What is a 3PL (Third Party Logistics Company)?

A third-party logistics provider, or 3PL, is an outsourced company that manages all or a particular part of a company’s logistics operations and executes transportation, freight management, and other activities.

In it’s simplest form, a 3PL firm coordinates and manages functions for better transportation and supply chain efficiency. Also, the new study reported that 65 percent of shippers are increasing their use of outsourced logistics services.

Why Do Companies Use Third-Party Logistics Providers?third party logistics

A 3PLs may manage a single part or a multitude of different supply chain processes within your company. Also, third-party providers are capable of managing multiple areas of your supply chain. To put it simply, companies use third-party logistics providers to manage their logistics operations in a productive and cost-efficient manner. Additionally, there are many other reasons why companies use 3PL’s, including:

Time savings

3PL’s save companies the time they would normally spend carrying out the management of their supply chain. Logistics firms also save them from costly mistakes that could take an ample amount of time to fix.

Continuous optimization

3PL’s have the ability to make modifications to each connection in the supply chain when needed. The company benefits from the continuous improvements made to their logistics process when they outsource a logistics firm.

Cost savings

Logistics firms offer lower transportation rates and can help reduce return goods cost and lost sales. Thanks to relationships with carriers and experienced freight brokers, 3PLs can negotiate lower rates for you and ensure to eliminate unnecessary costs.

Capacity

Regardless of the season, 3PLs give you access to capacity and required equipment. Through their relationships with thousands of carriers, third-party logistics providers ensure to support your freight volume. Also, they give you the opportunity to optimize inventory and warehouse management.

Expertise

3PL’s have expertise and thorough industry knowledge, and they can accurately forecast what will work best for their customers. They have technology that is able to produce advanced reporting and inventory management, tracking the entire logistics process.

When companies choose to work with a 3PL provider, they fully reap these benefits as the 3PL truly becomes an extension of their team.

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.