2022 Third-Party Logistics (3PL) Warehouse Benchmark Report
Welcome to the 3rd annual Third-Party Logistics Warehouse Benchmark Report.
This report uses aggregated responses from 200+ logistics professionals who identified as 3PL warehouses from across the United States, Canada, United Kingdom, Australia, and New Zealand. Download the complete report for insight on 30+ industry-specific topics including analysis of best practices for growth opportunities, the labor shortage, technology adoption, reporting and analytics, billing and invoicing, and trends 3PLs need to know to remain competitive.
Find highlights and 3PL industry trends below from each section of the report.
The 3PL Landscape
This year, many 3PLs focused on specializing in specific industries, with 3PL warehouses serving 2.9 industries—down from 3.5 industries last year—showing that with the increased demand that many 3PLs saw this past year, they have doubled down on industries and workflows that better align with their strengths. The largest industry concentrations include retail, dry storage, and bulk goods. Bottled goods/wine and spirits and pharmaceuticals/nutraceuticals showed the largest decrease year over year, dropping 33% and 32% respectively, indicating a possible correlation with some COVID-related increases in 2021.
Diversifying 3PL Services
Inventory management and order pick, pack, and ship remained the top services, yet more warehouses are looking to extend their offerings in 2023. Download the full report for a complete list of fulfillment types and services that drive growth and profitability for 3PLs.
Although 2022 has brought concerns around inflation, a recession, greater labor constraints, and some global uncertainty, 3PLs fared even better than in past years as it related to order volumes with 91% growing order volumes in 2022. This shows a continued positive trajectory from 2020 and 2021, where order volumes increased for 79% and 85% of 3PLs, respectively. This year showed fewer declines as well, dropping from the high of 12% in 2020 to only 4% in 2022, demonstrating momentum for nearly the entire industry.
Programs to improve profitability continue to be a priority for 3PLs in 2023—especially as competition increases.
Learn more about what drove growth for 3PLs in 2022, including the top new business channels, the most pressing challenges faced by 3PLs, opportunities for improved profitability, and how to find the best growth opportunities in 2023.
With finding and retaining workers ranking as the top two challenges for 3PL warehouses, labor emerged as a considerable area of concern this year. Nearly every supply chain publication has highlighted concerns about supply chain disruption and the worker shortage. It’s no surprise that this has impacted the 3PL warehouse industry severely. Fifty-nine percent (59%) of 3PLs cite that labor makes up 33% or more of their total costs, while 20% say it accounts for 60% to 75%.
Largest Warehouse Expenses
Costs for rent, lease, or facilities compound the concerns around warehouse capacity. With warehouse space making up the single largest expense for most 3PLs, adding space can take a toll on the bottom line.
Learn more about what 3PLs ranked as their largest expenses by downloading the complete Third-Party Logistics Warehouse Benchmark Report.
With 59% of warehouses utilizing more than 90% of their space and another 28% running between 80%-89%, significant risk exists for 3PLs striving to keep up with customer growth and inventory levels. Once warehouses reach 80%–85% space utilization, many find that efficiency drops. This also indicates a level beyond where some 3PLs might struggle with adding new customers or managing seasonal fluctuations.
Warehouse Capacity Challenges
With increasing ecommerce volumes pushing more volume through 3PL warehouses, 3PLs have become strapped for warehouse space and capacity. Find out what warehouses are doing to address capacity limitations.
See how your warehouse capacity compares to other similar warehouses.
As the 3PL warehouse industry continues to grow and service more order volume every year, technology adoption and integration have become even more important. Volume increases, compounded by the challenges in the labor market, have led to greater adoption of technology to reduce manual workloads and enhance process efficiencies.
This year, warehouse management systems (WMS) ranked as the most (87%) implemented technology for 3PLs, followed by order management (52%) and mobile barcode scanning (51%).
Leveraging WMS Technology
While WMS software offers significant benefits to 3PLs, many are using integrations to help with increased order volume, expand their system reach, and provide a better customer experience.
Download the full report to learn how much time your competitors saved using a WMS and what other technologies they implemented or are planning to implement in 2023.
