Positive Markers, Investment & Innovation Seen in Logistics Industry

By
Productiv

A positive 3PL report, especially regarding value-added services and distribution, and some much-needed technology investment in drayage, were among the upbeat indicators recently in the logistics industry. The news demonstrates the resilience and innovation of a sector that is so vital to commerce and national economies. Here are some brief snapshots of notable happenings.

3PL Revenue Down Last Year, But Up 25% Compared to 2019

While the global third-party logistics (3PL) market was down 18.5% in 2023, it was still up a healthy 25.3% over the pre-pandemic year of 2019, according to the annual report from market research firm Armstrong & Associates. From a sector perspective, dedicated contract carriage and domestic transportation management were down 10% last year, as shipping volumes declined; however, value-added services (VAS) and distribution within warehousing were up 8.4%. According to Logistics Management, Armstrong noted that VAS and distribution continue to outperform “amid the general lack of warehousing space, especially in the cold chain, coupled with overall growth trends in e-commerce fulfillment and last-mile delivery.” Value-added services are increasingly sought by brands as offerings like kitting and assembly and retail compliance make it easier for them to expand their channel partnerships.

Logistics CEO Looks to 2024 Ending of Freight Recession

In a positive sign, a logistics executive is seeing some light at the end of the long freight recession tunnel. Doug Waggoner, CEO of Echo Global Logistics, told the audience at FreightWave’s virtual 3PL summit that the bottom of the freight market has been reached, and that absorption of trucking capacity could spell stability and a better supply/demand balance by the end of 2024. “The number of trucks is declining, so not only the number of carriers, but the number of trucks in the market,” Waggoner said during a keynote address. “I think those are all good indicators for us to see that the excess supply of capacity is coming back in line with demand.” While it’s perennially easy to punt a market turn to the back half of the year, it’s still encouraging to hear a prediction of a freight recession thaw.

Target Launches Paid Membership Program

Minneapolis-based Target is tossing its hat into the paid membership ring, alongside perennial competitors Walmart and Amazon, both with well-established programs. Target Circle 360 will give subscribers unlimited free same-day delivery for orders over $35, as fast as one hour, and free two-day shipping on orders from Target.com. It’s interesting that this move is coming now, three and a half years after Walmart+ was launched. That program has been growing steadily since, but of course is miles behind Amazon Prime, with well over 200 million members. Target’s strong fourth-quarter results exceeded estimates at a time when Macy’s is closing 150 stores and Rite Aid is shutting down 77 locations. Target’s focus on tech investments and supply chain strategy, including creating a more efficient regional network and increasing automation, have often been cited as success factors.

Technology Investment, New Solutions Growing in Drayage

The drayage industry, long considered an “uncelebrated hero” of the supply chain, is seeing an increase in technology investment to upgrade the traditional operating model, according to a feature in Inbound Logistics. Because drayage is the “connective tissue” between ports and rail ramps, and the “first domino” in logistics, more solution providers are developing software to improve efficiency and performance. Among the improvements: new transportation management systems (TMS) and electronic logging devices help carriers optimize routes, provide real-time shipment tracking and reduce paperwork. Mobile apps and online portals are helping customers track shipments while improving communications with drayage carriers.

“Cutting-edge integrations allow for the real-time bilateral sharing of information so cargo owners can be kept informed on status updates, document sharing, ETA, and more,” said Michael Mecca, CEO and founder of drayage TMS firm PortPro.

Uniqlo Warehouse Goes Full-On Robotic in Tokyo

In an indicator of the extent to which robotics are transforming logistics and fulfillment, fast-fashion giant Uniqlo has given a Tokyo warehouse a serious automation upgrade. Tapping Japanese material handling system provider Daifuku, Uniqlo has added robots to inspect and sort clothing. As a result, it has reportedly reduced staff at the facility by an astounding 90%, while running production around the clock. This is sure to reignite the ongoing argument about robotics providing labor augmentation – in a sector where workforce challenges are evergreen – vs. outright associate replacement.

Fulfillment Strength Part of Winning Formula for Mercado Libre in Latin America

MercadoLibre, literally “free market,” continues to own the somewhat nascent e-commerce sector in Latin America, partly driven by its logistics infrastructure and uptake in its fulfillment services. A Wedbush analyst recently upgraded the company’s stock, saying MercadoLibre is capable of fulfilling 50% of its orders, a figure that’s comparable to Amazon. For any brand interested in a strong expansion opportunity, the LatAm market in general – and MercadoLibre in particular – is worth a look.

As the Market Turns, Look for a Solid 3PL Partner To Help You Seize the Day

It’s encouraging to see signs of recovery, growth, and innovation in logistics, at a time when the macro picture has been challenged for some time. A tech upgrade in drayage, some encouraging signs in the freight market, and some positive signs in the 3PL world are all reasons to be hopeful for the balance of 2024.

Value-added services are seeing stronger growth than other categories of 3PL service, which is not surprising, as retailers and brands require a diverse range of capabilities to make the customer experience magic happen. This is why they’re an important aspect of Productiv’s portfolio, from Amazon FBA prep to kitting and assembly and in-store POP displays. To learn more or get a free quote, talk to an expert at Productiv today!

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