According to research and recent forecasts, the Australian 3PL market revenue should reach US$20.08bn in 2024. Moreover, its expected annual growth rate is at 2.27%.
Given these figures, it’s evident that the 3PL industry in Australia is fast-growing and will continue to do so in the years to come. But what shaped the 3PL market and made it in demand in recent years?
The evolving and increasing demands of customers are the main factors driving the surge in 3PL market growth. The global pandemic has significantly altered consumer behaviour, particularly in terms of shopping and expectations regarding product delivery.
Businesses have also become increasingly dependent on outsourced logistics services due to the expansion of e-commerce capabilities, rapid globalisation, and technological advancements.
In this post, we explore these significant trends to understand the crucial role that 3PLs play and their future outlook.
1. Increased E-Commerce and Omnichannel Shopping
Online shopping has become a popular way to purchase goods from almost anywhere using various platforms. Customers also expect a smooth transition between web browsers, mobile apps, and physical stores.
This shift, in turn, motivated retailers to find ways to get their items shipped quickly without compromising customer satisfaction.
With the help of 3PL providers, they were able to meet the increased demand of their domestic and global customers. Because 3PL companies have warehouse space, trucks, and skilled personnel, even small businesses partnered with them to save time and money.
This change in fulfilment and distribution services eventually led to the substantial growth of 3PL in the country.
2. Lasting Impact of the Pandemic
Online shopping has increased the demand for third-party logistics (3PL) in recent years, mainly due to the COVID-19 pandemic.
Lockdowns in 2020 led to significantly reduced foot traffic for brick-and-mortar stores as consumers shifted to online shopping.
The decline in in-store shopping continued due to ongoing restrictions the following year. While the pandemic greatly affected business operators, it also prompted consideration of alternative options such as 3PL to maintain their supply chain.
With a 3PL partnership, businesses efficiently meet the increasing demand for online shopping. Additionally, with in-house staff provided by 3PL companies, businesses could operate effectively even with a minimal workforce.
3. Changing Customer and Business Expectations
In today’s retail landscape, customers expect quick and convenient shopping experiences. As a result, companies are turning to technological solutions to meet these demands. However, implementing these solutions requires significant investment.
One way companies are adapting to advanced technologies is by partnering with 3PLs. These service providers already have sophisticated systems to assist retailers in meeting customer expectations.
In particular, 3PLs have automated programs for order processing and shipping, which help to streamline workflow and reduce errors. Technology integration via 3PL also offers additional benefits, like data sharing. This advantage enables companies to keep track of inventory levels, order status, and shipments in real time.
4. Increasing Complexity of Modern Supply Chains
Due to changes in consumer behaviour, e-commerce and related industries are no longer straightforward. Products come from numerous manufacturers, retailers, suppliers, and distributors, making the movement of goods more complex.
However, with 3PL expertise, companies now recognise their value more in ensuring smooth fulfilment and shipping services.
Third-party logistics providers are also highly adaptable and offer multiple services to meet specific needs. In addition to transportation and warehousing, some 3PLs provide sustainable solutions such as eco-friendly packaging and alternative fuel vehicles.
More businesses are looking to streamline their logistics operations. By partnering with a reliable 3PL provider, they can achieve this while focusing on other operational tasks.
What is the Future of the 3PL Industry in Australia?
The 2023 Makreo research (Australia Third-Party Market Size and Growth Forecast 2018-2028) projected that the Australian 3PL market will expand further. By 2028, forecasters expect its estimated value to be over AUD$30bn.
Industry growth and demand will continue due to the sustained e-commerce surge and globalisation. Moreover, Australian businesses will keep enhancing their logistics functions and applying more specialised supply chain solutions.
With these projections, 3PL providers should similarly evolve by adapting newer technologies and more sustainable practices.
Future-proof Your Business with 3PL
The future of 3PL looks promising. As more companies opt for outsourcing for their logistics needs, it is evident that the growth and demand for 3PL will continue.
In this article, we saw how working with a 3PL provider can aid retailers in speeding up processes, boosting customer satisfaction, and overcoming challenges. So, it is not surprising that 3PL companies have become indispensable business partners in recent years and the future.
If you think your supply chain operations could benefit from a 3PL partnership, contact Effective Logistics at 03 8376 3300. You may also fill out our contact form for a quote.
