Logistics is getting more and more complex.
Globalization, international trade agreements, just-in-time production, same-day-delivery…
It all adds up to a headache for logistics companies. To cope, some companies have given up on concepts like same-day delivery. On the other hand, to stay competitive, others are moving towards 30-Minute Delivery.
Gartner says that rapidly evolving customer expectations, as well as new technologies, are the main reasons why business leaders are outsourcing more and more logistic activities to third-party companies.
What is a 3PL?
Third-party logistics companies (3PL) are playing an important role in the changing face of goods delivery. 3PLs offer services that tie into supply chain logistics.
The top 3 services are:
- Transportation of goods between warehouses and end-customers
- Warehouse management and inventory management
- Packing and fulfillment of goods.
Outsourcing is becoming mainstream. Business for 3PLs has been good in recent years and is expected to grow for the foreseeable future.
According to Gartner, more than 80% of professionals plan to increase their logistics outsourcing budget. The global market is expected to grow at a CAGR of 7.1% between now and 2027 and will reach nearly $1,800 billion by 2027.
But, there’s a challenge that the big 3PL players such as C.H. Robinson, DB Schenker, DHL, Nippon Express, and others, need to face - the growing trend for electrification.
How many electric trucks are suitable for 3PL?
Logistic companies such as Wincanton have extended planned investments in electric vehicles. Trucks like the FUSO eCanter, Daimler’s eSprinter, or BYD’s Class 8 truck are getting more and more attention.
At the same time, new companies have emerged. Arrival, Rivian, and Chanje are three companies that have started working alongside logistic companies in the past months. Even GM has invested $27 billion in electric vehicles, as well as launching a brand new spinoff company, BrightDrop, that provides vehicles and technology for first-mile and last-mile delivery. However, last-mile makes up only a fraction of the total routes that can be electrified.
At Ampcontrol, we’ve calculated that the middle-mile can be electrified more efficiently and with fewer risks than last-mile delivery.
Why is the middle-mile key for 3PL’s electrification?
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There are 3 ways electric trucks are shaping middle-mile transportation.
Firstly, middle-mile transportation has become highly competitive in the past few years. Mostly driven by the rise of eCommerce and the global COVID pandemic, the demand for fast and cheap shipping between warehouses (or warehouse to shops) has increased. Electric trucks provide a solution to this challenge, as they are cheaper when companies manage and charge their electric fleet efficiently.
Secondly, the average length-of-haul has declined rapidly over the past decade or so. Since 2005, the market has seen a drop of 62% (from 800 miles to 500 miles). Thus, delivery vehicles now have shorter distances to travel. This is the ideal scenario for fleet electrification, especially if this trend continues over the next few years, as predicted.
Since 2005, the market has seen a drop of 62% (from 800 miles to 500 miles).
Thirdly, many corporations have committed to reducing GHG emissions that are generated during production and throughout the supply chain. The pledge to reduce GHG emissions often forms part of their sustainability strategy. Middle-mile is crucial to achieving these sustainability and environmental goals.
How can a 3PL company manage its electric fleet?
Over the past few years, a large number of software systems have emerged to support 3PL companies to manage their operations efficiently through increased automation. Activities such as planning, scheduling, monitoring supply chain operations, and communication have been targeted by software companies. Very few business operations remain solely manual, with most tasks using some form of automation and productivity software.
Therefore, as 3PL companies begin to electrify their vehicle fleet they need technical support to operate and manage their EVs. Software solutions aim to:
- reduce out-of-service times of vehicles
- reduce total cost of ownership (TCO)
- increase on-time departure and delivery
At Ampcontrol, we’ve identified that the only proven way to achieve all of these objectives is to connect existing software systems from warehouses, route scheduling, workforce management, and others to the central charging infrastructure software. Only when all the information is available, can the fleet operator ensure that the right vehicle is charging and that it has sufficient energy for its next trip.
As well as taking care of and optimizing fleet charging in real-time, software such as Ampcontrol help 3PLs to simulate the charging of electric vehicles. This makes it much easier for 3PLs to make strategic decisions on equipment, such as which vehicle or charge point should be ordered for their fleet. Intelligent software for electric fleets enables companies to make day-to-day decisions with ease. In other words, the fleet operator only needs to monitor charging activities and make the final decisions, the software does the rest.
Summary
The face of logistics has changed dramatically in recent years. Third-party Logistics companies have sprung up to help companies fulfill the demand for fast and reliable delivery of items.
Fleet electrification provides an ideal solution, as they help to cut costs over the long-term and to hit sustainability targets. When used alongside smart charging software such as Ampcontrol, delivery EVs can be used for both middle-mile and last-mile deliveries. Smart charging solutions help to automatically optimize vehicle charging, freeing up the fleet operator to focus on growing the business.
Read more about fleet electrification here: 6 Reasons Why the Electrification of Fleets is Set To Accelerate In 2021
