Key Obstacles for 3rd Party Logistics Businesses & How to Overcome Them

Every business hits snags. Even those that are part of an industry valued at an estimated 297 billion US dollars. Yes, we are talking about 3rd party logistics, and the figure is counting North America alone!

Despite the massive growth of this industry, many 3PL businesses continue to face challenges. Fortunately, solutions exist. In this blog, we discuss some of the major 3PL problems and how to beat them

1. Shortage of Skilled Workforce

It seems like a bit of a stretch in the most overpopulated time of human history, that we are short on skilled workforce. Ironically, the shortage of skilled workers is so drastic that there are 10 million job openings in the US alone.

The rapid growth of the logistics industry has led to a demand for skilled employees. This means companies have a challenging time finding the right workforce for the job. Studies found that less than one-third of the companies are prepared to handle the ongoing demand with the current staff, while also trying to increase wages to retain staff.

Overcome this by…

  • Boosting productivity of current staff
  • Improving organization and safety
  • Automating tasks of crunching numbers and preparing tedious reports

2. Inadequate Warehouse Capacity

Warehouses are brick and mortar structures that serve businesses that run on computer codes. One is static and the other dynamic. Sounds like an obvious mismatch, right? Unfortunately, the rapid increase in eCommerce and the increase in demand for storage space is an obstacle that looms big for 3PL services. With passing time, real estate hikes also pose a problem for warehouse expansion.

Overcome this by…

  • Improving storage facilities by expanding vertically, not horizontally.
  • Optimized usage of industrial shelving and pallet racks
  • Improve storage by following ideal storage methods.

3. Booming ECommerce

Ecommerce is growing at an unprecedented speed over the last couple of years. In 2021, the eCommerce sales valued at $4.9 trillion worldwide. It is predicted to grow by 50% over the next four years. The undeniable influence of COVID and the continued growth rate has evolved seller-customers relations too. The demand for free shipping costs, real-time tracking of goods, quality packaging and return logistics are at an all-time high. If the largest 3PL services can afford to meet it, it is the small and mid-sized ones that struggle.  

Overcome this by…

  • Increasing product price to cover the shipping cost. Studies suggest that customers find a free shipping offer more appealing despite a slight price hike.
  • Updating to technology like 3PL Dynamics for real-time tracking and efficient management.
  • Maximizing storage space for faster fulfillment.

4. Adapting to Technology

Technology solutions to almost every problem in the world. Almost. Not if buying the technology is a problem in itself. Automation and cloud-based systems offer cutting-edge solutions, however, adapting them is no small matter. It is a decision that requires a major monetary investment. However, it has a relatively smaller annual ROI to make a good business case. Unable to update technology also puts the company at a disadvantage in terms of competition.

Overcome this by…

  • Adopting manual storage such as automated storage and retrieval systems (AS/RS), which cost relatively less, increases efficiency and boosts productivity. It also increases the use of floor space and increased inventory storage density.

Empower Your Business with PL Solutions

Despite these problems, our hope lies in the infinite human ability to adapt. Adapting your 3PL business to the changing times and adopting the right technologies hold the key to success.

At PL Solutions, we have the solutions that help you achieve your most critical business priorities. Get in touch with us today to know more!