As Recessionary Clouds Darken and Inflation Remains High, 3PLs Look to Optimize Efficiencies to Drive Profitability
EL SEGUNDO, Calif., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Extensiv (formerly 3PL Central) — delivering omnichannel software solutions for warehouse, inventory, and order management — today announced the results of the Third-Party Logistics Warehouse Benchmark Report. This is the third annual and industry's only benchmark report focused exclusively on the 3PL warehouse industry. This year's report highlighted the success 3PLs performing omnichannel fulfillment saw related to order volume and profitability growth as compared to other 3PLs.
The Third-Party Logistics Warehouse Benchmark Report aggregates data from more than 200 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 challenges facing the industry.
Key takeaways from the 2022 report include:
An increasing number of 3PLs grew volume and profitability: 3PLs fared even better than in past years, despite concerns about inflation, more significant labor constraints, and global uncertainty. 91% of 3PLs grew order volumes in 2022, up from 85% the year prior. 81% claimed higher profits this year, a slight increase from 79% last year.
Omnichannel strategies drove faster growth: 18% of 3PLs performing omnichannel fulfillment saw a 50% increase in profitability over the prior year, which is 33% more than the average of other 3PLs.
Successful 3PLs started to focus: This year, many 3PLs found success focusing on their strengths. For example, more 3PLs specialized in specific industries, with 3PL warehouses serving 2.9 industries — down from 3.5 industries last year.
Labor shortage compounded by increasing labor costs: 48% cite finding and retaining workers as a top business challenge that was also magnified by 79% of 3PLs stating that their labor costs increased in 2022.
Connectivity-led 3PL technology investments: EDI (51%), shopping cart (48%), and marketplace (25%) integrations showed major jumps from prior years as top technology integrated with warehouse management systems (WMS).
More than half of 3PLs fulfill orders in less than 90 minutes: To meet growing customer expectations, 60% of 3PLs fulfill orders less than 90 minutes after receipt, up from 53% last year. Further, the speed of order fulfillment is linked closely with annual order volume growth. Nearly a third fulfill orders in less than 30 minutes, up from 22% last year.
3PLs focusing on functionalities that drive profitability: The top functionalities respondents plan on implementing in the coming year include billing and invoicing (32%) and mobile barcode scanning (27%). Top priorities include acquiring new customers, e-commerce growth, and automating processes.
Other key areas of the report include trends and key metrics related to growth opportunities, profitability, labor shortages, warehouse space limitations, technology integrations, and success measurements, among others. Although this year brought growing concerns around inflation, a recession, more significant labor constraints, and global uncertainty, 3PLs remain optimistic about the coming year.
"3PLs spent significant time integrating shopping carts and marketplaces to optimize their businesses in 2022, and connectivity is a theme that will continue into 2023. We found it interesting that 3PLs generally remain optimistic as they continue in an uncertain economic environment," said Rachel Trindade, chief marketing officer at Extensiv. "Fifty-three percent (53%) of 3PLs are concerned about managing costs next year and 25% are concerned about inflation. They plan to face economic headwinds by finding greater efficiencies. With the Third-Party Logistics Warehouse Benchmark Report, the core insights provide 3PLs with access to industry benchmarks for planning and implementing best practices to support order and profitability growth in 2023."
Click Third-Party Logistics Warehouse Benchmark Report to view and download the complete 2022 Extensiv Third-Party Logistics Warehouse Benchmark Report.
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.
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