Third-party logistics (3PL) providers are an integral part of modern retail and industrial operations.
They allow businesses to focus on their core competencies while providing expert logistics services to support growth and enhance customer experiences. Yet, many companies fail to maximise the potential of their 3PL partnerships, often settling for transactional relationships or underutilising their 3PL's capabilities.
This blog explores how to unlock the full value of 3PL services, combining insights from CBRE’s analysis of industrial trends and WSI’s comprehensive study on 3PL performance and retailer expectations.
Unlocking the Strategic Potential of 3PL Services
A successful partnership with a 3PL extends far beyond order accuracy and delivery speed. Yet, many businesses fail to view their 3PLs as strategic partners, settling instead for baseline performance. According to the WSI study, while 92% of retailers report satisfaction with their current 3PLs, nearly half plan to switch providers in the next three years. This contradiction stems from unmet expectations, with common complaints including damaged orders, late deliveries and inadequate communication.
David Basic, VP of Sales at WSI, captures the missed opportunity: "Retailers can and should expect more from their logistics partners. Order fulfilment is one of the last and most important touchpoints of the customer journey."
CBRE’s insights reinforce this, highlighting the rising complexity of supply chains due to the surge in e-commerce and the shift to omnichannel models. These trends are driving demand for 3PLs capable of innovative, value-added services. Retailers and manufacturers alike are increasingly relying on 3PLs not just for logistics but also for network optimisation, technology integration and sustainability initiatives.
The key to unlocking this strategic potential is collaboration and trust. The WSI study found that 35% of retailers value transparency as the cornerstone of a strong partnership, while 34% emphasise collaboration. These qualities allow 3PLs to act as true extensions of the brand, contributing to customer satisfaction and operational efficiency.
If you're still unsure if you're business needs 3pl service providers or if another option if more suited to you then you may want to determine whether you need 3PL or 4PL services.
Determining Whether You Need 3PL or 4PL
As businesses explore their options for logistics management, a crucial decision arises: should they partner with a Third-Party Logistics provider or a Fourth-Party Logistics provider (4PL)?
Understanding the differences between these two models is essential in making informed choices that align with your business's operational goals.
What is a 4PL?
A 4PL takes a more holistic approach to supply chain management. A 4PL not only manages logistics and transportation but also acts as an integrator that oversees the entire supply chain. They coordinate and optimize the activities of multiple 3PLs, vendors, and service providers to create a seamless flow from production to delivery.
A 4PL provider plays several critical roles within the supply chain:
4PL Supplier Management
4PLs can handle relationships with various suppliers, ensuring that materials are sourced, procured, and made available when needed, helping to mitigate risks associated with supply disruption.
4PL Strategic Planning and Analysis
They employ advanced analytics to assess and enhance supply chain performance. This includes identifying inefficiencies, optimising routes, and forecasting demand, which ultimately lead to cost reductions and improved service levels.
4PL Technology Integration
4PL providers often leverage cutting-edge technology to seamlessly interconnect various components of the supply chain. This may involve utilising transportation management systems (TMS), warehouse management systems (WMS), and data visibility platforms that provide real-time insights across the logistics network.
4PL Risk Management
Given the complexities of modern supply chains, 4PLs help identify potential risks, from natural disasters to economic fluctuations and create contingency plans to minimise disruptions.
Building resilient 3PL service partnerships through communication and trust
A 3PL partnership thrives on clear expectations and robust communication. Both WSI and CBRE highlight the importance of multi-level communication to address the complexities of modern logistics. Whether it’s sharing real-time inventory data or conducting quarterly business reviews, communication fosters alignment and trust.
John Servia, VP of Operations at WSI, points out that onboarding is critical: "Getting the right information upfront allows us to design a solution that stands the test of time." Thorough onboarding ensures that 3PLs understand the nuances of a retailer’s operations, enabling them to deliver tailored solutions.
Retailers also need to take ownership of their role in the relationship. The WSI study reveals that 65% of respondents are willing to increase transparency during the proposal and onboarding phases. This includes sharing growth plans, performance metrics and service expectations to help 3PLs align their strategies. When both parties commit to mutual understanding and long-term goals, the partnership becomes more than a transactional exchange—it evolves into a collaborative effort to achieve shared success.
Servia adds: "We’re not just shipping products. We think about our customers’ business the way they do. It’s about building trust and delivering value at every step."
Trust is especially vital given the legacy of past experiences. According to WSI, 69% of retailers harbour concerns about handing over control to 3PLs, often due to prior disappointments. A strategic 3PL, however, works to dispel these fears through consistent performance and open communication.
What Makes the Best 3PL Customer Service?
As highlighted above, effective customer service through transparent communication is the backbone of a strong 3PL partnership. It transcends mere transactional interactions, embodying a collaborative spirit that fosters trust and confidence.
An outstanding 3PL doesn't just react to problems; they anticipate them. By utilising data analytics and performance metrics, top-tier providers can identify potential issues before they escalate. This proactive approach minimises disruptions and ensures smoother logistics operations. Whether it's forecasting demand or managing supply chain constraints, a 3PL committed to problem-solving will put strategies in place that safeguard the interests of its partners.
