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Why Should 3PL Providers Use AI Technologies?

Updated: Oct 3, 2022

By 2025, Ecommerce sales are expected to reach $7.4 trillion. There is no indication that internet buying will slow off anytime shortly [1].

Since more individuals turn to eCommerce for their shopping requirements, this trend is likely to continue in the coming years.

With the increasing popularity of eCommerce, 3PL (third-party logistics) providers are under pressure to meet the demands of online shoppers. Hence, they should adopt AI-based technologies that will enable them to scale their operations.

What are the challenges and threats faced by 3PL providers?

Challenges faced

Businesses deal with thousands of orders every day, and manual shipping and dispatching may result in problems. However, manual control of last-mile delivery operations has proven to be difficult.

Lack of real-time data: The lack of real-time data causes a delay in the result of the data leading to slow or inaccurate decision-making.

Route planning inefficiency: Without the right tools, 3PL providers may struggle to create efficient routes. Longer delivery durations and increased shipping costs are feasible outcomes.

Inaccurate inventory management: If 3PL providers cannot handle their inventory proficiently, they may over-ship or under-ship products. Inaccurate inventory management can result in customer dissatisfaction and lost sales.

Order fulfillment errors: Incorrect orders equals unhappy customers and returns.

Threats of using old Technologies

Here are some threats that 3PL providers might face due to adopting old technology:

Competing against other 3PLs that have adopted AI: If they don't take advantage of AI technology, their competitors will be able to offer better service to their customers, which will lead to a decrease in market share.

Losing out on efficiency and cost savings: AI-based delivery route optimization can help 3PLs save time and money. AI technology could speed up decision-making, simplify complicated processes, and improve inventory management. Consequently, it reduces unnecessary errors, overspending, and inefficiencies.

Failing to meet customer expectations: Customers expect faster delivery times and more accurate order fulfillment. If 3PLs don't adopt AI-based technologies, they'll likely fall behind their competitors in meeting these expectations. This makes customer service suffer as they'll be less able to meet expectations from the delivery time and accuracy. Read on 5 Optimal Ways for Handling Fulfillment Logistics

Falling behind on innovation: If 3PLs don't adopt AI-based technologies, they'll be at a disadvantage when it comes to innovation. AI could help the company keep up with the ever-changing landscape of eCommerce and logistics.

Benefits of the AI-based route optimization software

The following are the 3 benefits of AI-based route optimization software for 3PL providers:

Real-time data: AI-based route optimization software provides real-time data, which helps 3PL providers in optimizing their daily routes or dynamically re-routing in real-time and will let them avoid the hassle of manual route planning.

Improved efficiency: an AI-based route optimization can allocate the generated routes to the available vehicles and delay the unsuccessful plan owing to a lack of available resources for the next batch of orders.

3PL providers can plan more efficient routes. This leads to shorter delivery times and lower shipping costs.

Increased customer satisfaction: When using an AI route planner, customer orders are submitted over the integration layer and/or manually inserted through the control tower, it supports 3PLs in designing the optimum routes for effective fleet management and on-time delivery. 3PL providers will meet expectations in terms of delivery time and accuracy. Thus, improving their overall customer satisfaction levels.


The benefits of AI-based route optimization software will help in solving most challenges faced by 3PL providers. With the improvement in software efficiency and an increase in customer satisfaction, the 3PL providers will stay competitive in the market, scale, and meet the demand of the customers.

Read this article if you want to know how to choose the Right Route Optimization Software, if you still don’t know how to start, contact us today.



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