Third-party logistics (3PL) warehouses have overwhelmingly grown order volumes, profits, and customers this year, but labor challenges and tight market conditions are creating headwinds, according to a survey by warehouse management systems (WMS) provider 3PL Central.
The tech firm’s most recent Third-Party Logistics Warehouse Benchmark Report reflects input from more than 200 3PL warehouses and builds on previous data to provide year-over-year changes and information on trends to help warehouse professionals understand market growth opportunities and challenges facing the industry, according to 3PL Central.
Among the report’s findings, 85% of 3PL warehouses experienced order volume growth this year, with 23% reporting growth of more than 50%. At the same time, 3PLs are operating at or above warehouse capacity, with some of the lowest warehouse vacancy rates in history, alongside significant supply chain backlogs and a workforce shortage that left many with higher labor costs and fewer people to address the higher volumes. Nearly 50% of respondents said they are struggling to find and retain qualified workers while also facing “significantly increasing” labor costs.
Many respondents said they are turning to technology to address the challenges. Eighty-four percent of 3PLs said they have implemented a WMS as the central hub of technology for their business, with the average 3PL having three or more systems integrated to their WMS, including shopping carts, marketplaces, order management systems, and the like. More than half of respondents (53%) said they fulfill orders less than 90 minutes after receipt, with speed of order fulfillment linked closely with annual order volume growth, the survey also found.
Despite the challenges, 3PLs surveyed said they are optimistic for 2022.
“Looking at year-over-year data, the labor shortage and warehouse capacity limitations have become more acute issues for 3PL warehouses,” Rachel Trindade, chief marketing officer at 3PL Central, said in a statement announcing the report’s findings. “Respondents show how they have addressed these concerns with automation, technology, and system integrations.”