We’re back from the 2023 IWLA Convention & Expo, an event that attracts hundreds of warehouse logistics leaders from across North America by offering a unique opportunity to connect and network during educational sessions, receptions, and an action-packed golf tournament. If you haven’t attended an IWLA Convention & Expo in the past, consider joining us next year. Registration is now open for 2024 and attending is a great way for any warehouse leader to keep on top of the trends shaping the industry.
Our team had a great time connecting with customers and partners and was thrilled to meet many new faces, too. We listened and learned, and here is a quick rundown of the top trends we think today’s third party logistics (3PL) providers can expect in 2023.
A Healthy Market Will Continue to Drive Investment in the Sector
The 3PL market is anticipated to register a CAGR of more than 8% over the next five years. Many of our customers and the companies we spoke with at the convention have seen double digit returns year after year. Logistics companies are proving to be solid investments and private equity funding is flowing in. Larger 3PL organizations are also acquiring smaller ones. These investments are giving 3PLs money to spend on growth. In the past, growth has largely been customer-driven, today growth is being driven internally. Many 3PLs we spoke with realize they can’t keep doing business the way they have been doing it. The pandemic exposed many flaws in the logistics industry, and 3PLs need to invest in their processes to close the gaps and earn new business.
Rising Rents Will Force 3PLs to Focus on Increasing Efficiency
Rents on are on the rise and the demand for warehouse space is strong. Even for 3PLs that can afford to add new space, they often can’t build fast enough due to backlogs in the construction industry. For 3PLs to succeed, they must focus on using their current space more efficiently. This effort will drive further investment in technology and storage equipment.
Labor Will Continue to be a Major Constraint
The labor shortage isn’t new, but it certainly was exacerbated by the pandemic. The reality is that there are people out there willing to work, but the 3PL industry will be challenged to attract a workforce into what is viewed as an ‘unsexy’ environment. It will also be challenged to retain the talent it has as industry leaders increase salaries of warehouse and delivery workers. Expect to see 3PLs step up their focus on hiring right, training, providing good feedback, and offering incentives. Investment in automating specific processes within the warehouse that allows time and work to be reallocated to more high value tasks will also be on the rise.
A Greater Demand for Analytics
Today’s shippers want to make more data-driven decisions. As such, 3PLs will increasingly need to generate more analytical insights across their operations. 3PLs will focus on building data science capabilities and teams so they can provide useful insights to their clients and their own internal teams. The end goal is to provide shippers better traceability and end-to-end visibility across the supply chain.
The Use of AI Will Support Market Growth
Artificial Intelligence has gained a lot of traction in the 3PL industry. At the convention, much of the talk about AI centered on how it could be used in sales and marketing efforts. Apps like ChatGPT are expected to help 3PLs do things like generate personalized automated responses to customer inquiries, create high-quality content for email or social media marketing campaigns, and assist customers through their purchasing process. All key initiatives that will support overall market growth.
Stay Ahead of the Trends
The 3PL market is a competitive landscape. According to IBISWorld, there were over 20k 3PL businesses in the US in 2022. As such, 3PLs need to keep on top of the trends that will enable them to keep their current customers and win new ones. Made4net’s 3PL experts are here to help. Learn more about our 3PL WMS solutions and get in touch if you’re looking to grow.