E-Commerce Increases Demand for Third-Party Logistics Providers

January 17, 2023

Have you ever wondered how often people order large items, such as household appliances, online and have them shipped to their door? Recently Armstrong & Associates, Inc. (A&A), a reputable third-party logistics market and consulting group, addressed this question, and others, in its latest market report, “Making it Count: Big and Bulky Last-Mile Delivery in the United States.”

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A&A teamed up with the National Home Delivery Association (NHDA) for the study to review the Third-Party (3PL) Big and Bulky U.S. Last-Mile Delivery Market segment. The goal of the study was to “Identify current market size, historical growth and outlook, key providers, customers and verticals served, e-commerce’s role, employment, and other trends.” A&A did this by developing two different surveys and public information. The surveys were sent to NHDA members and other U.S. last-mile 3PLs.

What did they find? According to A&A’s press release, the 3PLs they analyzed had last-mile delivery revenues from $7 million to $1 billion and represent about 40% of the estimated $9.3 billion U.S. 3PL Big and Bulky Last-Mile Delivery Market. A&A estimates this market experienced a compound annual growth rate (CAGR) of 18.2% from 2017 to 2021 and will have a CAGR of 11.8% from 2022 to 2025. It is easy to see this makes Big and Bulky Last-Mile Delivery one of the sharpest increasing 3PL segments.

The report defined last-mile delivery as the transportation of big and bulky shipments (not parcels) from an origin to a destination within the U.S., where they will be consumed. These can be Business-to-Business (B2B) or Business-to-Consumer (B2C). Traditionally, last-mile e-commerce orders are shipped via small packages and moved with parcel carriers. However, with consumers now buying larger products such as furniture, electronics, and other items, different last-mile options are expanding. 3PL providers with fleets or freight brokerages are taking on the delivery of these items. Less-Than-Truckload (LTL), Last-Mile, Household Goods, and Truckload (TL) carriers are offering last-mile services for big and bulky items to adapt to the swift growth in e-commerce sales.

What are the costs involved? A large amount of work goes into the final transportation leg for an e-commerce order, and that comes with a price. Moving a shipment from a distribution or fulfillment center to a customer’s door can account for 30-40% of the total price of transportation. Last-mile provider revenue per shipment is low by conventional LTL standards. The total revenue will vary based on value-added services performed at the time of delivery. For example, having bedroom furniture delivered and set up will generate more revenue than a less rigorous shipment.

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