Inside the Australian Third-Party Logistics (3PL) Industry: Trends and Outlook in 2024

Summary

The Australian 3PL industry has seen significant growth in recent years, driven by the rise of e-commerce and the need for efficient, scalable logistics solutions. Even though retail activity slowed down in Australia in 2023 as Australian consumers and retailers adapted to slower economic conditions, the percentage of e-commerce has been on the rise since 2013 which has driven growth in the Australian Third-Party Logistics (3PL) industry. The reason for this is the increasing demand for efficient and cost-effective supply chain solutions. As Australian businesses, particularly in the e-commerce and retail sectors, continue to outsource their logistics operations, the 3PL market has become an increasingly important part of the country’s logistics and transportation landscape.

Key Takeaways

• The Australian 3PL industry is experiencing significant growth, driven by the rise of e-commerce and the need for efficient, scalable logistics solutions. 3PL providers offer e-commerce businesses substantial benefits like flexibility, cost savings, improved efficiency, and access to advanced technologies.
• Partnering with a local 3PL provider like Quickmail in Perth can provide additional advantages, including deeper market expertise, more personalised service, cost advantages, and faster implementation compared to large multinational 3PL companies.
• When selecting a 3PL partner, e-commerce businesses should carefully evaluate factors such as fulfillment capabilities, integration with their e-commerce platform, competitive shipping rates, and the provider’s ability to scale alongside the business’s growth.

Growth in the Retail Sector Slowed Down in 2023

Retail activity slowed down in Australia in 2023 due to slowing economic conditions, with a growth rate of only 2% (compared to a pre-COVID rate of 3.8%). However, positive growth (however small) indicates a continued recovery of the Australian retail sector following the economic impacts of the COVID pandemic.

Australians spent a total of $361 billion on retail goods in 2023. Nearly 18% of that total spending ($64 billion) was spent online via e-commerce, with the e-commerce percentage increasing yearly as more consumers get comfortable spending online.

The outlook is positive for 2025, with spending power estimated to increase by $50 billion thanks to interest rate adjustments, slowing inflation, predicted income growth, and stage three tax cuts. Coupled with population growth, these factors are anticipated to drive overall growth and provide some relief for retailers by the end of 2024.

How Did the Slow-Down in Retail Affect the e-Commerce Industry?

The slowdown in retail spending did not affect the e-commerce industry. In fact, e-commerce sales have been on a steady rise since 2013, reaching $64 billion last year, and this is predicted to increase linearly into the future.

[Image source: https://ecommerce-report.auspost.com.au/]

Overview of the Main E-Commerce Trends Since 2013 (ref: Australia Post)

2013-2016: The Gradual Rise

Consumers and retailers embraced digital retail channels for convenience. Shoppers increasingly favoured eCommerce platforms, marking a shift towards a digital-first approach in consumer shopping behaviour

BNPL and Amazon Come on the Scene

Buy now pay later (BNPL) payments grew in popularity in 2017. Afterpay reached 2.3 million customers by the middle of 2018. By December 2017, Amazon entered the arena, driving even greater growth in online retailing.

The COVID-19 Effect

eCommerce underwent a major transformation driven by the COVID-19 pandemic, leading to a significant surge in online shopping. By September 2021, online spending reached its peak with 1 in 4 retail dollars being spent online, making eCommerce an integral aspect of daily life.

The New Normal

Online shopping has firmly established itself as the ‘new normal’ in Australian retail and an integral part of the retail fabric. eCommerce adoption is expected to continue rising steadily.

Australia’s Third-Party Logistics Industry – Overview

Third Party Logistics (3PL)

3PL, or third-party logistics, refers to  outsourcing of logistics and supply chain management operations to a specialised logistics service provider, like Perth’s leading 3PL provider, Quickmail. For many e-commerce businesses, the point at which they engage a 3PL provider is the point at which they can start to scale and grow to increase revenue and profits. External 3PL providers allow e-commerce businesses to more easily grow and scale their revenue and profits by improving their supply chain performance, reducing logistics costs, and gain access to advanced logistics technology and infrastructure without having to invest in and manage it themselves.

E-commerce businesses are increasingly using 3PL providers to manage:

1. Warehousing

2. Fulfillment and Order Management

3. Shipping and Transport

4. Supply Chain Visibility and Analytics

5. Technology and Systems Integration

Rising Demand in e-Commerce Drives Growth Across the Third-Party Logistics (3PL) Industry

The rise of e-commerce has drastically increased the need for sophisticated, flexible, and scalable logistics solutions for businesses across Australia — needs that 3PL providers are uniquely positioned to address, driving their massive growth in recent years.

