1、2024 State of the Third-Party Logistics Industry ReportThriving in the Face of Changing Market Dynamics Table of ContentsIntroductionGrappling with the Rising Cost of Doing BusinessNavigating the Shipping Landscape Chaos Exploring the Geographic Spread of Modern FulfillmentConclusionAbout Extensiv03

2、0509162526Embracing Cutting Edge(Software)Technologies21IntroductionWelcome to the 2024 edition of the state of the third-party logistics industry report!Last years report started with a reflection on how pandemic-related disruptions continued to plague the warehousing and third-party logistics(3PL)

3、communityand how many experts predicted the situation would persist through 2023.A year later,we are all very thankful that the COVID chapter of human history is mostly over;vaccines are widely available,infection rates are down,and most people probably already lostor discardedtheir face masks.Peopl

4、e are returning to public lifeand in-person shopping,which has had some noticeable impacts on the logistics industry.Ecommerce sales slowed significantly in 2023 back to their pre-pandemic trajectories,with online sales growing by 9.3%per Insider Intelligence,and brick-and-mortar retail regained rel

5、evance as“physical stores are still expected to account for 72%of all U.S.retail sales by 2024.”Even warehouse capacity rates are normalizing.Unfortunately,a new year means new challenges.While the pandemic may be over,many experts believe the supply chain is still at risk of an“everything shortage.

6、”Theres no hard evidence to indicate that the logistics industry evolved or implemented new methodologies to promote supply chain resilience and agility.Dustin Jalbert,senior economist of wood products at FastMarkets RISI declared,“I dont think a lot has changed.”Instead,consumer demand cooled from

7、the climax seen in 2020-21,and businesses were able to scale without substantially shifting strategies to end the crisis.With emerging shipping disruptions in the Red Sea,2024 may bring its own set of supply chain challenges.Grew more than 50%Grew 25%-49%Grew 10%-24%Grew 0%-9%Our profitability is th

8、e same as previous yearsOur profitability declined up to 10%05%10%15%20%25%202320222021Our profitability declined more than 10%30%35%As new complexities arise,Extensiv wants to help you prepare for the future.This years State of the Third-Party Logistics Report consists of four sections outlining th

9、e key current challenges facing fulfillment today and forward-thinking solutions to equip your 3PL to thrive amidst turbulence.Source2024 State of The Third-Party Logistics Industry Report04This passivity has already created new hurdles in the 3PL space as economic conditions,geopolitical tensions,a

10、nd consumer expectations constantly fluctuate.Highlighted in the 2023 Third-Party Logistics Warehouse Benchmark Report,11%of respondents saw declining profitabilityin 2023 compared to 5%in 2022;if the pandemic was not a big enough sign that theindustry needs innovation,this should be.Grappling with

11、the Rising Cost of Doing BusinessGrappling with the Rising Cost of Doing BusinessArguably the most alarming trend in global economics overall is the persistent rising costs of every-day life.Everything is more expensive than it used to be,and consumers and business owners alike can feel the pressure

12、 this creates on their wallets.Zoning in on the third-party logistics sector,the 2023 3PL Warehouse Benchmark Report shows that managing costs ranked as the top business challenge respondents will need to overcome in 2024 at 48%.Meanwhile,operational costsincluding facilities costs,labor,systems&tec

13、hnology,equipment,and shippingcontinue to mount.In particular,warehouse rental costs are growing rapidly,outpacing inflation;prime rents rose by 11.8%in the 12 months to June 2023.Of course,rents are but a piece of the total cost pie,and labor costs are the largest slice.Warehouse worker wage costs

14、rose by 7.4%over the same period,and tight labor markets continue to fuel their escalation.Technically,inflation is improving around the world;the monthly inflation rate in the United States fell to 3.1%in November 2023,a massive improvement since it peaked in June 2022 at 9.1%.Mean-while,the consum

15、er price index(CPI)in the UK rose by 3.9%in the 12 months up to November 2023,significantly lower than the recent peak of 11.1%in October 2022.Similarly,on the other side of the Pacific Ocean,Australias annual CPI rate fell to 5.4%in the September 2023 quarter(New Zealands,to 5.6%),down from a high

