Last week, I took a look at the annual 3PL Study for 2025, finally getting to it after it was released as usual at the CSCMP Edge conference in Nashville at the end of September. (See State of the Logistics Union 2024.)
I noted that the always anticipated report was led, as for all 29 years of its existence, by my friend Dr. John Langley of Penn State, along with same set of sponsors (who make the report possible) for the last few years, that being NTT Data, Penske Logistics, and Penn State.
Gilmore Says.... |
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| The survey found ust under one-third of respondents (30% of shippers and 3PLs) stated that they are not willing to absorb any costs related to faster shipping speeds. |
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In that part 1 review and comment I intended to focus on the core data from the usual survey of shippers and 3PLs, which I did to a degree, but this area of the report was cut back last year and even more so here in this year’s study, leaving me without much to work with.
That includes the complete elimination of any discussion of one of my favorite points, on the “IT Gap,” which referred to the delta between the high level of importance shippers place on their 3PL’s technology versus how strong they believe those 3PL capabilities really are.
These changes are not to the good, in my opinion.
But there is a lot more than the core survey in the sprawling report.
That includes discussion of several of what I have called “special topics,” which this year were change management in shipper-3PL relationships, AI in the supply chain, and the oddly titled “the importance of direct-to-consumer experience.”
I actually offered highlights from the (overly) long change management section last week, so let’s move on to AI.
In terms of AI uses cases in the supply chain, the report calls out:
• Supply and demand forecast
• Route optimization
• Order management (ensuring that the right amount of product is available at the right time, reducing holding costs and improving cash flow.)
• Warehouse automation
• Customer service
• Supplier management
The report then offers some decent examples, such as this one in terms of task automation: a load planner who needs to look at the data, synthesize it and write an email to a carrier. Generative AI can synthesize information and craft it like a human does, the report notes – taking the human out.
I would still like someone explain the real AI differences better. For example, the report says route optimization can be improved because “AI and ML can analyze historical data, traffic patterns and external factors, including traffic, weather, and shipper or receiver delivery constraints, to optimize route planning and scheduling.”
But for some time we have had Transportation Management Systems that can already do all of that. I’d like to know how AI does it better.
A 3PL’s AI capabilities may wind up being a key selection/retention factor, shown in the chart from the report:
Source: 3PL Study
Next, on to “the importance of the direct-to-consumer experience.” What’s this all about?
This section starts with an overly long discussion on the growth of ecommerce, mostly repeating what we already know about trends.
I did find this interesting: The survey found ust under one-third of respondents (30% of shippers and 3PLs) stated that they are not willing to absorb any costs related to faster shipping speeds. I say good luck with that in an Amazon world.
That as a set-up to a more future-oriented discussion, including a bullish view of newer fulfillment technologies, including Autonomous Mobile Robots (AMRs), robotic picking arms, shuttle systems, and vision technology for robotic picking.
I am not sure what all this has to do with the value of direct-to-consumer experience, but maybe you have read between the lines.
In addition to the three focused topics, we also get two more discussion topics under the heading of “Contemporary Issues.”
That starts with the topic of so-called nearshoring, about which the report says 76% of shippers say they are considering adjusting sources of supply to be more local or domestic.
The report also notes that in 2023, Mexico replaced China as the top trading partner with the US, driven by the continuing Trump tariffs on Chinese imports.
The next issue is around trends in real estate and labor.
The report says that the recent slowdown in demand and rates for warehouse space after many years of strong growth may be only a short pause to that trend.
On labor, the report cites data showing the past five years have seen a modest annual 2% growth in warehouse worker employment, with a projected 8% growth over the next five years – a steady but modest rise.
So there I conclude my two-part summary of the 3PL Study. As noted above, the report is in general a good read, but in my opinion is tilting too much on discussion of various issues and not enough on the core data that got the annual report started nearly three decades ago. I also believe the special topics should be more directly relevant to shipper-3PL relationships.
But I would welcome your feedback on this matter.
We’ve off next week for the Thanksgiving holiday. See you in two weeks.
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