When online orders exploded in volume during the pandemic, many third-party logistics providers were not equipped to meet fulfillment requirements, according to Robert Liva, senior channel manager at Pierbridge and Martin Hespeler, vice president of sales at Microlistics, both adjacent technologies at Wisetech Global Group.
Hespeler describes the exponential growth in orders during the pandemic like this: “The typical 3PL would see anything from a hundred orders in bulk pallets on a daily low-volume basis to 300 to 600 orders on a high-volume basis with the e-commerce boom. When manufacturers, retailers and companies like Amazon asked them to do fulfillment of e-commerce orders for them, they went up to 5,000 to 20,000 line orders a day. And that was something they were never accustomed to, didn't have the labor to handle and didn't have the technology to support.”
Liva notes that carriers had been building up their networks due to “good growth trajectory” in e-commerce prior to the COVID-19 lockdown. “But in the pandemic, COVID just skyrocketed it. They couldn't build their networks fast enough.”
Nor did some logistics providers implement best practices quickly enough. “Shippers were not used to doing good practices in terms of how to pack orders. Before, they just had to fill up a pallet when shipping with an LTL carrier. Now I've got to put it in a box. And if you fill up a box with air, you're going to fill up those small parcel carrier vehicles and vans much faster than they ever expected.”
As a consequence, carriers began introducing volume- or cubic-based pricing to get shippers to pack orders tighter because there was a significant crunch on capacity, Liva says.
Hespeler and Liva discuss the technology required as the business shifted from making large shipments to a high number of small shipments, which are much more labor-intensive.
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