16、of 7.8%in the December 2022 quarter(whereas New Zealands most recent peak was 7.3%in the June 2022 quarter).Prices are still going up,but at least not as rapidly as they were.10%8%6%4%2%0%Inflation RateNov 20Jan 21Mar 21May 21July 21Sep 21Nov 21Jan 22Mar 22May 22July 22Sep 22Nov 22Jan 23Mar 23May 23

17、July 23Sep 23Nov 239.1%3.1%Source2024 State of The Third-Party Logistics Industry Report062024 State of The Third-Party Logistics Industry Report07While the monthly inflation rate is a positive sign that the U.S.Federal Reserves aggressive plan to curtail rampant inflationinstituting 11 massive inte

18、rest rate hikes in the eighteen months leading up to Q4 of 2023is working,higher rates create their own set of problems for individuals and businesses looking to borrow money from financial institutions.As stated in the 2023 3PL Peak Season Playbook(which provides actionable advice relevant outside

19、of peak season as well),“the number one reason that businesses fail is because they run out of cash.”For businesses needing to borrow money to create some flexibility in their cash flowso they dont run out of cashrate hikes make this option riskier or even unattainable for some.With previously low-i

20、nterest loans now maturing at higher rates,minimum payments and the cost of capital are higher than in previous years.Compounding this dilemma,lenders are getting stricter with their financing requirements,especially after two major regional banks went under in March of 2023,making it more difficult

21、to obtain a loan that could be crucial for expanding a 3PL operation by acquiring new warehouse space.Although delinquency rates for commercial real estate remain historically low in 2023,a Federal Reserve survey showed that“small and mid-sized banksholding most commercial real estate loansreported

22、tighter lending standards in the years second quarter.”For many 3PL warehouses,this takes adding new locations and/or enlarging their existing square footage off the table.How can 3PLs achieve business growth while minimizing costs in 2024?The most obvious solution for increasing cash flow is to opt

23、imize billing and payments processes.Using automated billing solutions,like Extensivs Billing Manager,alongside a warehouse manage-ment system(WMS)to capture all chargeable events as they happen,not only boosts billing accuracy but also expedites invoice creation.Incorporating other technologies,suc

24、h as a digital payment portal to shorten payment cycles so 3PLs get paid faster and the cutting-edge software developments presented later in this report,creates further opportunities for maximizing efficiencyto save on operational costs.What tactics can 3PLs implement to combat rising operational c

25、osts in 2024?BEST PRACTICE RECOMMENDATIONS Practice Smart Cost ManagementImplement strategies to manage and reduce operational costsand free up cash flowwithout compromising on quality.This includes optimizing resource allocation,renegotiating contracts,improving efficiency,and consolidating debt wh

26、ere possible.Diversify Revenue Streams Explore new services,verticals,or markets to diversify revenue sources.This could include expanding into new geographical areas(more on that later)or offering in-demand value-added services.Streamline Billing and PaymentsInvesting in automated billing solutions

27、 that capture all chargeable events in real time will enhance billing accuracy and expedite invoice creation.Dont think you need software for this?Take a look at your customer payment behaviors and average days sales outstanding;chances are,non-automated methods are dragging out the time it takes yo

28、u to get paid.Digitizing invoicing and payments with a digital payment portal will further shorten billing cycles.2024 State of The Third-Party Logistics Industry Report08Navigating the Shipping Landscape ChaosNavigating the Shipping Landscape ChaosCan you ever believe that parcel shipping wasnt a s

29、uper significant aspect of 3PL operations?An article from Talking Logistics remarks that“relatively few companies were shipping via parcel”near the dawn of the millennium,and parcel shipping“was a niche mode appropriate for only a small segment of the market.”Pointing out that the industry has chang

30、ed in two decades is expected and,frankly,insignificant.Almost nothing is the same as it was two decades ago.What was unexpected was how rapidly parcel shipping would rise as a key mode of transportation for both retailers and manufacturers following the ecommerce boom triggered by the pandemic.Whil

31、e parcel shipping volume in the United States showed moderate annual growth between 2016 and 2019,the market exploded in 2020 with parcel shipping volume growing 35%over the previous year.21.2202221.620.31513.211.9000Volume in Billion of Parcels ShippedSourceSimply p

