Does sustainability mean the end of 3PLs?

Large national retailers, like Walmart and Amazon, have had to leave their 3PLs and turn to in-house fleets in order to achieve their sustainability goals.

Why is it a choice between the two? The current norms of supply chains, including using agents and independent contractors, as well as the expense of innovation has limited the number of 3PLs willing to make the push. With ambitious promises to consumers and deadlines looming, retailers don’t have a choice but to push forward, without the 3PLs.

Reliance on the Independent Contractor

At the bottom of the supply chain, carrying the weight of the last mile delivery, is typically an independent contractor, with his own vehicle. In a sustainable supply chain, though, that vehicle would be electric.

In the past, these drivers have been dissuaded from purchasing electric because of the higher initial expense. An expense, not all shippers are willing to compensate them for.

How does a company, walking the line between independent contractor and employee, mandate a particular vehicle for their drivers and control the delivery process?

Bringing fleets in-house

The answer for many large retailers is to bring their fleets in-house, allowing them to front the cost of innovation and buy the electric vehicles.

Here, they can also work through the other issues that sustainability brings, like routes that are limited by the “fuel” of the vehicles.

But where does this leave 3PLs and other intermediaries?

How can a retailer or a 3PL balance sustainability goals without bringing a fleet in-house?

IKEA is doing just that. We sat down with Steven Moelk, Zero Emissions Delivery Project Director at IKEA, to learn how they’re juggling ICs, 3PLs and leading the sustainability charge. Watch it here: