The e-commerce market is booming and traditional retailers are adopting new business models to accommodate the growth. In the past four quarters, the U.S. Commerce Department has reported that retail e-commerce sales have outperformed the previous year’s numbers by more than 15%. In comparison, retail sales during the same period rose just over two percent.
In a recent article from truckinginfo.com, it was reported that “UPS projects that business-to-consumer parcels will make up more than half of its U.S. domestic shipments by 2019.”
As demand steadily rises, e-commerce is clearly impacting distribution models of last-mile delivery companies like UPS, by offering customers faster and highly traceable shipping options. What’s less obvious is how e-commerce is influencing the operations of 3PL providers.
How the e-commerce boom benefits 3PL providers
Increased LTL Shipments
Due to capacity issues and constantly fluxing inventory in urban markets, there is frequent opportunity to move less than truckload freight between stores and local distribution centers for fulfillment. Additionally, 3PL providers can take advantage of delivering oversized or over dimensional products like home fitness equipment, which is too large to be boxed and sorted by parcel carriers, and often needs to be delivered to dock-less residential areas.
Now that two-day, next day, and even same day delivery has become industry standard, the need to keep transportation costs down has caused businesses to spread inventory between more warehouse locations for cheaper and easier ground transportation. Due to the increased demand, shippers are now outsourcing more of their warehousing, distribution, and transportation needs to 3PL providers.
Precise Expedited Requirements
In addition to the demand for faster than ever transport periods, shippers require expedited services that go beyond standard delivery times. 3PL providers are seeing an escalating need for shipments that require must arrive by dates, which include weekends and specific windows for delivery that could cause shippers heavy fines if the arrival time is missed, or the freight is delivered too early.