This post was contributed by Will Schneider of Warehousing And Fulfillment.
Without a doubt, the outbreak of the COVID-19 pandemic has affected diverse financial sectors of the global economy.
However, the eCommerce sector was an exemption. But not without some setbacks, especially with regards to product shipping.
A lot of businesses were shut down temporarily with the introduction of citywide or nationwide lockdowns.
Production of most products became harder and more expensive due to the shortage of materials from suppliers, an increase in the cost of manufacturing items, and difficulty in transporting the materials from one location to another.
Also, many companies had to cut down on the number of employees that were permitted to come to work and this reduced the speed of production and supply.
The logistics industry also had its fair share of the pandemic effect. There was a drastic decrease in cargo volumes due to a decline in demand. About 105 sailing routes from Asia to North America and Europe were canceled in February 2020.
Plus, the US Rail traffic transported 22.4% fewer carloads in June 2020, in comparison to the.same month the year before.
In the maps below, you can see how the pandemic has affected both ocean and air freight capacities worldwide:
In India alone, 500,000 cargo workers and drivers were stranded at checkpoints across the country when a nationwide lockdown was implemented.
Experts predict that if the pandemic persists, the global logistics industry growth may decrease by 10.2%.
Despite all these setbacks, the logistics industry is still playing an important role in the economy while the world is fighting to stop the spread of the virus.
Amid lockdowns, the logistics industry played an important role in the moving of essential products like food, medical supplies, and relief materials nationally and internationally.
Having a good 3PL in times like this can help boost the efficiency of your business in meeting the needs of customers, and reducing costs. And give you the time to focus on rebuilding your business.
Why Have the Right 3PL Partner During a Crisis (Case Study)
The logistics industry played an active role in ensuring the transportation of essential supplies during lockdowns. Because of this many organizations could send relief materials to areas in dire need of help.
An example of such organizations is ALAN Aid. By partnering with the right 3PL ALAN Aid could “save lives through logistics“.
ALAN Aid partnered with American Trucking Associations and Mack Trucks to deliver 24,892 pounds of beverages, food items, and detergents to children in Lavergne, Tennessee, and Miami.
Also,14,000 pounds of laundry detergent were moved from Tennessee to charities in Florida. And 15,200 pounds of hand sanitizers and 15,000 pounds of donated PPE were shipped from Michigan to Native American tribes in Kansas and from Minnesota to California by Riverside Transport and CFI, respectively.
With the help of other logistics companies like Apex Moving Storage and International Association of Movers, 316,076 relief materials were moved across the United States during this pandemic.
This is no small feat.
ALAN aid would not have been able to achieve half of this if they didn’t partner with 3PLs.
If you are wondering how all this applies to you? Here is how.
If a single organization can have thousands of essential items easily moved across thousands of miles during statewide lockdowns by having the right 3PL connections, now imagine what the same connection can do for your business in times like this.
While hiring a 3PL may not be at the top of your priorities, here are a few reasons you should hire one:
Because of the restrictions put in place to curb the spread of the virus, the possibility of shipments being delayed is very high and this can cost you.
However, 3PLs have experience in moving goods around the world at different times under different circumstances including crisis periods. And they know how to navigate through these difficulties without incurring extra costs.
Gives you time to focus
Having a 3PL take charge of the delivery of your products gives you enough time to focus on other important aspects of your business.
There are many issues confronting business owners at a time like this and having to handle the stress associated with the delivery of products to clients can be avoided. If a 3PL takes control of product delivery, you will have ample time to focus on other crucial areas that will improve your business.
The 3PL takes care of employee training, tracking tools, software, and infrastructure needed to give you the best logistics solutions.
When Should You Hire a 3PL?
While enlisting a 3PL may not look like the ideal choice to make in times of crisis, it is still an option you may consider if you begin to notice certain issues in your business.
Below are certain questions you need to answer to know if it is time for you to hire a 3PL:
Is your team overwhelmed?
If the workload for your employees increases and sorting out logistics related duty is demanding more of their time, then you need to hire a 3PL. The focus of the managerial staff should be on the smooth running of business operations and not brainstorming on warehousing and logistics.
Are your transportation costs increasing?
Have you noticed an increase in your transportation costs? Then there’s is every tendency that the logistics burden of your business has increased and it is time to hand over to a 3PL.
Is there an increase in the number of complaints from your customers regarding shipping?
Are returned boxes beginning to pile up? Do you need to hire more hands or new storage equipment and facilities? If yes, you need a 3PL. The 3PL will handle the shipping of the products, improve the visibility of the order status, and promptly answer the questions of your customers.
Is your business moving to a new region or facility and you don’t know how to handle shipping?
A 3PL will help you to not only locate a new facility but also assist to set up a new warehouse for you and move your products into the new facility.
Is your inventory inaccurate and laden with obsolete items?
Has low inventory accuracy and operational inefficiencies increased the safety stock of your company?
These can lead to lots of financial challenges and your warehouse being filled beyond its capacity which can cause product damage. Hiring the service of a 3PL will eliminate these stock issues and also help to increase the distribution network of your company.
Types of 3PL Partners to Have in Crisis Times
There are different types of 3PLs based on the service they render. An understanding of the functions of these different 3PLs will enable you to know which one best suits the needs of your business.
