 2.5% in 2020.

Learn more about what 3PLs ranked as their largest expenses by downloading the complete Third-Party Logistics Warehouse Benchmark Report.

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Workforce changes in 2021

Workforce Implications

The demand for warehouse workers will continue into 2021. Third-party logistics warehouses overwhelmingly (71%) indicated that they plan to increase their workforce in the next year. With qualified workers already in short supply—and in some cases, causing backups throughout the supply chain—it is important to recognize that using the same approaches to attract and retain workers may not support the increased demand for the workforce.

Biggest Labor Challenges

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With the continuing rise in labor, impacts to warehouse costs are being felt by many 3PLs. This is especially true during peak season when they can be hit hard with labor costs as a result of overtime hours.

See what your competitors stated as their biggest staffing challenges and what percent they are spending on labor.

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What Technology Adopted

Technology Adoption

3PL warehouses must look for ways to drive scalable efficiency, which often comes in the form of technology and automation. On average, 3PLs have installed 3.8 systems across their business. By far, warehouse management systems (87%) rank as the number one system in place and often serve as the technology backbone for running and managing all warehouse-related activities.

leveraging WMS technology

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The fastest-growing 3PL warehouses have a 57% higher likelihood of having an order management system (OMS) and a 67% higher likelihood of having shopping cart and marketplace integrations versus no-growth organizations.

3PLs who leverage WMS reporting see impacts to order volume and time management. Download the full report to learn more and what other technologies they implemented or are planning to implement in 2021.

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Reporting Used

Metrics & Measurement

Many 3PL organizations primarily rely on inventory and order-volume reporting (84%), with only 8.2% integrating big data analytics and 14% using predictive analytics. High-growth companies demonstrate a higher likelihood of using big data analytics and have 133% more chance of using service-level dashboards as a core part of their KPI management. This represents a large opportunity for the average 3PL to gain better visibility into their transactional workflow across their customer base.

Improve performance visibility

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Successful third-party logistics warehouses blend top-level business key performance indicators (KPIs) with tactical operational metrics to drive the best performance.

Download the complete report to learn what 3PLs ranks as their most important metrics and fulfillment times.

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Conclusion

This year has presented both unique challenges and opportunities for the third-party logistics warehouse industry. Between the change in buying behaviors driving more volume through ecommerce and an increasing demand for essential goods, more than ever before businesses have had to turn to 3PL warehouses to fill this vital role in the supply chain.

With the expectation of a significantly record-breaking peak season in 2020, 3PLs will face volume demands that will test systems, processes, and teams like never before. What does this mean for 3PLs? Warehouses will have to reflect on 2020 peak season as they plan for 2021, evaluating performance using metrics and measurements that determine where they can drive additional efficiencies through process redesign or technology implementation.

To harness the expected continued growth, 3PLs will have to create well-defined workforce and warehouse space strategies to address these two key areas that threaten to limit growth potential.

Overall, the outlook for 3PL warehouses remains positive moving into 2021. By following the strategies implemented by the fastest-growing 3PLs outlined in the report above, more 3PLs can expect to reap the benefits of increased demand throughout the supply chain.

Download the Full Report

 

About 3PL Central

3PL Central is the leader in cloud-based warehouse management system (WMS) solutions built to meet the unique needs of the 3PL warehousing community. Serving as the backbone of our customer's operations, our platform quickly transforms paper-based, error-prone businesses into service leaders who can focus on customer satisfaction, operate more efficiently, and grow faster. Offering a comprehensive warehouse management platform, we make it easy for 3PLs to manage inventory, automate routine tasks, and deliver complete visibility to their customers. As the proven industry leader for over a decade, 3PL Central accurately manages billions of dollars in inventory and processes more than 1 million orders a week from any of our customer’s and their customers’ systems.

Interested in learning how 3PL Central can help your warehouse implement a comprehensive WMS platform and share our expertise in building best practices across your warehouse in 2021?

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