Shipping products is challenging, given the constant labor shortages among warehouse workers and truck drivers. It has become an increasingly significant problem since the pandemic. The most recent report from the Bureau of Labor Statistics (released in January 2023), for example, details the downward trend in warehousing and storage personnel "Fabian Sandoval wrote in a commentary for Route Fifty." "These logistics positions are down between 3,000 and 4,000 jobs this time last year."
And it's not just warehouse workers. Truck drivers are also leaving the business, and replacements are not rushing to fill those spots. While the driver shortage has eased slights, American Trucking Associations Chief Economist Bob Costello says it is still near its all-time high. "Based on our estimates, the trucking industry is short roughly 78,000 drivers," Costello said in October 2022. "That's down slightly from 2021's record of more than 81,000 but still extremely high historically."
Â These historic shortages have left some shippers in dire straits. They are looking to outsource retail fulfillment to a third-party logistics (3PL) partner to relieve some pressure. But to make that move, shippers need to understand the benefits that 3PLs can offer them. This blog explains what retail fulfillment through a 3PL means and details five benefits that outsourcing retail fulfillment with a 3PL can bring to your company.
Outsourcing retail fulfillment operations such as shipping, warehousing, receiving orders, inventory management, picking, and packaging to a 3PL team of experts allows shippers to reduce or eliminate time spent on fulfilling orders so they can focus more on the business. In most cases, a 3PL also offers many value-added services that can make life easier or solve problems. These include kitting, blister packaging, personalizing items, adding labels, returns management, reworking, and product disposal or destruction.
There are several ways in which a 3PL can satisfy your fulfillment needs and make life easier for your company. Here are five benefits of partnering with a reputable 3PL.
One of the more significant expenditures in operating a company is the inventory carrying cost, all the expenses related to storing and handling unsold goods. These costs include warehousing, labor, capital costs, depreciation, insurance, and taxes paid, as well as chores like packaging and labeling. A company's inventory carrying costs are usually around 20% to 30% of its total inventory value. With that kind of outlay, any way you can reduce those costs can be highly beneficial. By partnering with a 3PL with on-demand warehouse capacity, shippers can consolidate cost savings involved in storage without allocating spending to things like rent and utilities.
The demand for products delivered speedily has become more significant over the past few years. According to a PricewaterhouseCoopers survey, 41% of consumers are willing to pay for same-day delivery, and 24% said they would pay more to receive packages within a 1- or 2-hour window of their choice. A 3PL can provide quick access to warehouse capacity and has numerous connections with carriers throughout the supply chain that can ensure that products are as nearby as possible to a location relative to their customers.
Considering the recent labor shortages, this benefit is particularly pertinent. With shippers having to do more with less, the workforce can become even more weighed down by taking on more duties. Employees can be overloaded and forced to multitask, leading to errors caused by rushing. A 3PL's dedicated staff can help ensure prompt service and reduces the risk of mistakes. When you use a 3PL, you have the service when needed and lower overhead when you don't.
Working with a 3PL in retail fulfillment gives you options in many areas. One key area is scalability. Trying to expand to customers in other regions or countries can often be mindboggling for some shippers with new shipping rates, regulations, and times to figure out. With a 3PL, there is an experienced and knowledgeable staff that can solve those problems and help you take your business to a new level. A 3PL also can provide the extra resources needed for expansion. On the other hand, if your business needs to contract, you are not on the hook for additional resources that you put money into that are no longer required.
Because the 3PL retail services come in a wide range (warehousing, shipping, logistics, and numerous other value-added services) you can streamline all of your retail fulfillment needs into a single source. Without a 3PL, there are many other partners you will have to contact if there is a problem or you need to find out where a shipment is. A 3PL takes over that role and relieves that burden for you.
With concerns about labor shortages in the warehouse worker and driver sectors, shippers have plenty of things to be worried about. Add in the speed at which consumers want their products shipped to them, and you can easily see how errors can occur when a company is trying to do everything. That makes this the ideal time for outsourcing retail fulfillment to a 3PL. Port Jersey Logistics can provide for all your retail fulfillment needs from your biggest, like warehousing and transportation, to a host of value-added services that might be required if concerns arise. In the business since 1954, Port Jersey Logistics is one of the premier 3PL and supply chain providers in the country. With a dedicated and experienced staff and customized logistics solutions, Port Jersey Logistics can help you rise to another level. To see all the services we provide, visit our website today.