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August 25, 2022

Why Atlanta’s Industries Are Using 3PL Services

As Atlanta expands its influence as a leading transportation hub, more national companies are outsourcing parts of their operations to local third-party logistics (3PL) providers.

The Metro Atlanta Chamber nicknamed Atlanta “Supply Chain City” because of its prime geographic location, strong infrastructure network and collection of corporate headquarters. Atlanta is only a two-hour flight or two-day drive away from roughly 80 percent of the United States, according to the Georgia Department of Economic Development. It’s home to the most expansive rail system in the Southeast, the third-busiest container gateway in the country and the world’s busiest airport.

As a result, the 3PL sector in Atlanta has exploded. The Atlanta Business Chronicle reported that the logistics and parcel delivery industry has been up 90.3 percent year over year since 2019. The city’s 3PL leaders continue to revolutionize the sector, making Atlanta the second-best metro area for digital supply chain in the U.S., according to Deloitte.

Atlanta’s 3PL providers handle everything from inventory management and control to final-mile delivery and installation for the metro’s fastest-growing industries. Here are the four top industries relying on 3PL services to help scale the supply chain.

Manufacturing

Georgia has one of the strongest holds on the advanced manufacturing industry of any state in the country. The Atlanta Small Business Network found that Georgia outperformed the U.S. in 10-year gross domestic product growth in producing machinery, fabricated metals and electrical equipment. The local advanced manufacturing sector employs roughly 270,000 people, and Atlanta is central to the sector’s growth as the state capital.

In recent years, the local advanced manufacturing industry has become more dependent on 3PL services. With the rapid growth, 3PLs have allowed manufacturers to scale without the high overhead costs.

Atlanta’s industrial market is notoriously tight, with the warehousing vacancy rate recently reaching a record low of 4.2 percent, according to the Atlanta Business Chronicle. Instead of dealing with the steep competition and rising rental rates, local manufacturing companies have begun expanding their warehousing space by partnering with 3PL providers.

A 3PL typically owns its trucks, equipment and warehouses, allowing manufacturers to tap into those assets and expertise without taking on a more significant financial burden. When a manufacturer needs more space, its 3PL partner can immediately jump into action by leveraging its owned asset network.

Biosciences

Atlanta is widely recognized as one of the leading global health centers because of its prosperous bioscience industry. National health organizations such as the Centers for Disease Control and Prevention, Arthritis Foundation and American Cancer Society have placed their headquarters in Atlanta. The city is also a leader in medical devices, immunology and health information technology.

The local bioscience sector has niche logistical needs only a 3PL expert can provide. Bioscience companies often have to ship materials sensitive to time and temperature. However, most bioscience businesses don’t have the asset network to receive, store and transport those deliveries themselves. A 3PL can protect the integrity of those products while providing greater visibility into the inventory of materials.

The bioscience industry also has a complex web of regulations from federal institutions such as the Food and Drug Administration that affect its shipments. A 3PL with industry experience can skillfully navigate these regulations to ensure everything is compliant, allowing loads to get out quickly without last-minute obstacles.

Automotive

Atlanta is quickly becoming an epicenter for the automotive industry. The local automotive sector saw exponential growth in 2021 — more than 14 times the volume in 2020, according to JLL research. As the industry rebounds from its pandemic lows, staying efficient and agile in operations is critical to meeting the changing demand.

The automotive industry receives and ships large, bulky parts that require expansive infrastructure, equipment and packaging. And because demand fluctuates frequently, automotive companies with spacious warehouse spaces may be paying for space they don’t always use.

Atlanta’s 3PL experts allow them to expand and contract as needed to stay lean in their operations. A logistics provider can receive parts, perform quality-control inspections, place everything into storage and transport items as needed, improving the efficiency and productivity of their automotive partners.

Retail

Atlanta has been one of the top beneficiaries of the pandemic’s e-commerce boom. Franklin Street found that sales volume increased by nearly 92 percent from the first quarter of 2019 to the second quarter of 2021, and consumer activity has yet to show signs of slowing down.

However, expectations for faster and faster deliveries have accompanied the e-commerce growth. McKinsey found that almost half of omnichannel consumers will shop elsewhere if delivery times are too long. Local retailers have sped up their deliveries by leveraging the coast-to-coast networks of 3PL providers, who can quickly move goods through their owned distribution centers across the country.

While some omnichannel retailers attempt to handle everything in-house, stores have significantly lower inventory-accuracy rates than established distribution centers, according to McKinsey. A 3PL can also handle the SKU complexity of an omnichannel retailer, using decades of inventory-management experience to keep the warehouse organized.

During peak times, 3PL providers minimize supply chain disruptions for Atlanta businesses, keeping delivery times low and buyers satisfied. As the metro’s industries grow, 3PL companies will play a critical role in ensuring recent successes are repeatable.

Armstrong – Atlanta is the largest asset-based provider of commercial services in the nation, offering a wide range of logistics and warehousing services to keep businesses running smoothly. When you partner with Armstrong, you receive a team of 3PL experts dedicated to delivering you — and your customer — peace of mind. Learn more by calling 770.368.0368 or requesting a free quote online.

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