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Home » 3PLs look to partnerships with digital firms to handle soaring e-commerce demand

3PLs look to partnerships with digital firms to handle soaring e-commerce demand

Expanded capabilities could also help established 3PLs compete with amazon.com's increasing share of outsourced fulfillment sector, Armstrong report says.

geodis warehouse interior
November 11, 2020
DC Velocity Staff
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Third party logistics providers (3PLs) that handle e-commerce orders are caught between swelling volumes of online parcel purchases and the hefty market share of mega-retailer amazon.com, which increasingly acts a 3PL itself, a new report says.

In response, some of the industry’s biggest 3PLs—such as Seko Logistics and Geodis—are swiftly building partnerships with digital logistics firms to build their capabilities to handle those twin challenges.

The moves come as shippers are shouldering the burden of booming e‐commerce logistics costs, which currently account for 9.9% of total U.S. logistics costs and are on track to grow at a whopping 19.9% compound annual growth rate (CAGR) through 2020, according to the transportation consulting firm Armstrong & Associates Inc.

The 3PL sector is well positioned to handle that trend, with U.S. 3PL e‐commerce revenues forecast to rise 28% through 2020 as companies continue to outsource their logistics activities in the face of a spike in e‐commerce demand during the Covid-19 pandemic and winter holiday peak, Armstrong said in a report titled “Rising Tide: The Rapid Growth of E-Commerce Logistics, 3PL Solutions, Last-Mile Delivery, and the Dominance of Amazon.”

But most of those revenues are flowing to a single player. Among those 3PL providers, Amazon.com’s operations claim an estimated 60% market share of the $43.4 billion U.S. e-commerce 3PL market segment as the online retailer uses its distribution muscle to process orders for third party merchants through its Fulfillment by Amazon (FBA) service, the report said.

With an eye on boosting their ability to compete, the 3PLs aren’t sitting still. Seko Logistics said today it had joined forces with Bringg, which calls itself a delivery and fulfillment orchestration platform provider, in a move to offer its digital consumers better visibility and control of their delivery experience.

In Seko’s move, the company’s clients will now receive a text-message link to a self-service web app which lets them track their deliveries on a live map, communicate directly with the driver or support center to notify them of any specific requests, receive status updates, provide payment, and rate the delivery experience. At the same time, Bringg synchronizes data across Seko’s software platforms, including its transportation management system (TMS), WMS (warehouse management system), CRM (customer relationship management), and commerce modules. Bringg then models delivery flows and predicts timing for every stage of the pickup or delivery, tracking inventory across the first, middle, and last mile, the companies said.

And yesterday, Geodis announced integrations with the Shopify marketplace platform and with Amazon Drop Shipping itself, saying the information technology (IT) upgrade will expand its own e-logistics solutions to meet the acceleration of online shopping. As a logistics partners for both marketplaces, Geodis will fulfill online orders and ensure data flow between their digital storefronts and supply chains. For example, Geodis can directly pull orders and push ship notifications and tracking back to Shopify, providing brands with inventory sync between the two companies and offering full visibility from order to ship, the firm said.

Parcel & Postal Carriers Transportation 3PL Warehousing 3PL
KEYWORDS Armstrong & Associates Geodis SEKO Logistics
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