The Australian 3PL industry has experienced steady growth in recent years, driven by the increasing demand for efficient and cost-effective supply chain solutions, predominantly by e-commerce and dropshipping. As Australian businesses continue to outsource their logistics operations, the 3PL market has become an increasingly important part of the country’s logistics and transportation landscape.

Advances in technology like real-time shipment tracking, smart warehouses and the usage of different sensors and technologies in logistics are also helping the 3PL industry in Australia to grow. The growth of 3PL end uses in Australia related to healthcare is being driven by the government’s growing investments in the country’s healthcare infrastructure.

Australian 3PL Industry Size and Key Trends

The Australian 3PL market was valued at $20.8 billion in 2023, representing a year-over-year growth of 8.3% from 2022.

The rise of e-commerce has been a major driver of 3PL industry growth.

Same-day and next-day delivery expectations have led 3PL providers to invest heavily in efficient delivery capabilities and technologies.

Sustainability and environmental considerations are becoming more important, with 3PL companies focusing on developing green logistics solutions, such as electric vehicle fleets and carbon-neutral warehousing.

Automation and data analytics are transforming the industry, with 3PL providers leveraging AI, machine learning, and IoT to optimise operations and provide better visibility for their clients.

While the overall retail sector is growing at a rate of around 3.8% per year, the Australian Third Party Logistics (3PL) market is predicted to grow at a rate of 5.23% annually, according to SPER Market Research.

The Benefits of 3PL Providers for e-Commerce Businesses

The outsourcing of supply chain management and operations delivers benefits to e-commerce businesses in the following areas:

1. Flexibility and Scalability

eCommerce businesses can easily scale up or down their logistics operations to meet fluctuating demand. 3PL providers can handle peak seasons, new product launches, and other changes in business requirements. Outsourcing of your logistics to a quality 3PL provider like Quickmail allows you to be more agile and responsive to market conditions.

2. Cost Savings
3PL providers are able to leverage economies of scale and optimise logistics operations to reduce costs for their clients. Businesses can avoid the capital investment required to build and maintain their own logistics infrastructure. 3PL providers can often negotiate better rates with carriers and suppliers.

3. Improved Efficiency and Expertise

3PL companies specialise in logistics and have deep expertise, technology, and resources dedicated to supply chain management. They can provide more efficient and streamlined logistics solutions compared to your own in-house operations. 3PL providers can offer specialised services like reverse logistics, freight management, and inventory optimisation.

4. Access to Technology

3PL providers invest heavily in logistics technologies like warehouse management systems, transportation management systems, and data analytics. Companies can leverage these advanced technologies without having to make the capital investment themselves.

5. Business Can Focus on Their Core Competencies

Outsourcing logistics to a 3PL allows companies to focus on their main business activities and competencies. It frees up internal resources, time, and capital that can be redirected to strategic initiatives.

6. Improved Customer Service

3PL providers specialise in order fulfillment, last-mile delivery, and other customer-facing logistics functions. This can lead to improved delivery times, order accuracy, and overall customer satisfaction.

The Growth of 3PL Providers

The growth of third-party logistics (3PLs) industry has been fuelled by the increasing demand for streamlined supply chain operations and efficient order fulfillment services. In Perth, 3PL providers like Quickmail have seen significant growth in recent years due to the surge in e-commerce fulfillment needs and the requirement for seamless mailing and distribution services. The 3PL growth in Perth is driven by the following factors:

• Increased demand for e-commerce fulfillment solutions.
• Expansion of Perth 3PL services to cater to diverse client needs.
• Emphasis on efficient order fulfillment processes.
• Rising importance of quick and reliable mailing services.
• Integration of advanced technologies to enhance logistics operations.

The Benefits of Engaging with a Local 3PL Provider

There are several potential benefits to hiring a local 3PL third-party logistics company like Quickmail, instead of a large multinational 3PL provider:

Local Market Expertise
Local 3PL companies have a deeper understanding of the local business environment, regulations, and customer preferences, leading to more tailored and effective logistics solutions for the local market.

Personalised Service
Smaller 3PL providers can often offer more personalised attention and responsiveness to their clients’ needs. They can be more flexible and adaptable in meeting specific requirements.

Focus on Niche Industries
Local 3PL companies can specialise in serving certain industries or sectors that are prominent in the region. This industry-specific expertise can be beneficial for companies operating in those sectors.

Faster Implementation
Onboarding and implementing logistics solutions with a local 3PL provider can be quicker and smoother compared to large, global enterprises.

Cost Advantages
Local 3PL companies have lower overhead costs, which can translate into more competitive pricing for their clients. They can also leverage their regional networks to negotiate better rates with local carriers and suppliers.

Agility and Flexibility
Smaller, regional 3PL providers can often be more agile in responding to changing market conditions or shifting client needs.

Supporting Local Businesses
A good reason to choose a local 3PL company like Quickmail is that you’re supporting your local economy and local businesses.

How to Choose the Right 3PL Partner

Selecting the appropriate 3PL partner is a vital decision that can significantly impact your business’s efficiency and growth potential. When choosing a third-party logistics provider in Perth for your e-commerce business, consider factors such as the provider’s experience in handling fulfilment services, their track record with similar businesses, and their ability to scale with your company‘s growth. Look for a 3PL partner that offers reliable shipping solutions at competitive rates to guarantee timely delivery to your customers. Additionally, prioritise a provider that can seamlessly integrate with your e-commerce platform for streamlined operations. By carefully evaluating these criteria, you can choose a 3PL partner that aligns with your business goals and supports your success.

Common Services Offered by 3PL Providers

When choosing a 3PL partner for your e-commerce business in Perth, it’s important to know the common services provided by these providers to guarantee seamless operations and efficient order fulfillment. Here are some common services offered by 3PL providers:

• Order packing and fulfilment
• Shipping services at competitive rates
• Direct mail campaigns
• Storage and warehousing solutions
• Inventory management and returns handling

These services are essential for streamlining your e-commerce operations, ensuring timely delivery to your customers, and managing the various aspects of distribution effectively. By partnering with a reliable third party logistics provider like Quickmail, you can focus on growing your business while leaving the logistics to the experts.

How Can Quickmail Help?

To maximise efficiency and streamline your e-commerce operations in Perth, Quickmail offers a wide range of services tailored to meet your order fulfillment needs. Quickmail specialises in third party logistics (3PL), providing all-encompassing solutions for e-commerce businesses. From order packing and fulfillment to shipping at competitive rates, we handle it all. Our expertise in printing guarantees that your branding and marketing materials are of the highest quality. With Quickmail, you can save time and money by outsourcing your warehousing, inventory management, and shipping needs. Check out the table below to see how Quickmail can help optimise your e-commerce processes.

Frequently Asked Questions

What Are the Key Factors to Consider When Evaluating a 3PL Provider in Perth?

When evaluating a 3PL provider in Perth, we prioritise efficient warehousing, reliable order fulfillment, cost-effective shipping rates, and seamless integration with eCommerce platforms. Trust Quickmail – your partner for growth.

How Does Quickmail Differentiate Itself from Other 3PL Providers in the Market?

We stand out by offering customised solutions, cost effectiveness, and individualised service. Our established relationships guarantee excellent shipping rates. From storage to distribution, we handle it all. Let us simplify your logistics needs and help your business grow.

Can Quickmail Accommodate Unique or Specialised Order Fulfilment Requirements for Businesses?

Absolutely, we tailor order fulfilment to suit unique business needs. From specialised packaging to custom distribution requirements, we handle it all. Quickmail’s flexible approach guarantees we can accommodate any specialised order fulfilment needs you have.

What Technology and Systems Does Quickmail Utilise to Ensure Efficient and Accurate Order Processing?

We utilise cutting-edge technology and robust systems to guarantee efficient and accurate order processing. Our team coordinates seamlessly to manage storage, pick, pack, and distribute orders, providing cost-effective shipping solutions through established partnerships.

How Does Quickmail Handle Returns and Exchanges for Businesses Utilising Their 3PL Services?

We handle returns and exchanges efficiently by streamlining processes and ensuring accurate documentation. Our team swiftly assesses items, coordinates returns, and manages exchanges promptly. Customer satisfaction is our priority, and we aim for seamless transactions.

Final Thoughts

To sum up, after exploring the world of third-party logistics (3PL) services, it is clear that partnering with a reliable provider like Quickmail can greatly streamline your business operations and drive growth. By outsourcing your logistics needs, you can focus on core business activities while benefiting from expertise and cost savings. The theory that efficient logistics management leads to increased productivity and profitability is indeed proven true through the success stories of businesses utilising 3PL services in Perth. Contact us today!