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How 3PLs have helped businesses navigate logistics with COVID-19 in mind

How 3PLs have helped businesses navigate logistics with COVID-19 in mind

COVID-19 has wreaked havoc across nearly all forms of business, and maybe none more so than those in supply chain management. The supply shock that began in China in February 2020, followed by a demand shock as the global economy collapsed, exposed flaws in companies’ production plans and supply networks across the world. With cargo backlogged at major container ports in China, and travel restrictions leading to a shortage of truck drivers to transport containers, the resulting bottlenecks in supply chains caused a ripple effect across major industries worldwide.
 
Businesses were left with billions of dollars in unsold products when the pandemic struck, leading inventory-to-sales ratios to spike momentarily before being liquidated. However, when the economy recovered and demand grew, companies were unable to fully restore stocks to pre-pandemic levels, resulting in lower inventory-to-sales ratios. Price hikes have also been a result of these shortages with commodity prices monitored by the Producer Price Index increasing by 19 percent between May 2020 and May 2021, the biggest year-over-year increase since 1974 (whitehouse.gov).
 
Many have turned to third-party logistics companies (3PLs) during these unparalleled times, which have been able to assist carriers in keeping trucks loaded and moving profitable freight. For smaller carriers who have fewer resources to build relationships with a larger network of shippers, 3PLs are able to grant access to thousands of shippers.
 
For shippers, 3PLs provide added capacity and flexibility, which fills in the gaps and connects a shipment to a carrier looking to move a load in that lane. This is much needed as most shippers do not have the internal resources or shipment density to procure all of their required capacity. 3PLs also have the added flexibility of multimodal transportation, connecting shippers to a variety of trucks such as flatbed, lorry and refrigerated vans, ultimately cutting down on costs and time.
 
The shift to digital operations caused by COVID-19 has also created challenges, where health and safety are the main objective when choosing to switch to online. 3PLs are seeing a transition from phone and in-person meetings to online chatting, video conferencing and EDI/API integration. Digital logistics has an influence not just on the cost side of the value equation, but also on the capacity side to offer tailored, customer-focused logistics with shorter cycle times and high customer satisfaction, which supports growth. Technology has a central role to play in the future of logistics, with advanced data analytics providing greater insight into supply chains and mitigation of future disruptions beyond the pandemic.
 
COVID-19 isn't a normal risk factor. The magnitude of its influence is unrivaled by anything most management teams have seen before. Companies must move quickly and boldly to develop and implement a short-term tactical strategy that will reduce threats to human health and preserve global supply networks. 3PLs play a crucial role in these supply chains, as strong data and analytics skills are critical in this process for comprehending complexity, anticipating possible disruption, and devising a swift solution.

At Atlas Logistics®, we are experts in finding the solution to any logistics scenario. Contact us today to learn more.