Things are slowing down in the 3PL industry, with a 4.7% shipment decline during the last fourth quarter. Asparuh Koev, CEO of Transmetrics, an AI logistics platform, sees this as a green light for polishing the dust off those company visions that got put on the bottom of the pile.

Read also: Why Now is an Excellent Time to Switch to Sustainable Logistics Practice

A glut of trucks and stubbornly weak freight markets have been crippling third-party logistics (3PLs) companies for the past two years. These conditions are squeezing margins and putting a serious strain on their financial health.

With 2024 looking like a slow-to-steady year for shipping demand, smart investments are what 3PLs need to take back control of their market. Getting closer to customers with strategically located warehouses, customizable solutions, and dynamic pricing techniques are some approaches to consider. 

Looking beyond traditional solutions, your logistics business can regain its unique proposition, navigating periods of excess capacity and emerging stronger.

Micro-Warehousing and Strategic Partnerships

Some 67% of surveyed customers encountered delivery problems already this year. Strategically located facilities offer a handy alternative to large distribution centers and make for agile retail supply chains.

Micro-fulfillment centers or smaller-scale storage facilities are often positioned in urban areas, bringing inventory closer to the end consumer, and reducing the delay and costs that come with heavy traffic congestion and limited parking. This last-mile optimization strategy is particularly useful for fast-moving items, or popular products, ensuring they are readily available for quick dispatch. The trick is to have advanced inventory algorithms that prioritize high-demand items and logistics planning tools to calculate storage recommendations that can maximize smaller spaces.

Popular supermarket chain Walmart, for example, partnered with three technology companies to open micro-fulfillment centers inside select Walmart stores in the US, and we are seeing a similar strategy for Germany’s largest grocery discounter, Netto. The Edeka Group company joined forces with automated solutions provider, Cimcorp, to help optimize Netto’s processes for shorter lead times and more precise order fulfillment.

Teaming up with logistics providers or co-locating with other retailers in shared warehouses can also improve efficiency by reducing costs and streamlining fulfillment processes.

Value-Added Services (VAS) Expansion

How many times have customers bought products and decided they don’t want them anymore? Twenty-three percent of shoppers admit to “wardrobing” — buying items with the intention of returning them.

Reverse logistics is all about getting that product back from customers and figuring out what to do with it in the best way possible. This could mean sending it to a store, a warehouse, a repair center, or even back to the manufacturer. The main goal is to either get some money back from the product by selling it again or get rid of it cheaply and sustainably through recycling.

While it might not be the trucker’s fault a customer received the wrong order or the product didn’t meet the customer’s standards, 3PLs can help businesses dispose of unwanted or defective products responsibly. Providing this additional value is a great way to maximize excessive capacity and take the burden off retailer clients. By streamlining communications between retailers, warehouses, manufacturers, recyclers, and end customers — with transparent information on warranties and service returns accessible — 3PLs can offer reliable reverse logistics.

Estimated at $8.8 trillion in 2024, the e-commerce market size is large and it’s growing; at a CAGR of 15.8% between 2024 and 2029. However, business expansion across multiple independent online stores requires solid inventory management control. Forecasting tools and warehouse management systems (WMS) that integrate with e-commerce platforms can provide real-time visibility into inventory and order fulfillment to manage stock across multiple warehouses. 

Data-Driven Dynamic Pricing

Traditional fixed pricing can leave 3PL warehouses empty during slow seasons and overflowing during peak times. However, by adjusting prices based on real-time factors like demand and capacity, 3PLs can maximize profits and better serve customers.

3PL companies can adjust their strategies to market fluctuations, differentiating rates for services depending on their current demand, warehouse space, level of difficulty, or load-to-truck ratio. You may use the delivery date to determine the final rate, putting a dynamic markup based on timeliness and your current workload.

To implement dynamic pricing successfully, 3PLs need good data. Real-time visibility into an organization’s entire supply chain enables businesses to enhance decision-making and pivot to maintain a competitive edge. Analyzing historical trends alongside real-time data and market conditions allows you to swiftly identify and address upcoming peaks or slows in demand or storage space. Clear communication with clients and investment in flexible technology is also crucial. This way, 3PLs can understand client needs, adapt to market changes, optimize resources, and become more competitive in the logistics industry.

With a surplus of empty trucks and a slow-to-steady year for shipping demand on the horizon, 3PLs need to get creative to regain control. The key lies in getting closer to customers. Strategically located warehouses can mean faster deliveries and happier clients. 3PLs can bring in new customers with customizable logistics solutions making you a more attractive partner while keeping profit margins balanced with flexible rates based on demand. By thinking outside the box and adopting these strategies, 3PLs can not only weather the current market conditions but emerge as stronger competitors in the logistics industry.

Author bio

Asparuh Koev has worked in the transport and logistics sector for more than two decades. Over the years, he has established several companies including Sciant, an engineering services company later acquired by VMWare, and IntelliCo Solutions, which delivers IT digitization for the transport industry. Koev co-founded Transmetrics in 2013 and, as CEO, he combines IT and domain expertise to grow a company that is bringing truly cutting-edge technologies to the sector.