Many terms are confused in the logistics and transportation industry, especially if you don't have years of industry experience. Examples of words that might be confused are '3PL Provider' and 'freight broker.' Many shippers consider these terms interchangeable; however, there is a significant difference between a 3PL and a freight broker.
A freight broker is a middle man between the shippers (or the companies who need to ship freight) and transportation carriers or drivers. Both shippers and carriers have their requirements and schedules, and a freight broker acts as a person who matches them together and arranges freight shipments.
Usually, freight brokers are non-asset-based, which means they don't own any physical equipment. Not owning physical equipment allows them to have the flexibility to find the equipment necessary to ship their freight. They work with numerous freight carriers and partners, so you don't have to search for reliable carriers on your own. Freight brokers handle most of the communication and paperwork for you.
A 3PL provider, also known as a third-party logistics provider, is a company that provides a wide range of outsourced logistics and transportation services to businesses. The extensive service coverage of a 3PL provider includes the following services:
In addition, 3PL's work with thousands of freight carriers, suppliers, vendors, brokers, companies, and partners, so they have the buying power and an extensive network of industry connections. Thus, allowing them to perform complex operations and manage the entire logistics branch of huge companies.
A 3PL and a freight broker connect the shipper and the carrier but have different roles.
A freight broker tends to be a part of one specific event in the logistics process- moving goods between shippers and carriers.
A 3PL provides a much wider variety of services than just managing a particular shipment. 3PL providers focus on building trusted, long-term relationships rather than simply executing one or two operations. A 3PL can help address any volume of freight shipments, any part of a business's supply chain, and any other logistics function.
Even understanding the difference between 3PL's and Freight Brokers can be hard to choose the right one for your business needs. So, let's think about your business needs and decide which one fits your business needs.
If your business needs infrequent assistance with shipping and deliveries: you should look for freight brokers. A freight broker can be cost-effective and a helpful solution to your business needs.
If your business needs regular assistance with packing, shipping, delivering, warehousing, and returns: you should look for a 3PL provider. A 3PL provider will better fit a long-term partnership for companies with complex supply chains.
To learn more and to see first-hand how a 3PL can help you manage your logistics, contact us today for a free transportation cost analysis.