32、ut,no oneparticularly any of the carrierswas equipped to handle this drastic increase in parcel volume,and they have struggled to catch up ever since.2024 State of The Third-Party Logistics Industry Report10*This statement is seemingly at odds with the prevalent narrative that inflation did not noti

33、ceably affect consumer spending because retail sales continued to grow year-over-year throughout 2022.However,the statistics on retail sales rarely adjust for inflation and only consider the monetary value of sales,not the volume of items sold.For example,Insider Intelligence highlighted that retail

34、 sales grew 7.2%year-over-year in April 2022,not adjusted for inflation.But,later in the same article,they note that U.S.inflation rose 8.5%in March 2022,meaning that inflation was rising faster than retail sales were growing.Even though consumers were spending more money than in the previous year,i

35、t was not because they were buying a higher quantity of things.Instead,because the dollar had lost so much purchasing power,it took more money to buy the sameor feweritems.2024 State of The Third-Party Logistics Industry Report1130bn20bn10bnThough the graph above shows that U.S.parcel shipping volum

36、e fell almost 2%from 2021 to 2022which is consistent with the decline in consumer shopping as they faced record high inflation*the 21.2 billion parcels shipped in 2022 was still 1.1 billion shipments more than what the pre-pandemic forecast by Pitney Bowes had predicted for the year.The parcel train

37、 may have slowed down some,but it was still a year ahead of schedule,hindering the carriers power to keep pace with the new state of commerce.2022 Parcel VolumesA full year ahead of pre-pandemic predictions26.1Source20022202320242025202620272028Pitney Bowes 2019 Forecast2019-2022 ActualsP

38、itney Bowes 2023-2028 Forecast25.124.123.122.121.120.118.117.1US Actuals Parcel Volumes vs Pre-Pandemic Forecast,in Billions15.415.421.721.520.522.023.224.425.626.928.0The derailment on the consumer delivery side of the shipping equation revolved around labor union disputes with the major carriers.T

39、he summer was extra cruel for UPS,who narrowly avoided what would have been the largest strike against a single employer in U.S.history with a historic deal with the Teamsters.Sifted reports that the new agreement,estimated to cost UPS around$30 billion,isnt the only price the carrier has to pay fol

40、lowing the intense negotiations.Fearing a work stoppage,many UPS clients switched to alternative carriers for their delivery needs,sending UPS volumes falling by roughly 2.2 million packages a day year-over-year in Q2,representing a 9.4%decrease.Though FedEx directly benefited from the situation,cla

41、iming about a third of UPS lost volume,both“FedEx and UPS grappled with soft demand throughout the year.”Even with the influx of former UPS loyalists,FedExs average daily volume still dropped(less than 1%)year-over-year for the quarter ending August 31.Now,FedEx is undergoing its own mediation with

42、their pilots union,reports Reuters.Other notable labor disputes include the more than 1100 DHL employees on strike at the Cincinnati/Northern Kentucky International Airport following unsuccessful contract negotiations and the authorized strike by cargo pilots working for Amazons largest air freight

43、provider(though this walk out cannot begin until later in 2024).Amazon recently became the biggest delivery business in the U.S.and hopes to cement its position at the top of the parcel delivery industry with its newest service,Amazon Shipping,but a looming strike could upend their ambitions.The der

44、ailment on the other side of the shipping equation,the supply side,hinged on the ongoing freight recession.Most notably,LTL freight giant Yellow suddenly shuttered in July,marking the demise of one of the top ten freight carriers in the country despite grossing over$6 billion in 2022,reports CNBC.Wh

45、ile fallout from Yellows end has been far less catastrophic for the industry than anticipatedthe supply chain is realistically no more haywire than normal,and freight prices havent skyrocketedwhats more concerning is how rapidly the freight recession is rippling through the logistics industry and ho

46、w severely it is affecting such big players.Shortly following Yellows bankruptcy,J.B.Hunt Transport Services reported dropping 30%in profits in Q3,and Convoy Inc.announced its end in October.Yet,not everyone is too concerned.As Michael Belzer,an economics professor at Wayne State University and form

47、er over-the-road truck driver,puts it:“In a macro-sense,one company goes down,other companies rise up and take their freight.”Perhaps the freight recession is more an opportunity for new companies to push the industry forward than a warning sign of a perpetually worsening economy.If 2023 saw the shi

