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Supply Chain Industry Updates

3PL Warehouses Face a Good Problem Headed into 2021

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Many 3PL warehouses appear to be bursting at the seams as they attempt to keep pace with this year’s e-commerce boom.

Nearly 80% of 3PL warehouses experienced growth in 2020 and expressed continued optimism about 2021, according to a recent survey. However, 50% of respondents reported exceeding their warehouse capacity, leaving limited room for expansion. Almost as many (47%) said they were having difficulties finding qualified workers while also experiencing increasing labor costs (58%).

“This year has presented both unique challenges and opportunities for the third-party logistics warehouse industry,” 3PL Central, a provider of warehouse management services software, observed. “Between the change in buying behaviors driving more volume through e-commerce and an increasing demand for essential goods, more than ever before businesses have had to turn to 3PL warehouses to fill this vital role in the supply chain.”

3PL Central surveyed more than 250 warehouse industry professionals in September. “3PL Central designed this survey and the subsequent report to highlight the best practices of the fastest-growing companies in the industry,” said Rachel Trindade, chief marketing officer. “We want to advocate for the industry and provide insight and expertise to those 3PLs planning to accelerate their growth and to meet the demands of a rapidly changing landscape. For example, providing data that omnichannel fulfilment warehouses were 271% more likely to fall into the fastest-growing 3PL warehouses category (25%+ growth) can help warehouses develop strategies for diversification in 2021.”

The survey also found that fast-growers tended to have “significantly higher concentrations in retail and apparel fulfillment” business and were more likely to serve pharmaceutical or nutraceutical customers.

The report concluded that “the outlook for 3PL warehouses remains positive moving into 2021.” However, “warehouses will have to reflect on 2020 peak season as they plan for 2021, evaluating performance using metrics and measurements that determine where they can drive additional efficiencies through process redesign or technology implementation. To harness the expected continued growth, 3PLs will have to create well-defined workforce and warehouse space strategies to address these two key areas that threaten to limit growth potential.”

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