Part 2 of 3
In the first part of this three-part series, we discussed the growth of the parcel shipping market, and the size of the opportunity it presents to 3PLs. For this second installment, we are going to focus on what form those growth opportunities take. There are two ways for parcel to figure into a 3PL’s growth strategy: volume increase and service expansion.
The more reliant shippers become on parcel, the more volume they will have, and the more complex management will become. The sheer volume alone, along with the need to source necessary capacity, and potentially expand the carrier network could be handled in-house, but perhaps should be handled by a trusted partner. When it comes to current customers, the trust has already been built, but perhaps the shipper has not yet seen that it would make sense to expand the relationship. During the COVID pandemic, and associated shift to e-commerce, shipping patterns fundamentally changed. Many goods traveled to their final destination by parcel, not TL/LTL, and many shippers are likely still perfecting their fulfillment operations. The 3PLs handling those shippers’ TL/LTL accounts are in the best position to help generate efficiencies for those relatively new to doing higher volumes of parcel. In doing so, 3PLs create a new value-add for shippers – helping to navigate a somewhat unfamiliar situation – and therefore a competitive differentiation for themselves.
The more parcel a shipper takes on, the more their warehouse operations will change. This presents a sizable opportunity for a 3PL to not only capture that parcel business, but to expand into warehouse operations, too. Increasing complexity will drive many shippers to outsource more and more of their supply chain operations, including fulfillment management in the warehouse. Many 3PLs are already equipped to do warehouse management (in fact, some focus primarily on it). However, for those not in this niche, increased parcel volume presents an ideal opportunity to raise the subject with current customers. The result may well be parcel and warehouse business – a formula that can be repeated with other customers, too.
It’s obvious to any experienced 3PL that supply chain operations have changed over the past three years and have done so dramatically. What is sometimes less obvious are the places in which 3PLs themselves can turn this change into a growth opportunity (especially when some areas traditionally covered by 3PLs, like TL and LTL, contracted during the pandemic). Parcel is a perfect example of somewhere to capture additional business and volume from current customers. The trick is recognizing when and where they may need that help even before they do and initiating the right conversation with them.
In Part 3 of the series, we will cover shipper benefits 3PLs can speak to when proactively approaching customers about parcel management. In case you missed Part 1, check it out here.