Transport based 3PLs
This type of 3PL shuttles goods between locations. The movement of the goods can be from your company to retail buyers or from the factory to your warehouse. Transport based 3PLs can make both local and international deliveries based on their capacity.
FedEx, USPS, DHL, and UPS are common examples of transport based 3PLs that shuttle goods internationally. UberRush and Postmates are examples of local couriers.
Warehouse/distribution based 3PLs
These are the most common types of 3PLs. Warehouse-based 3PLs take care of storing your products, offer Amazon Prime like shipping, and handle returns. They are also great if you want to shield yourself from the supply chain crisis.
Shipper/management based 3PLs
This 3PL specializes in handling every aspect of shipping. They provide adequate technology such as integrated freight management services which helps to eliminate the stressful aspects of shipping.
Key aspects of shipping like freight payments, accounting, freight data, and matrix reports are handled by this 3PL. AFS Logistics and Worldwide Express are examples of Shipper/Management Based Third Party Logistics Services.
Financial/information based 3PL
Financial Based 3PLs will help you calculate and understand the warehousing costs of each item. And provide internal control of the financial aspects of your company’s logistics such as inventory management, freight auditing, freight payment, cost, and accounting and tools for monitoring, tracing, and tracking inventory.
Full-service 3PLs are a great 3PL partner to have in times of crisis. They have a wide network of strategically located fulfillment centers nationwide that ensure the prompt delivery of products to the right location. These 3PLs can offer same-day fulfillment and also offer inventory intelligence to facilitate the quick arrival of products to customers.
How to Choose the Right 3PL Partner to Get You Through the Crisis
Since there are different types of 3PLs, it’s important to carry out thorough research to know which 3PL is perfect for your business.
But before searching for a suitable 3PL for your business, you need to self-evaluate your company. This will help you know exactly what the needs of your company are and the 3PL partner that will be appropriate for your business. Here are certain factors you need to consider when self-evaluating your company:
The product your company sells
If the products your company sells requires specific warehouse conditions and handling, you need to look for 3PL providers that specialize in catering to the logistics needs of such products. Whatever 3PL you choose should have the expertise required to give adequate care to your products and keep them in good shape.
The image and reputation of your brand
It is important to look for a 3PL that complements the image of your brand. This is because customers do not see the 3PL, they see your brand and if the logistics partner doesn’t do a good job, your company will get the blame and this can ruin your brand’s reputation.
The best way to avoid choosing the wrong 3PL is to research the reputation of the 3PL you intend to use. You can search to see the brands currently using the 3PL and the logistics reviews from their customers.
The growth trajectory of your company
It is important to choose a 3PL provider that is flexible enough to handle the growth of your company. If you don’t have a growth plan, you need to outline one that spans over at least two years. This will help to predict the growth rate of your company.
If the growth rate is rapid, you need to hire a 3PL provider that is broad enough to contain the expansion. However, if the growth rate is slow, go for a small 3PL as picking a big one will cost you more.
Factors to Consider When Looking For the Perfect 3PL for Your Brand
The efficiency of a 3PL provider is often determined by the human resource they have.
You need to make sure that the employees of the 3PL are properly trained to carry out their duties adequately. Find out if the 3PL does background checks on the employees or if they employ people randomly.
This will help you know the people that will handle your products and how well they can be trusted to deliver the products to the designated destinations. Remember, if anything goes wrong, the customers will blame your company, not the 3PL, so you need to make sure that the 3PL employees do a good job.
Storage is a big deal when hiring a 3PL. You need to find out if they will share storage for your products, and what their storage policies are. You also need to know if the storage facility belongs to the 3PL company or if they outsource it from another company.
Always remember to research on the security of the area where the storage facility is and how inventory is tracked and monitored when it is being moved.
Check to see if the 3PL offers freight forwarding services, which shipping carrier they use, and how reliable the carrier is.
You will also need to find out how quickly the 3PL can send tracking information to your inventory management system or the customer. Ensure that the 3PL is flexible enough to meet the demand of customers for faster delivery. Also tell the 3PL how you want returns to be handled, what services to use when returning products, and the costs associated with returns.
It’s not recommended that you go for a 3PL option with the lowest price, instead, look out for 3PLs that can give you good value for your money. Plus, if you haven’t vetted their price structure, this could cost you a lot as they may charge you extra fees for storage, labeling or freight, and fees.
Make sure you are not being overcharged for services. And if a 3PL is giving you a price that is lower than what you expect, don’t jump at it, take out time to investigate why it is cheaper, there may be something you are missing.
Even though many countries are opening up for businesses again, the COVID-19 pandemic has put both the eCommerce and logistics industries under a lot of pressure. And the only way to stay afloat is to partner with the best 3PL that will make your work a lot easier.
The pandemic has not affected consumers’ impatience with slow deliveries and you won’t be able to meet these demands if you don’t have a competent 3PL partner working with you.
Are there signs that your business may need to hire a 3PL provider? If yes, then conduct a self-evaluation on your company to see what type of 3PL you will be needing.
Remember to share your experience with us.
About the author
Will Schneider is the founder of insightQuote, a match-making service for B2B services, and writes informative posts about fulfillment services at Warehousing And Fulfillment. He is passionate about helping businesses find the right solutions to improve their operations. When not working, Will enjoys coaching youth basketball.