Business needs can fluctuate, and the ability of a 3PL to adapt to these changes is essential for success. A flexible 3PL understands that seasonal demands, market trends, and global events can significantly impact logistics requirements. This provider can swiftly adjust their services to accommodate increased volumes during peak seasons or scale down operations when demand wanes.
For instance, a high-quality 3PL should be equipped with adaptable warehousing solutions that can be readily expanded or shrunk based on a client’s specific needs. Flexibility extends beyond just physical space; it includes the ability to pivot strategies such as changing shipping methods to help either shipping costs or adjusting delivery schedules to meet evolving customer expectations. By offering scalable solutions, 3PLs help businesses navigate uncertainty with confidence, ensuring that they can remain competitive no matter the external circumstances.
Leveraging 3PL Expertise and Technology for Competitive Advantage
One of the primary reasons businesses engage 3PLs is to access specialised expertise and resources. Yet, many retailers fail to fully leverage these capabilities. CBRE’s analysis highlights the growing need for 3PLs to adopt advanced technologies to meet customer demands and streamline operations. Automated warehouses, predictive analytics and cloud-based inventory systems are no longer optional; they are essential for maintaining a competitive edge.
WSI’s study supports this, revealing that 54% of retailers rely on their 3PLs to help design or redesign their supply chains. Retailers that approach their 3PLs as strategic partners gain access to a wealth of industry knowledge and innovative solutions. Basic cautions against micromanaging: "It’s odd when brands select a 3PL through an exhaustive process and then tell them how to fulfil their product. They may be leaving value on the table."
Retailers can unlock even greater value by collaborating on complex challenges such as sustainability and scalability. Peter Davis, VP at WSI, notes: "The best 3PLs won’t just focus on picking and packing. They’ll aim to be true partners, supporting initiatives like sustainable packaging, solar energy and optimised transportation routes." As environmental concerns become a priority, retailers must seek 3PLs that align with their corporate responsibility goals.
In addition to sustainability, scalability is a key concern. CBRE identifies the rising demand for flexible warehouse spaces driven by e-commerce growth and shifting consumer expectations. A well-aligned 3PL can help businesses navigate these challenges by providing adaptable solutions, from multi-warehouse distribution strategies to peak season capacity planning.
The Cost of Complacency
One of the most significant barriers to improvement is the perceived cost of switching 3PL providers. Many retailers hesitate to move, citing operational disruptions, retraining and onboarding expenses. Yet, as Basic warns, the cost of doing nothing can be far greater: "A lot of prospects come to us to rate-shop or service-shop because they have issues with their current 3PL. But then they think about the cost of moving and say, ‘Let’s just stick with what we have.’"
This reluctance can lead to stagnant growth, reduced efficiency and missed opportunities. Retailers must weigh the short-term inconvenience of change against the long-term benefits of a better-aligned partnership. CBRE’s analysis highlights the increasing role of 3PLs in supporting businesses through economic uncertainty and supply chain disruptions. Choosing the right partner is not just a matter of cost; it is a strategic investment in resilience and growth.
What makes the right 3PL partner for you?
Choosing the right 3PL partner is crucial for any business aiming to optimise its supply chain operations and improve overall performance.
Expertise in Your Industry
One of the first criteria to assess is the 3PL’s experience and expertise in your specific industry. Each sector has distinct challenges and requirements, from temperature-controlled logistics in food and beverage to highly regulated compliance in pharmaceuticals. A 3PL with a deep understanding of the nuances in your industry can provide tailored solutions that drive efficiencies and reduce the risk of errors.
Technological Capabilities
In today’s fast-paced market, sophisticated technologies are vital for optimising logistics operations. Consider 3PL partners that leverage advanced WMS (Warehouse Management Systems), TMS (Transportation Management Systems), and real-time tracking tools. A provider who utilises technology effectively can offer transparency, improve inventory management, and streamline order fulfillment processes. The right technology stack also enables better data analytics, which can significantly inform business decisions and improve operational performance.
Geographic Reach and Flexibility
A well-chosen 3PL should offer extensive geographic coverage tailored to your customer base. This means not only having warehouses strategically located across key regions but also the ability to adapt to fluctuating market demands and customer expectations. A 3PL with a robust network can ensure timely deliveries, reduce shipping costs, and enhance customer satisfaction by minimising transit times.
When assessing potential 3PL partners, evaluate their network of warehouses and distribution centres. Their locations should ideally be close to major transportation hubs, such as airports, seaports, and highways, which facilitate quicker movement of goods. Having multiple fulfillment centres can help mitigate risks associated with regional disruptions, whether due to natural disasters or political instability.
Rethinking 3PL Partnerships
The logistics landscape is undergoing rapid transformation, fuelled by e-commerce growth, technological advances and rising consumer expectations. To stay competitive, businesses must move beyond transactional 3PL relationships and embrace strategic partnerships.
By fostering trust, enhancing communication and leveraging the full expertise of their 3PLs, retailers can achieve greater operational efficiency, customer satisfaction and scalability. The insights from CBRE and WSI underscore the importance of collaboration, transparency and innovation in building these partnerships.
Investing in the right 3PL is not just about logistics—it is about positioning your business for sustained success in an increasingly complex market. Retailers that take a proactive approach to their 3PL relationships will not only meet today’s challenges but also seize tomorrow’s opportunities.