48、pping industry veer off course,how will it get back on track in 2024,and how should third-party logistics providers prepare to navigate this landscape?2024 State of The Third-Party Logistics Industry Report12By 2023,the inability to adapt exposed vulnerabilities throughout the logistics industry.The

49、 train derailed,creating a shipping landscape defined by chaos.2024 State of The Third-Party Logistics Industry Report13While complete shipping data for 2023 is not yet available,if Pitney Bowes updated forecast from last year is correct,parcel volume in the U.S.should have rebounded from 2022 and w

50、ill continue to grow at a 3%compounded annual growth rate(CAGR)through 2028.This is a significant slowdown from the double-digit growth rate seen in the five years leading up to 2022,which will make scaling to meet demand much easier for carriersassuming they developed new strategies for handling an

51、 ever-increasing volume of parcel shipments during the letup of 2022.In any case,one silver lining that will continue through 2024 is more flexible pricing for shipping.In response to faltering shipping demand,both UPS and FedEx offered discounts to regain some business,causing ground parcel deliver

52、y costs to fall year-over-year for the first time since 2019,according to Supply Chain Dive.Additionally,both UPS and FedEx announced a general rate increase(GRI)of 5.9%for 2024,down from 6.9%in 2023,meaning that even though rates will still go up in 2024(as they do every year),the increase is not a

53、s steep as it was last year.However,the GRI still poses a financial risk to companies trying to control costs.7.9%6.9%5.9%4.9%3.9%2.9%2002020222024The Last 10 Years:GRI TrendlineSourceWhat does this mean for 3PL warehouses?Most notably,while UPS and FedEx strive to retake some of their lo

54、st volume,they will be more responsive to rate negotiations;retailers including Macys and Rent the Runway leveraged their increased bargaining power to secure more favorable delivery contracts in 2023.As the backbone of their customers fulfillment operations,3PLs should take advantage of this lenien

55、cy on behalf of their customers;while 3PLs do not typically pay shipping costs,obtaining better rates for your customers will improve customer satisfaction and loyalty.Having high shipping volume and long-term relationships with carriers can empower your business in negotiations.But,if you are unsuc

56、cessful in clinching reduced rates for your shipping contracts,you can always turn to shipping aggregators or label providers,like Pitney Bowes or BUKU Ship,to reduce shipping costs.With new carriers gaining steam,3PLs should consider diversifying the carriers in their portfolio,especially to includ

57、e more specialized and regionalized carriers.Some 3PLs have preferred carrier partners that they use all the time regardless of the cheapest available rates,while others will compare shipping costs to find the most affordable option,but the benefits of the latter approach are immense.Reported by Ent

58、repreneur,“an internal Descartes study of September 2023 shipping volumes for 1,600 merchants showed that,on average,those who used rate shopping saved$4.39/shipment.This translates into average potential shipping savings of 34%,”amounting to much more in savings than from any negotiated rates with

59、a single carrier.Adopting rate shopping technologies,like the Small Parcel Suite feature in Extensiv 3PL Warehouse Manager,makes this process much more efficient and enables 3PLs to better serve their customers.Finally,remember that shipping costs are a major pain point for the brands and retailers

60、that logistics providers serve in the wake of the Amazon Effect.As companies look to control costs in 2024,it is becoming increasingly more difficult for them to offer free and fast delivery to consumers.While some merchants are revamping their free shipping policiesfor example,by adding fees for fa

61、ster service,raising minimum purchase requirements,and/or switching to flat-rate shipping models for all ordersothers are locating their products closer to consumers and adopting multi-point distribution frameworks to increase delivery speeds.Learn how you can participate in this geographic spread o

62、f modern fulfillment in the next section.2024 State of The Third-Party Logistics Industry Report142024 State of The Third-Party Logistics Industry Report15How can 3PLs sharpen shipping strategies in 2024?BEST PRACTICE RECOMMENDATIONS Assess Your Carrier Partnerships RegularlyReviewing current carrie

63、r usage and shipping rates allows you to identify where shipping savings might exist.Additionally,building strong relationships with multiple carriers ensures reliability and improves your chances of negotiating better terms.While you may audit your carriers annually(around the time of contract rene