Reporting and Analytics
As consumer demand puts pressure on companies to offer more same- and next-day delivery options, that pressure passes on to 3PLs to expedite their pick, pack, and ship processes—making time to fulfill crucial. In fact, 53% of 3PLs fulfill orders in less than 1 hour. Twenty-nine percent (29%) of participants reported fulfilling orders within 30 minutes.
Improve Performance Visibility
As the third-party logistics industry scales to support increasing order volumes and rising consumer expectations, understanding the metrics and measurements that drive success has become even more critical.
Download the complete report to compare your performance and metrics for revenue, order volume, worker productivity, and operational costs.
Billing and Invoicing
When ranking key performance measurements, 3PLs consistently rate revenue and profitability in the top three responses. Relying heavily on a 3PL’s ability to invoice and bill in an accurate and timely manner, revenue and profitability can be significantly impacted by the process used to invoice and capture billable charges.
The most common processes to tackle invoicing include accounting software (27%) and combining systems and manual processes (22%). Surprisingly, this year saw an increase in companies creating invoices manually from 13% in 2021 to 21% in 2022, indicating room for improvement in how systems can support 3PLs in billing efforts.
Download the complete report to compare your performance and metrics for time spent on billing and invoicing, challenges related to customer billing and time to payment.
While 2022 brought positive returns for most 3PLs, many 3PLs are approaching 2023 with caution and a focus on managing costs, specialization, and integration. Heading into the new year, the industry will not only need to watch continued labor shortages and warehouse capacity constraints but also keep an eye on how inflation may impact overall operating expenses. Proactive management and automation efforts will drive efficiency in 2023.
Along with caution, there is still much room for optimism. Ecommerce order volumes continue to increase, brands are actively looking for new 3PL partners, and profitability gains made this year create a great foundation for profitable growth in 2023.
Year after year, 3PL warehouses demonstrate tremendous ability to thrive even in dynamic times. 3PLs have consistently adapted and created new opportunities in nearly every environment, from addressing supply chain disruptions to coming up with creative solutions to support inventory surpluses or supporting new fulfillment types.
In conclusion, although the outlook for 2023 is mixed, ecommerce order volume and new customer acquisition may prove to be significant bright spots. By following best-practice recommendations, 3PLs can drive optimization across their businesses and position themselves for success and profitability growth.
ABOUT EXTENSIV 3PL WAREHOUSE MANAGER
Extensiv 3PL Warehouse Manager is the leading cloud-based warehouse management system (WMS) solution built to meet the unique needs of the 3PL warehousing community. Serving as the backbone of our customers’ operations, our platform quickly transforms paper-based, error-prone businesses into service leaders who can focus on customer satisfaction, operate more efficiently, and grow faster. Offering a comprehensive warehouse management platform, we make it easy for 3PLs to manage inventory, automate routine tasks, and deliver complete visibility to their customers.
Extensiv is a visionary technology leader focused on creating the future of omnichannel fulfillment. We partner with warehouse professionals and entrepreneurial brands to transform their fulfillment operations in the radically changing world of commerce and consumer expectations. Through our unrivaled network of more than 1,500 connected 3PLs and a suite of integrated, cloud-native warehouse management (WMS), order management (OMS), and inventory management (IMS) software, we enable modern merchants and brands to fulfill demand anywhere with superior flexibility and scale without painful platform migrations as they grow. More than 25,000 logistics professionals and thousands of brands trust Extensiv every day to drive commerce at the pace that modern consumers expect.
Interested in learning how Extensiv can help your business implement a comprehensive WMS platform and build best practices across your warehouse in 2023?
Download the full report
2022 Third-Party Logistics Warehouse Benchmark Report
This report uses aggregated responses from 200+ logistics professionals who identified as third-party logistics (3PL) warehouses from across the United States, Canada, United Kingdom, Australia, and New Zealand.
Download the complete report for insight on 30+ industry-specific topics including analysis of best practices for growth opportunities, the labor shortage, technology adoption, reporting and analytics, billing and invoicing, and trends 3PLs need to know to remain competitive.