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‘Everyone’s Been Burned’: 3PLs Aren’t Fulfilling Current Business Needs, Survey Says

Traditional third-party logistics (3PL) providers must keep their heads on a swivel as brands are expecting more out of their partnerships. As many of 30 percent of brands are likely to not recommend their 3PL to other brands, according to a survey from sustainable commerce fulfillment provider Manifest.

When citing the top reasons for either hesitating to re-sign with a 3PL or moving elsewhere, 63 percent of survey respondents indicated that the technology simply couldn’t handle the needs of their growing business.

In total, the more than 500 survey respondents cited 18 reasons for potentially moving on to a new 3PL. Sixty-two percent cited the parcel rates being too high and uncompetitive, while 61 percent said they didn’t offer any sustainability initiatives. Another 61 percent also said these platforms only provide online support and weren’t transparent in their communications.

As many as 56 percent of respondents said there were a lack of international shipping carrier options with their current 3PL, while the same percentage said their logistics provider didn’t allow the brand in their warehouse to meet the team. All told, every one of the 18 reasons was cited by 56 percent or more of the survey respondents.

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“Everyone’s been burned. Brands say they aren’t just buying based on price anymore,” said George Wojciechowski, co-founder and CEO of Manifest. “‘You could be a shiny object and look great, but I need to go deeper. Do your values as my critical partner in this supply chain component of my business match the ethos of me and my brand and what I want to be working with?’ That’s where things are because these brands aren’t new. These brands have been through the typical grinder of working with a 3PL that has 2,100 clients that they’re also servicing.”

Among the top three reasons brands are moving to new 3PL providers, the leader is still competitive parcel rates at 68 percent. But 67 percent cite a need for good quality packaging materials and 65 percent are still hung up on transparent communication, order accuracy and dedicated support. Feeling out the most-wanted categories, 65 percent said the new 3PL offered personalization capabilities in-house including embroidery and engraving.

It’s not like these are new partnerships that are planting seeds of doubt in brands’ heads. More than 72 percent of respondents partnered with their 3PL for more than three years, while more than 54 percent have been working with their outsourced logistics partner for at least five years.

Manifest, which itself offers brands a spectrum of premium sustainable packaging, carbon footprint measurement and in-warehouse client support to ensure a more eco-friendly logistics and fulfillment operations, is looking to change that

“I think they’ve stopped listening to what merchants need,” Wojciechowski told Sourcing Journal, noting that Manifest has declined more potential clients than it has accepted based on their lack of alignment on needs.

“Transparency must go beyond the top line. A lot of 3PLs may say ‘You’re draft shipping from Alibaba, come on board,’ because it’s going to help them hit their future number of closes and revenue,” said Wojciechowski. “But then what happens two, three or four quarters down the road? It’s not a profitable merchant. They’re using up a lot of internal resources for support. They’re unhappy and they’re getting unhappy service. There’s no more one size fits all.”

With a mission is to disrupt one of supply chain logistics by offering earth-friendly 3PL solutions, Manifest released the 2023 3PL Gold Standard Report to shed light on where brands may have new requirements for their logistics partners, including personalized service, heightened trust factors, participation in roadmap development and sustainability initiatives.

For example, Manifest removes plastic from partner brands’ shipping and fulfillment processes, instead using compostable or recycles outbound shipping packaging as part of its offering. Peter Hillowe, vice president of commercial at Manifest, says modern 3PLs are unfortunately still averse to getting out in front of the sustainability concerns facing their partners.

“They’re afraid to be in the market. It has to happen now,” Hillowe said. “They’re afraid to talk about the plan that they want to roll out in 2030 now in 2023.”

To compile the survey, Manifest secured responses from people working at consumer brands that regularly ship between 1,000 and 100,000 residential orders per month using a 3PL solution.

“These [responses] emphasize the reality that the current parcel delivery ecosystem is failing today’s shippers, who struggle with high, unpredictable parcel rates and unreliable support,” said Ben Emmrich, founder and CEO of Tusk Logistics, in the report. “This dynamic impacts their ability to exceed customer expectations while turning a profit. It’s clear that shippers need a meaningful alternative to today’s existing parcel delivery ecosystem, where 97 percent of the market is driven by legacy national parcel carriers.”

The report recommends that brands create a basic 3PL scorecard to internally rate their current 3PL using the 18 reasons why brands leave or join a new solution in 2023. This gives these companies a chance to internally compare the vendors they currently have with new requirements and better evaluate their goals and business priorities.

“The best questions start in your own head, where a brand can do that for their existing 3PL to better figure out if they really need to launch a new arm,” said Hillowe. “Maybe there are areas your 3PL is getting right that you didn’t realize until you wrote it on a whiteboard, and you don’t need to launch a new process. I think it’s about starting inward and then if you need to going and asking those questions.”

This means brands must coming up with a weighted scale of the factors that are individually most important to them, whether it be pricing, a sustainability initiative or the order service level agreement (SLA), Hillowe said.

From there, brands should develop and share the scorecard with their current 3PL to assess the performance, before launching a request for proposal (RFP) to compare qualified 3PLs to their currently expected needs.

Prior to launching Manifest in 2022, Wojciechowski cofounded ShipBob, an e-commerce fulfillment service for direct-to-consumer (DTC) businesses.