64、wals),doing this exercise more regularly(even on a quarterly basis)will help you adapt your shipping strategies to reduce costs and/or improve service levels with greater agility.Expand and Diversify Your CarriersMulticarrier shipping strategies are critical for risk mitigation and obtaining leverag

65、e for negotiating carrier rates.A“one size fits all”carrier and shipping strategy limits merchants ability to control their shipping costs while maintaining a high level of customer service,so as their logistics provider,you should explore different carriers to better serve your customers.Invest in

66、Shipping TechnologiesIdentify how your business can incorporate automated rate shopping into your order fulfillment process to get the lowest possible rates for each shipment.Furthermore,utilizing advanced shipping software equipped with analytics tools enables you to optimize routing,track shipment

67、s in realtime,and anticipate potential disruptions.Exploring the Geographic Spread of Modern Fulfillmentoperations closer to home.172024 State of The Third-Party Logistics Industry ReportExploring the Geographic Spread of Modern FulfillmentThe logistics industry is cutthroat,and current market dynam

68、ics are driving changes in traditional 3PL models.Simply put,the old way of running a 3PL warehouse doesnt cut it anymore.More and more single location 3PL warehouses are going out of business,selling their business,or looking for ways to partner.Continued consolidationthough less prevalent than in

69、2022 when there were 17 large 3PL acquisitions compared to just 4 merger and acquisition transactions in the first half of 2023,according to Modern Materials Handlingonly heightens the competition.And as always,many 3PLsare actively looking for ways to contend with the big players in the logistics i

70、ndustry:both established giants like Amazon as well as well-funded newcomers like TikTok.The solution?Exploring,and reshaping,the geographic spread of modern fulfillment.Following years,more accurately decades,of intense globalization,many companies are rethinking their logistics strategies to enhan

71、ce supply chain resilience and strengthen domestic risk mitigation strategies.These companies supply chain shifts towards onshoring,nearshoring,and“friendshoring”are redrawing the map of global business in hopes to insulate themselves from geopolitical conseq-uences,protect their companies from futu

72、re supply chain disruptions,and reduce costs.Geopolitical developments across every region of the globe are making the international flow of business a lot trickier.Both President Trump and President Biden have enforced significant tariffs on trade with China.In Europe,the ongoing conflict between R

73、ussia and Ukraine has deepened rifts between the U.S.and Russia.And,most recently,the erupting tensions in Gaza between Israel and Hamas are rippling throughout the Middle East.The world is on fire,and many fear that“geopolitical shocks pose the greatest threat to supply chain health,”prompting many

74、 businesses to start moving While manufacturing goods in one region may be cheaper than in another,the costs of bringing them to America vary greatly from region to region,so the landed costs may be higher if sourced from the region with the lowest production costs.Furthermore,moving supply chain op

75、erations closer to home offers other benefits like increased agility and adaptability.In an article from Supply Chain Dive,Harvey Kanter,CEO of DXL Group,explains:1U.S.and CanadaMexicoWestern EuropeEastern Europe and Mediterranean15South America15Japan and South Korea17China(with trade war tariffs)1

76、7China(without trade war tariffs)2225IndiaSoutheast Asia1 to 2101425AustraliaCountry,Country Pair,or RegionDays to MarketAverage Landed Cost0%21%-19%13%-3%-8%-3%-4%-18%-15%10%Average landed costs are in comparison to a similar U.S.cost.In other words,average landed costs are 19 percentagepoints chea

77、per in Mexico than the United States.For this analysis,landed costs included the cost of labor,logistics,tariffs,machinery electricity and fuel,among others.The“trade war tariffs”for China includes the maximum 25%duties on select imports from the country,under section 301.SourceTheres 45 days to get

78、 goods from Asia to here,and theres a certain cost associated with it.It takes one week to get goods from Mexico.Mexico costs more money,but we have more agility to chase goods,and we have deep relationships.Additionally,as production and logistics costs continue to rise across the boardinfluenced b

79、y rising wages in historically cheaper regions,global trade wars inflating the price of commodities,and international freight rates ramping up since the pandemic,among other factorsbusinesses are starting to home in on different indicators related to supply chain costs.Given these dynamics,tracking

80、the landed costs of goods(the total price of a product or shipment once it has arrived at a buyers doorstep)has become more important for retailers and merchants to understand their overall profitability and determine their supply chain strategies,including warehousing locations.2024 State of The Th

