3PLs in the Fast Lane: Meeting the e-commerce surge with tech, scale, and smarts

E-commerce has shifted from convenience to routine as more consumers and businesses press “buy now” on their computers, tablets and mobile phones.

A customer buying sneakers on a phone and a manufacturer ordering parts online are both fueling the same steady rise in digital transactions. For logistics managers, that growth translates into fuller order queues and new opportunities to refine processes and keep their operations competitive.

The escalating e-commerce boom also introduces new challenges. Higher order volumes can strain labor and storage capacity; tighter delivery windows pressurize transportation networks; and rising return rates add more complexity to the already-busy fulfillment environment. Companies that used to plan for steady seasonal cycles now face year-round peaks, making it harder to keep up with non-stop demand.

The pressure is mounting. Even with tariff uncertainty wreaking havoc on certain markets and product segments, global e-commerce sales are expected to reach nearly $8 trillion by 2028—up from just over $5 trillion in 2022.

This year, e-commerce will represent more than 20% of all global retail sales, and market research firm eMarketer predicts that more than 50% of the world’s population aged 14 and older will officially become “e-commerce shoppers” within the next three years.

To manage the increased order flow and also leverage new opportunities in the virtual selling space, shippers are leaning on third-party logistics providers (3PLs) that help them extend capacity, manage fulfillment and streamline the returns process.  

Shippers of all sizes turn to 3PLs

Using a 3PL was once the domain of large enterprises or companies that lacked the resources to manage logistics inhouse. That’s changed. Outsourcing has been democratized, and today shippers of every size turn to 3PLs for fulfillment and transportation support.

Evan Armstrong, CEO of 3PL market research firm Armstrong & Associates, says the shift reflects both need and opportunity. “For smaller and mid-sized e-commerce fulfillment providers, a big challenge lies in increasing wallet share and doing more with customers,” he explains. “That often means moving past basic order fulfillment into areas like transportation management, both of which can be managed by a 3PL.”

Instead of just filling orders and shipping them out on a customer’s parcel account, for example, 3PLs can combine shipments, negotiate better carrier rates or consolidate small packages into less than truckload (LTL) moves.  

According to Armstrong says this evolution benefits both sides: shippers pay lower costs and gain access to a broader range of services, while 3PLs capture more value by managing freight as well as fulfillment.

“For 3PLs, profitability is often more about managing the transportation versus handling the actual ‘in the box’ fulfillment,” says Armstrong, noting that much of the 3PL industry’s current growth is based on existing customers expanding their relationships and asking providers to take on more functions. “Shippers continue to lean on their providers for a broader range of services.”

Supporting the reverse supply chain

E-commerce has a returns problem. Last year, U.S. consumers sent back nearly 17% of all online orders, representing nearly $890 billion in merchandise, according to the National Retail Federation (NRF).

The rate is even higher in product categories like apparel and footwear, and peak season only magnifies the challenge. Left unmanaged, returns can eat into margins, tie up inventory and put customer loyalty at risk.

Third-party logistics providers have stepped in to help. Many of them now offer dedicated reverse supply chain services, from managing return labels to handling inspections, repackaging and restocking. They consolidate returned goods, track reasons for returns and feed that data back to retailers to help reduce overall returns rates.

For a warehouse or logistics manager already stretched on the outbound fulfillment side, leaning on a 3PL’s reverse logistics capabilities helps clear space, reduce labor strain and get returned products back into sellable channels faster.

It also makes customers happy by shortening the refund or exchange cycle. Handling returns in-house is costly and usually requires more staff, space and systems that may pull attention away from core outbound fulfillment processes.

Andy Lockhart, Vanderlande’s director of strategic engagement and warehouse solutions, agrees that returns remain a difficult piece of the e-commerce puzzle. “It still continues to be a big challenge,” he says. “We see more 3PLs making a bigger play into managing customer returns, and that creates new opportunities for them to help shippers who don’t have the right processes in place internally.”

Lockhart notes that the goal is always to get returned goods back into inventory as fast as possible so they can be resold. “Once it hits the dock door, the question is how quickly you can get it to being sellable again,” he explains.

