These days, the supply chain seems to be in a constant state of flux, with 3PLs often leading the pack in visibility due to their constant competition with giant internet retailers that can deliver packages within a few hours when necessary.
The Biggest Challenges Remain the Same
Fulfillment service providers and retailers have both been struggling with last mile delivery for years. As shipping space remains more or less the same and more people are ordering things more often, that equation remains hard to balance. However, the last mile problem doesn’t exist in a vacuum. It’s just another layer on the trifecta of labor shortages, profit compression and the cost of technology acquisition.
Despite efforts to develop over-the-road trucks that can be controlled remotely, allowing a driver to essentially take command of two loads at once, as well as other labor-cutting measures, there are just not enough drivers for all the packages that need to go across town and across the country. Unemployment is extremely low, so it’s likely that this will continue into the future.
That puts truckers in a position to demand higher wages for their hauls, which then drives the cost of moving a load up, reducing profits for already-stretched 3PLs trying to buy into the latest tech to retain and earn new business.
Tech’s Part in Fulfillment Challenges
Today’s business owners need more data to better understand their customers, as well as to ensure they’re not spending too much on merchandise.
These companies seek out 3PLs that have all of that on offer, the bigger the data, the better for some. The companies that fall behind in the tech department are finding it hard to compete in the mainstream, even if they’re highly experienced in a particular niche.
Of course, this isn’t the only tech that’s notable. Having access to trucking networks so those loads can be rerouted if necessary, being able to more easily collaborate with other members of the supply chain through EDI or other electronic means and passing the right documents along to customs before the ship even arrives at port are just a few of the many tech balls that are being juggled by 3PLs today.
The challenges that are being presented to the 3PL sector are noteworthy because they absolutely can affect the price of almost everything on the retail end of the process. It remains to be seen what will happen to 3PLs, shippers and shoppers as American protectionist tariffs go into force worldwide, but it’s almost certain to add to the current circular woes of lack of shipping space, cost of labor and thin profit margins.