81、ird-Party Logistics Industry Report18Striving to simultaneously mitigate the threat of supply chain disruption while optimizing logistics costs calls for rethinking the geographic spread of modern fulfillment on both an international scale and throughout North America.Even for third-party logistics

82、companies specializing in domestic operations,these global themes in the supply chainand especially in manufacturingwill trickle down to influence their approaches to both expansion and risk mitigation.Consumer expectations arent slowing down,and single-point distribution strategies are ill-suited f

83、or supporting brands that need to offer fast and free delivery nationwide.While fourth-party logistics(4PL)is one of the first examples that comes to mind when contemplating geographically dispersed fulfillment networks,there are multiple shapes this trend can take:3PL warehouses and 4PLs can use th

84、eir expertise in global supply chain management as a foun-dation for future growth opportunities aimed at expanding their geographic footprints.Logistics providers have deep skill and experience handling the challenges associated with moving goods across a global supply chain beyond streamlining log

85、istics for efficiency,including in-depth knowledge about global trade regulations,supply chain dynamics,customs processes,tax regulations,and different freight modalities.Just as 3PLs and 4PLs use this mastery to oversee international trade for their clients,they can apply similar techniques to buil

86、ding out multi-nodal networks across North America that optimize overall logistics costs and speeds domestically.Of course,adding new locations to your operation also adds new challenges,first and foremost regarding network-wide visibility of your customers inventory,orders,and transaction data.Luck

87、ily,emerging fulfillment software technologies engineered to bring multi-nodal logistics to life are attainable and more widely available than ever before.For example,Extensiv Network Manager is a combined program of software,services,and tools that empower multi-location 3PLs,existing 4PLs,and sepa

88、rate 3PL warehouses linked together to operate as a 4PL network to manage warehouse capacity,visibility,and order orchestration across multiple 3PL Warehouse Manager accounts.Technology inaccessibility is no longer a blocker to geographic expansion for 3PL warehouses,and,as we explore in the next se

89、ction,logistics technologies are getting smarter.Multiple distinct 3PL warehouses partnering together to create a 4PL networkIndividual 3PLs incorporating additional nodes to their own operationExisting 4PL providers continuing their expansion2024 State of The Third-Party Logistics Industry Report19

90、How should 3PLs prepare to participate in the geographic spread of modern fulfillment?Consider 4PL OpportunitiesTools like Extensivs Fulfillment Marketplace make it easier than ever to find 3PLs in complementary geographies that have similar workflows and are open to partnering up to create a 4PL ne

91、twork.Regardless of who actually owns the 4PL network,all participating 3PLs benefit not only by being able to offer enhanced service offerings to their customers but also by generating revenue on more orders fulfilled.Study the MarketIf you want to expand into multi-nodal operations,you must unders

92、tand the market(s)you want to join.Adapting to regional market differenceswhich entails understanding local regulations,culture,and consumer preferenceswill enable you to customize services accordingly and(most importantly)make informed decisions about how you disperse inventory across locations.Sha

93、rpen Your Skills and TechnologyIt goes without saying that orchestrating multi-facility fulfillment operations is much more complex than running a single 3PL warehouse.Optimizing your processes and standardizing them across all locations in your network will go a long way toward providing consistent

94、 customer service regardless of the facility tasked with fulfillment.Additionally,leveraging the right technology that provides full visibility over your customers inventory,order,and transaction data across all 3PL warehouses in the network is critical for making sure that all locations follow stan

95、dard operating procedures and service level agreements.2024 State of The Third-Party Logistics Industry Report20BEST PRACTICE RECOMMENDATIONS Embracing Cutting Edge(Software)TechnologiesThe specific date of November 30,2022 may not make it into history books,but the launch of the worlds most famous

96、chatbot,ChatGPT,by OpenAI that day certainly will.Though artificial intelligence(AI)technology has been making progress for years,the arrival of ChatGPT ushered in a new era in software development.Everyone was talking about AI non-stop in 2023,discussing how the technology would affect not just the

97、 tech industry but all industries,including logistics.AI has the potential to be a transformative force in the supply chain.At the beginning of 2022,McKinsey reported that spreadsheets were still the top tool used by supply chain leaders for demand forecasting and planning at 73%,but a whopping 4 ou