Automation, quality checks and software that connects returned goods to active demand all help shorten that cycle. One returned black T-shirt, for example, can be scanned, cleared and shipped back out the same day instead of sitting in a bin for days.

Looking ahead, Lockhart points to growing interest in technologies like artificial intelligence (AI) to improve the most labor-intensive part of returns: quality assurance. “The QA piece of the inbound article is the biggest single labor-intensive part of the process,” he says.

Cameras and machine learning tools could help spot defects or condition issues, which means operators would only have to handle exceptions. For companies facing a steady flow of e-commerce returns—and the 3PLs that support them—these tools can reduce manual work and recover more value from every product that comes back.

Click. Buy. Ship.

As e-commerce growth keeps pushing order volumes higher, more 3PLs are using modern technology to keep pace.

Warehouse management systems (WMS) track inventory and orders with accuracy, robotics take on repetitive work at speed and cloud platforms give shippers the real-time visibility they expect. By putting these technologies to work, 3PLs help customers handle higher volumes without losing control of service or cost.

With these advances on the table, providers have a chance to move past short-term uncertainty and build stronger operations. Market volatility, tariffs and shifting freight rates are still part of the landscape, but technology gives 3PLs a way to manage those variables with more control. Instead of waiting, forward-looking companies are using more tech tools to improve efficiency, cut costs and meet rising customer expectations head-on.

Mike Armanious, CEO of Datex Inc., sees modern WMS as one direct path to long-term gains for growing 3PLs operating in the e-commerce arena. E-commerce shippers expect real-time visibility, quick onboarding and seamless integration with their own systems, he adds, which means a 3PL can’t just process orders; it has to become an extension of the retailer’s business.

“When a 3PL tightly integrates with its client, that relationship becomes much ‘stickier,’” says Armanious. “Clients want to stay because the WMS has become integral to their own operations.”

That integration also helps position the 3PL as a trusted partner in an industry where consistency and transparency drive repeat business. This is important because 3PLs operate much differently from companies that sell a single product line, like a candle manufacturer that’s followed the same processes for decades.

In that case, installing a WMS is relatively straightforward because the operation doesn’t change much over time. With 3PLs, however, every new customer brings different requirements, workflows and expectations.

The software itself has to flex and scale with those changes. “When 3PLs embrace modern tools,” says Armanious, “they create stability in a fast-changing environment and get to grow right alongside their customers.”

Armstrong sees the automation trend accelerating across both B2C and B2B fulfillment this year. Some of the new technologies being put in place include co-bots, pick-to-bot systems that move items to packing lines, and automated guided vehicles (AGVs). He’s also seeing emerging applications of AI for dock door scheduling, predictive analytics and tighter integrations between WMS and transportation management systems (TMS).

Labor constraints continue to be a primary driver of automation in e-commerce fulfillment. “The reality is that there aren’t enough warehouse workers, just as there aren’t enough truck drivers,” says Armstrong. “The cost of labor keeps going up and it’s hard to keep people, which is why more companies are turning to robotics and AI to keep e-commerce fulfillment efficient.”

Resetting terms & expectations

With the global e-commerce market barreling toward the $8 trillion mark, this sales channel continues to push supply chains into new territory. Order volumes are climbing, returns remain a persistent challenge and labor constraints are driving companies to invest in more automation, robotics and integrated systems.

Armstrong says 3PLs are central to this shift, offering the capacity, technology and expertise that shippers need to be able to keep pace with the growing demand. For many, outsourcing both outbound, inbound and returns logistics is no longer a luxury but a necessity.

To e-commerce companies facing new pressures on the logistics front, Armstrong says the work doesn’t stop once a new 3PL partner is in place. Contracts signed during the volatile years that followed the global pandemic are now expiring, he points out, and shippers can view this as an opportunity to reset terms and expectations.

“We highly recommend benchmarking what you have with your 3PL and using the request for proposal process to secure better pricing and stronger capabilities,” Armstrong adds. “That’s the best way to make sure your 3PL relationship keeps pace with today’s market.”