Five dominant 3PL trends in Asia today

Five dominant 3PL trends in Asia today

By Nick Bartlett on July 17, 2021
For international businesses sourcing production in Asia, a knowledgeable and trusted 3PL partner in the region is essential to your success.

For any international businesses sourcing production in Asia, a knowledgeable and trusting 3PL partner in the region is essential to your success.

Logistics throughout Asia requires dealing with a head-splitting patchwork of trade agreements, shifting logistical hubs, and shipping routes of varying quality and usability, not to mention ever-changing policies for everything from transportation regulations to company ownership.

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Any logistics company involved in this quickly-evolving region needs to have local teams on the ground, often across multiple locations. They serve as a way to keep on the pulse of shifting local regulations and to be there to quickly chase the bottom line as new companies continue to form and disappear. 

Because of the level and breadth of insider knowledge required, the logistics landscape in Asia has, until now, only been open to a handful of companies with expansive networks. Consequently, this has also frequently left clients largely in the dark as to the specifics of their operations abroad.

However, with the growth experienced across the industry, including the growing reliance on the role technology is playing, 3PL is poised to change drastically in Asia.

  1. A shift towards client-facing technology to get customers more involved in tracking and on-the-fly decisions.
  2. Better and more efficient route planning and vehicle loading due to AI-assisted technology.
  3. A growing number of options for routing and sourcing materials including airways.
  4. A move away from retailer shipping models to e-commerce models.
  5. Increased 3PL specialization and 4PL network reliance

Here’s how these trends may affect your business in Asia today:

HOW TECHNOLOGY IS CHANGING 3PL

Technology, specifically artificial intelligence and improved data gathering, is making logistics more efficient, transparent, and cost-effective at every link of the chain. These upgrades are shifting the role of 3PLs into data centers necessary for coordinating large networks of warehouses and shipping providers.

AI IS CONTRIBUTING TO MORE EFFICIENT ROUTE PLANNING

Throughout much of southeast Asia, optimizing trucking routes is a constant hassle. There are few major highways designed for high-volume cargo throughput and, usually, the few that do are plagued by congestion, toll roads, and border stops. This means costs are higher overall and headaches abound.

Using increasingly-accurate GPS route planning technology, 3PLs today in Asia can enlist the help of AI to most accurately optimize routes based on speed, cost, and driver rest time. They can also adapt quickly to obstacles posed by new construction as well as new routes opened or closed.

RELATED: 5 Must Dos When Considering a 3PL Provider

 

BETTER DATA WILL CONTRIBUTE TO BETTER-UTILIZED SHIPPING

Today, AI is also helping logistics companies to use every spare centimeter of their shipping options.

Until now, under-utilized shipping space in trucks has been a scourge to the industry. According to some sources, trucks will frequently embark on long-distance trips utilizing only 50-60% of their cargo capacity due to inefficient packing and lack of communication between fulfillment centers.

Better AI and more comprehensive databases can help 3PLs know exactly how to pack items to reach an optimal carrying capacity as well as to better keep track of extra space across clients.

EASIER DATA ACCESS WILL CREATE MORE CLIENT-SIDE INVOLVEMENT IN DECISIONS

Picture this: you have a shipment scheduled to leave Shenzhen today and arrive in Laem Chabang in the next three days. At the last minute, however, the Shenzhen port suddenly closes due to a flash flood. You now must route your goods by land to Dongguan in one day or else risk delaying orders by over a month. 

While a good 3PL could help you find a reputable trucking service on short notice, they may only know one or two service providers who charge a hefty rush fee causing you to lose your profit margin on this round of goods.

But with the expansion of online databases, logistical options are becoming increasingly transparent for both 3PLs and their clients. You as a client can have a greater role in snap decision processes that could save you millions.

3PLS ARE SOURCING CHARTER FLIGHTS TO MAINTAIN DEMAND

Today, consumers around the world—specifically in Asia—take same-day delivery for granted and logistics companies are taking notice.

Recent events like the clogging of the Suez Canal have made clear the dangers of entrusting global trade almost entirely to a couple of narrow sea routes. Now, 3PLs are racing against the clock for better alternatives.

Today, according to logistics news site MH&L, 3PL logistics companies make up 29.6% of activity in major airport submarkets — a number that’s only likely to increase as these organizations continue to buy office space near major airports.

In the future this could spur heavy growth in the aerospace industry and lead to much faster overseas delivery to landlocked regions.

3PLS ARE HONING THEIR E-COMMERCE KNOWLEDGE & OFFERING

Speaking of same-day delivery, it’s now easy to see that the retail store is dying. As more people obtain goods directly online and have them shipped home, it’s no longer the mall’s job to hold the goods and it’s no longer the customer’s job to take them home. This means 3PLs need to pick up the slack in planning for storage and last-step fulfillment:

Successful 3PLs increasingly must focus on sourcing fulfillment centers and warehouses within hot consumer regions. To fully take advantage of this logistics sector, these fulfillment centers need to not only accommodate a wide range of goods, but also efficiently service deliveries to the entire region. 

While this remains a novel concept in the west, logistics providers in Asia have been following this model for years. In turn, they know much more about the dos and don’ts of a model centering on dynamic storage and last-mile shipping.

This may signal increased migration of Asia-based 3PLs to the west as they can get local businesses up to speed much faster.

3PL IS SHIFTING TOWARDS A BARBELL-SHAPED INDUSTRY

There is increasing evidence that 3PL is shifting towards a “barbell-shaped” industry.

On one end, many 3PLs are becoming smaller and more highly-specialized in the movement of hyper-specific types of goods. As labor in Asia becomes increasingly skilled and specialized, these 3PLs will become crucial to sourcing the best talent at the lowest prices.

On the other end, faced with an increasing need for multinational coverage, 3PLs are blowing up into large international organizations. Many of these closely resemble 4PLs with offices and influence in multiple countries and major logistics hubs.

These two types of logistics companies will likely have an increasingly symbiotic relationship, with large institutions sourcing labor to small institutions. Those in the middle may have to choose which side their services fall on or become obsolete.

MID TO LARGE SIZE BUSINESSES IN ASIA ARE WORKING MORE WITH 4PL SERVICE PROVIDERS

As the 3PL industry shifts, large organizations trying to enter Asia may find it more beneficial to work with logistics companies that have access to more data, know-how, and facilities across the region.

4PLs with their wider global networks and bespoke warehousing and shipping options can offer a higher level of security, stability, knowledge, and accountability than 3PLs for businesses.

CBIP Logistics, we’re a 4th party logistics firm that wants to help make your existing business or transition to Asia as easy and profitable as possible. 

With a track record of successful relationships, we can take your business through every step of the logistics process in Asia with the latest technology and information available. From optimizing shipping and warehousing to supply chain consulting, we can help your business in any stage of the logistics process.

Interested? Schedule a free consultation with us today. We’d love to get you started.

About Author

Nick Bartlett

Nick Bartlett is CBIP’s director of sales and marketing. His expertise lies in marketing, supply chain management, and corporate retail experience. He honed his skills over 10+ years working across the Asia Pacific region and beyond.

Nick keeps a close eye on new markets and believes successful business operations come through value-based relationships.

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