98、t of 5 respondents expect to or already use AI and machine learning(ML)for planning.While 3PL warehouses do not typically provide demand planning for their customers,their IT infrastructure is critical for enabling their customers to implement these innovative technologies.AI isnt omniscient.Before

99、businesses can use fully automated,AI-driven frameworks,they need to train the AI on data to start the machine learning(ML)process.ML is the building block for AI.By learning from historical data,ML algorithms can predict future trends,optimize resource allocation,and enhance decision-making process

100、es.Then,these ML algorithms can fine-tune themselves over time,continually improving efficiency and adaptability to changing market dynamics.To collect the necessary fulfillment and order data to train AI-powered demand forecasting programs,retailers and merchants3PLs customer baseneed to be able to

101、 access this information through system integrations.A connected network of AI,ML,and fulfillment software tools can provide a comprehensive overview of operations,from warehouse management to transportation logistics.Implementation Status,%of respondentsDont PlanTo UseTop Applications Being Conside

102、redFour Out of Five Supply-Chain Leaders Expect To or Already Use AI and Machine Learning for PlanningNot doing it713Use SimpleAlgorithms Only431720Plan To UseFor Some ActivitiesPlan To UseFor Most ActivitiesAlready Use AI andMachine Learning12345DemandPlanningSales and Operations PlanningControlTow

103、erDetailedSchedulingInventoryOptimizationEmbracing Cutting Edge(Software)TechnologiesDoing itSource2024 State of The Third-Party Logistics Industry Report222024 State of The Third-Party Logistics Industry Report23This interconnectivity enables seamless data flow and insights,fostering a more proacti

104、ve and dynamic approach to logistics management.If a 3PL doesnt meet a certain threshold of techno-logical sophistication,like using a WMS instead of manual inventory and order records,to allow this,its customers will struggle to progress their own technology adoption.In this way,the soft-ware a 3PL

105、 uses has a direct impact on how well their customers can run their businesses.But,AI is also growing more common in the technology that 3PLs use as well.AIs third-party logistics applications range from predictive analytics,which anticipates market trends and supply chain disruptions,to intelligent

106、 automation that enhances efficiency across various operational processes.For instance,AI-driven tools can optimize routing and inventory management,reduc-ing costs and improving service levels.Moreover,AIs capability to process and analyze vast quantities of data in real timethe foundation for data

107、 analyticsenables 3PL providers to make more informed and strategic decisions.In an industry where timing and precision are crucial,data analytics is particularly powerful.Real-time data analysis offers a granular view of the supply chain,enabling 3PL providers to respond swiftly to changing conditi

108、ons.This agility is crucial in maintaining service quality and customer satisfaction in an unpredictable market.Analytics tools can also dissect customer behavior and market trends,providing insights that drive tailored service offerings that can help 3PLs better serve their customers.Data analytics

109、 also help 3PLs enhance and streamline internal warehouse operations that directly impact profitability.The best WMS platforms now offer specific labor analytics dashboards that can help warehouse managers measure the performance of their staff,set productivity goals,and carefully track orders by cu

110、stomer and status from start to end of day.Additionally,3PL opera-tions leaders can filter the information in these dashboards by customer so they can accurately track the cost to serve each and customer-level profitability,enabling them to make calculated decisions about customer pricing and retent

111、ion strategies.As we look to the future,the integration of these technologies presents both challenges and opportunities.The initial investment and the need for skilled personnel to manage and interpret the data and insights generated by these systems are notable challenges.Furthermore,as refer-ence

112、d earlier,AI isnt an out-of-the-box,ready-to-go tool;it takes time and data to train the algorithm to work well.If you plan on using AI in the future,approach 2024 as a building block year for accumulating algorithm training data to enable more robust AI adoption going forward.The opportunities for

113、efficiency gains,cost reduction,and enhanced customer satisfaction are immense.These technologies are not mere tools but pivotal elements that will define the future of the logistics industry.By harnessing their power,3PL providers can transform challenges into opportunities,driving innovation and e

114、xcellence in their operations.3PL providers who success-fully navigate these challenges and leverage these cutting-edge technologies will be well-posi-tioned to lead in the rapidly evolving logistics landscape.2024 State of The Third-Party Logistics Industry Report24What can 3PLs do to embrace the c

