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The 3PL industry is going through transformations and the coming few years are likely to be critical for the future of the industry. While things may not look rosy from the customers’ perspective (customer dissatisfaction has been growing over the years), the industry itself is gearing up to take on the challenges and the opportunities offered by the latest technological advancements. In fact, to the techno-savvy optimists who see a bright future for the industry, the future is already here.

The new technologies that are most likely to change the face of 3PL include mobile apps, cloud computing, Big Data, internet of things (IoT), 3D printing, driverless vehicle, drone delivery and augmented reality. While some of these technologies are already in use, such as mobile apps and 3D printing, others are still in the testing phase, such as driverless vehicle and drone delivery. Nevertheless, technologies are already here and it’s only a matter of time before they will be implemented successfully.

The State of Third Party Logistics: Technology Innovations Driving a Service Mindset

But the main goal of these technologies will be to enable 3PL companies to connect, collaborate and engage with their clients seamlessly in order to improve the speed and quality of service. Just imagine the day when packages will never become lost or misplaced (because they are fitted with RFID chips that enable them to communicate with each other), when driverless vehicles and drones will deliver shipments at the customers’ doorsteps, and when customers will be able to monitor the progress of their shipment in real time.

At the rate new technologies are cropping up, some of them specifically targeting the logistics market, there will soon come a time when almost the entire logistic process will be automated – needing human intervention only for critical tasks. The automation of logistics will remove human errors, cut unnecessary costs, speed up transportation and delivery, ensure the safety of goods, and help managers make quick and accurate decisions.

However, only about 30% of 3PL companies have been found to be using cutting edge technologies. Most of these companies are large, with the financial resources to maintain their own servers and a dedicated IT staff. The advanced technologies they use are limited to Transportation Management System (TMS) and Warehouse Management System (WMS) applications. The majority of smaller companies find the costs of these applications too high to be profitable.

The Dizzying Speed of Technology Driving the State of Logistics Now & In the Future

But that is quickly becoming the past. Application developers are increasingly targeting small to mid-sized companies, which makes sense because they form the largest segment of the market. Once the costs of TMS and WMS drop significantly, they will become ubiquitous. These applications are also becoming more advanced and gaining the ability to respond to market dynamics instantly. In the future, they will evolve to have artificial intelligence (AI) capable of making some decisions on their own.

Speech recognition, such as Siri, is becoming more common. In the future, voice prompts and commands will be standard in the supply chain, such as when making stock inquiries and freight tracking. At the same time, intelligent speech recognition systems will enable workers to communicate directly with WMS & TMS, bypassing human actors, which will improve stocktaking, speed up order turn-arounds and decrease staff training periods. In many large companies, these are already happening to a more or less degree.

Mobile technology is revolutionizing 3PL. Many 3PL companies have already begun to use mobile devices and apps to improve agility. Devices fitted with radio frequency identification (RFID) chips are not only capable of transmitting their location, they also have the potential to hold data about themselves, so that they can be instantly traced and identified. Using mobile apps installed on their mobile phone, customers will be able to order, process and track freight shipments at any time.

The Enablement Age Empowers Shippers & Third Party Logistics thru the Use of Emerging Technology

state of third party logistics

This brings us to Internet of Things (IoT), a revolutionary new technology that will give devices and products the ability to talk to each other within a network. In the future, all the devices and products will have a chip (such as RFID) implanted in them so that they will identify themselves, know their right place in a warehouse, gather information about their surroundings and transmit them to the handlers.

Cloud-based technology is making fast inroads into business, heralding the new age of Big Data. Already, businesses of all types are beginning to use cloud-based applications that can be accessed from anywhere. With the computing power made available by the cloud at an affordable rate, they are able to analyze extremely large sets of data to study patterns, trends and associations pertaining to their business activities.

3D printing also has the potential to make a significant impact on the 3PL industry. With the ability to print exact working copies of products, manufacturers and retailers of the future may choose to ship raw materials instead of finished products. This means that raw materials may constitute a significant amount of goods moved across borders. The technology is already in existence and is widely being adopted by manufacturers as well as their customers.

When it comes to transportation and delivery of goods within a certain geographical area, driverless vehicles and drones have the potential to become important tools. Both technologies are already here. But they must overcome several regulatory hurdles before they can come into widespread use. Of course, they may never completely replace traditional means of transportation, but there is little doubt that they will be used to deliver a significant percentage of goods in the future.

Another technology that has the potential to have far-reaching impacts on the 3PL industry is augmented reality. By giving workers the ability to see, hear, feel and smell beyond their natural ability, the technology enables them to gain critical information about the products, such as the ability to know the contents, weight and dimensions of parcels without opening them. The technology will save a great deal of time and reduce overall costs.

Today’s 3PL managers and workers are fortunate to be living in a time when science fiction is turning into  reality every day. Take a good look around and you will see that the future is already here. All you need to do is embrace it and you will find yourself a cut above your competitors in the watchful eyes of your customers.

Are you expecting your 3PL to know these coming issues and understand the state of third party logistics as it stands now and into the future? Let us know your thoughts in the comments section below! Tomorrow we will discuss the room to grow for third party logistics providers.