Ecommerce continues to be the primary growth engine for third-party logistics (3PL) providers, according to a new survey by warehouse management systems developer Extensiv.
The survey, which analyzed responses from 200 3PL companies, highlights both opportunities and challenges as the industry navigates shifting trends.
3PL providers play a pivotal role in modern supply chains, offering outsourced logistics services such as:
- Warehousing
- Transportation
- Fulfillment
- Inventory management
- Packing
- Shipping
- Reverse logistics
- Strategic supply chain support
While ecommerce now accounts for 70% of many 3PLs’ business portfolios, the sector faces headwinds in the form of slowing order volumes and profitability growth. However, the report shows a rebound in ecommerce fulfillment, particularly for Fulfillment by Amazon (FBA) Prep services, after a contraction in the post-pandemic period. Notably, 22% of respondents offering ecommerce fulfillment and FBA Prep reported high profitability growth in 2024. That compares to just 17% across other fulfillment types.
How ecommerce fuels 3PL growth
- Resilience amid challenges. Despite tough market conditions, including slowing growth, 3PL providers continue to demonstrate adaptability by diversifying their services.
- AI adoption. Artificial intelligence is gaining traction, with significant interest in its potential to optimize warehouse operations.
- Geographic expansion. The addition of warehouses to improve geographic distribution has emerged as a clear trend. This includes a growing interest in fourth-party logistics (4PL) networks to enhance efficiency, reduce risk, and strategically position inventory closer to customers.
- Labor productivity focus. While cautious about hiring, 3PLs are prioritizing labor optimization through management tools and efficiency measures, rather than relying solely on robotics or automation.
- Automated billing systems. Automating billing processes has become critical for maintaining cash flow and profitability, reducing errors, and improving invoicing speed.
According to the data, 3PLs served an average of 3.9 industries in 2024. Retail, bulk goods, and dry storage remained the most common sectors, with most categories showing growth or recovery compared to 2023. However, commodities/raw materials, hazardous materials, and “other” categories experienced slight declines.
Consumer-driven sectors such as cosmetics and bottled goods — including wine and spirits — maintained strong upward momentum. Meanwhile, apparel, one of the fastest-growing categories in 2023, saw flat growth in 2024.
The findings underscore the evolving dynamics of the 3PL industry as companies adapt to ecommerce demands, explore emerging technologies like AI, and strategically expand their warehouse networks to remain competitive.
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