The history and origins of 3PL logistics

 

It’s been predicted that approximately 80% of Fortune 500 companies use 3PL services today and that this worldwide industry brings in an annual revenue of around $750 billion.

In today’s competitive digitally-orientated landscape, everyone wants to save time and money. Consumers expect an almost instantaneous turnaround time, right from the checkout page, all the way through to the actual physical delivery. An increasing number of ecommerce business owners are turning to 3PL service providers to create speedy, seamless online user experiences.

Third party logistics providers are solution-orientated businesses that help companies operate more effectively. They offer a variety of services that include transportation, picking and packing, warehouse storage, distribution, stock management, real-time tracking, analytics, etc.

The need for 3PL services

Hundreds of years ago, products were boxed, put onto ships, and transported all over the world. Businesses ran their operations and had full control over all logistics. Today, however, this supply chain is extremely complex. The rapid growth of ecommerce and emerging consumer markets around the world has paved the way for a common technological solution.

As more and more companies operate on a global scale, so too does the demand to make use of a system that not only improves speed and reduces costs, but also reduces the risk of product damage or loss. Enter the 3PL solution. Although this sector is only around 40 years old, it continues to evolve to better meet the dynamic and complex demands of the consumer.

Just 20 years ago, business owners were happy to have their product transported and delivered.
These days, they expect instant access to data that will let them know exactly where their product is at any given moment and alternatives as to how it can be better transported in the future.

Where it all began

The 1980s: The trend to outsource logistics to third parties really took off in the 1980s after the Motor Carrier Act was passed. This act removed imposed controls within the trucking industry, which allowed third-party companies to offer logistics services in a more complex environment. Trucking carriers also increased from less than 20 000 in the 1980s, to around 1.2 million today.

The 1990s: As new markets appeared across the globe in the 1990s, companies of all sizes were keen to grow their product range even further. Economic developments rose in India and China, which motivated companies to move their manufacturing operation overseas. Third party service providers started offering integrated logistics services, which filled the need of managing complex, global supply chains.

The 2000s: The massive expansion of the internet in the 2000s, opened the door for 3PLs to offer “connected” supply chain solutions to global companies. Transportation, logistics, and stock management were all integrated into impressive technology platforms which allowed for true supply chain visibility. Today, 3PLs continue to expand and adapt their services to meet the demands of an ever-changing global marketplace.

The future of 3PL

The dramatic shift of the 3PL industry has been documented over the last 21 years by the Annual Third-Party Logistics Study from Capgemini Consulting, Penn State University and Penske Logistics. Researchers for this year’s report found that many 3PLs have evolved from tactical service providers to collaborative partners that take on even more accountability. Nearly all 3PLs of this report revealed that data-driven decision making is crucial to the success of future supply chain activities.

With today’s continuously changing digital landscape, it’s no wonder that more and more ecommerce companies are increasing their technology expectations, and that 3PLs are jumping to the challenge by offering smart, solution-orientated logistics services.

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