115、utting edge of fulfillment technology?BEST PRACTICE RECOMMENDATIONS Start Collecting Data NowEven if the technology you have now does not have any AI-powered functionality yet,it probably will soon.Or you may be considering switching to a software platform that does.In any case,to prepare for this t

116、ransition into the world of AI,you need data to start the ML process,and collecting that data as soon as possible will make this adoption smoother and much,much quicker.Speaking of Data,Get in the Habit of Leaning on Data AnalyticsIt wasnt long ago that the third-party logistics industry ran entirel

117、y manually,and still,many warehouses are just now adopting advanced fulfillment software to replace spreadsheets.Software is,for many,a very foreign language,and there may be some resistance to turning many decisions over to computer systems.However,it is important to remember that software and data

118、 are tools to help human workers,not replace them.Data analytics are essential for allowing logistics providers to make informed and strategic decisions efficiently,so getting in the habit of trusting data analytics will enable you to keep up with the rapid pace of the modern supply chain.Leverage S

119、ystem IntegrationsIntegrations are the foundation for eliminating data silos between systemsboth yours and your customers.You can adopt“the best”software platforms on the market,but if they do not communicate with each other,data inconsistencies will render them useless.Ensure seamless integration o

120、f all your softwareboth existing systems and newfor a unified approach to logistics management and to get the most out of your technology investments.ConclusionAs the 2024 State of the Third-Party Logistics Industry Report closes,its clear that the sector is at a critical juncture.Amidst economic,te

121、chnological,and geopolitical shifts,the ability of 3PL providers to adapt and innovate remains paramount.This report has underscored the significance of embracing cutting-edge software technologies,rethinking geographic strategies in fulfillment,navigating the complexities of the current shipping la

122、ndscape with agility and foresight,and approaching 2024 with cost saving strategies at top of mind.Reflecting on the lessons of the past year,we see that adaptability has been key to navigating these turbulent times.The industry has faced multiple years of unprecedented challenges,and quite frankly,

123、it does not seem like 2024 will bring a return to precedented times.Yet,despite(and sometimes because of)these trials,the logistics world has also uncovered new opportunities for growth and innovation.As we look forward to the rest of the year,its clear that 3PLs must continue to focus on strategic

124、planning,leveraging technology,and building agile business models to stay competitive.The need for 3PLs to be proactive is more pronounced than ever.Though the COVID crisis is largely over,instability persists throughout the supply chain,the economy,and global tensions.The introduction of this repor

125、t stated that many industry experts dont think we learned our lesson from the pandemic;2024 presents the opportunity to prove them wrong.Whether its through diversifying service offerings,enhancing technological capabilities,or developing new partnerships,the ability to anticipate and respond to mar

126、ket changes will be adefining factor in achieving success.3PLs that can effectively integrate innovation into their operations,adapt to shifting consumer demands,and seize emerging opportunities will not only thrive but also lead the way in shaping the future of the logistics industry.Request a Demo

127、 HereFor more information,please call us at 833.983.6748 or visit .2024 Extensiv I All rights reservedAbout Extensiv In May 2022,3PL Central,Skubana,Scout Software,and CartRover combined to become Extensiv.Extensiv is a visionary technology leader focused on creating the future of omnichannel fulfil

128、lment.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 ma

129、nagement(WMS),order management(OMS),and inventory management(IMS)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 Exten

130、siv every day to drive commerce at the pace that modern consumers expect.About Extensiv 3PL Warehouse ManagerExtensiv 3PL Warehouse Manager is the leading cloud-based warehouse management system(WMS)solution built to meet the unique needs of the 3PL warehousing community.Serving as the backbone of o

131、ur customers 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

132、 routine tasks,and deliver complete visibility to their customers.About Extensiv Network ManagerExtensiv Network Manager provides the technology to connect and operate a reliable network of individual 3PL warehouses.For 3PL warehouses looking to scale their business and compete in todays market,Exte

133、nsiv Network Manager delivers a fulfillment platform to build and manage a reliable network of partners that can extend geographic reach,offer greater services,and enhance SLAswithout impacting your or your customers bottom lines.Interested in learning how Extensiv can help your business not just survive but thrive amidst turbulent industry conditions to catalyze your logistics operation in 2024?