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E‑commerce logistics driving the fastest-growing 3PL segment: report


Milwaukee, WI — A report published by Armstrong & Associates, Inc. (A&A) estimates that e‑commerce logistics costs in the U.S. hit $117.2 billion—representing 6.9% of total U.S. logistics costs.

The report, “E‑Commerce Logistics in the United States,” provides a deep‑dive into e‑commerce logistics in the U.S., with a focus on domestic and international transportation, warehousing and fulfillment, last‑mile delivery, and reverse logistics.

“E‑commerce retail is no longer a novelty—it’s the new normal,” stated the report. “The industry has shown significant and sustained growth. In the last five years, we’ve seen a compound annual growth rate close to 15%, and the industry shows no sign of slowing down.

“We can’t overemphasize the role logistics plays in e‑commerce retail. Providing two‑day delivery for a seemingly endless assortment of products is no small feat. E‑commerce as we know it would not be possible in the United States without our vast, efficient logistics infrastructure. Logistics networks are quickly growing and changing to meet the ever‑higher bar set by e‑commerce retailers.

“We frequently talk about the “last mile” in logistics, the short but costly final leg of a product’s journey. E‑commerce retail has taken this concept a step further. The shift from brick‑and‑mortar to e‑commerce retail has resulted in a such a significant addition to the typical logistics journey for retail products that we think of this as e-commerce’s “extra mile.

“The well-traveled path from distribution center to store location is being replaced by a much more complex series of moves: from distribution centers to fulfillment centers to parcel hubs and sortation centers to last-mile delivery providers for residential delivery. As logistically complex product categories such as groceries and furniture make the shift to e‑commerce, the “extra mile” is only becoming more cumbersome and costly.

“E‑commerce’s “extra mile” was previously traveled by someone else—the customer. “E‑commerce retail has assumed an entire logistics step that had previously only existed on a very small scale. Logistics networks have undergone dramatic changes to accommodate e‑commerce, but the transformation is far from complete. We estimate U.S. e‑commerce logistics costs will grow at a rate of 18.8% through 2020.

 


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