Tag Archives: 3pl logistics

3PL vs 4PL: What Is the Difference?

In the diverse and complex world of logistics, it is easy to get carried away with all the terms and definitions. Two of the most commonly confused terms are 3PL and 4PL. While both third-party logistics and fourth-party logistics act as an intermediate party that has something to do with freight transportation, there are many differences between a 3PL and a 4PL. To understand the intricacies of both types, it’s important to know the definition of 3PL and 4PL.

What is a 3PL?

A third-party logistics provider (3PL) is a company or organization that handles certain transportation operations and supply chain functions of a particular business. While the main competency of a 3PL is moving freight, it also provides additional logistics services. 3PL’s gained popularity in the 1970’s when they were tendering freight to railroad companies. Since then, third parties have increased their impact and now play a crucial role in the transportation industry. If a company’s supply chain becomes too complex to manage internally, outsourcing to a 3PL is a great solution. You are still in control of the overall logistics processes and strategy, but burdensome manual operations are handled by a third party. Typically, a 3PL provides the following services:

  • Freight forwarding
  • Load management & dispatch
  • Warehouse and inventory management
  • Supply chain management
  • Technology integration

What is a 4PL?

A fourth-party logistics provider, also known as a lead logistics provider, is basically a 3PL with extended functionality. It appeared as a service for companies that need more coverage in terms of logistics and supply chain management. Usually, 4PL’s provide a wide span of services and hold more responsibility and accountability. 4PL’s will most likely manage your entire supply chain.  A 4PL typically provides the following services:

  • Strategic supply chain and logistics management
  • Warehouse and inventory management
  • Accounting
  • Freight forwarding
  • Transportation management
  • Optimization of operations

What is the difference between a 3PL and 4PL?

Both 3PL’s and 4PL’s provide transportation and logistics services to businesses. The main difference is that a 4PL focuses on strategic goals, extensive service coverage, and close partnerships, while a 3PL lets you control the overall strategy but outsource tedious operations.

3PL vs Freight Broker: What Is the Difference?

In the logistics and transportation industry, many terms are confused, especially if you don’t have years of industry experience. One example of terms that might be confused is ‘3PL (third-party logistics provider)’ and ‘freight broker.’ Many shippers consider these the same things, however, there is a significant difference between a 3PL and a freight broker.

What is 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 own 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. This means they don’t own any physical equipment. This allows brokers have the flexibility to find whatever equipment you need to ship your freight with. They work with numerous freight carriers and partners so that you don’t have to search for reliable carriers on your own. Freight brokers handle most of the communication and paperwork for you.

What is a 3PL?

A 3PL, or 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 includes everything from shipment tracking and dispatch to long-term supply chain management. 3PL’s work with thousands of freight carriers, suppliers, vendors, brokers, companies, and partners, so they have the buying power and a large network of industry connections. This lets them perform complex operations and manage the entire logistics branch of huge companies.

3PL vs Freight Broker: What is the difference?

Both a 3PL and a freight broker act as a connection between the shipper and the carrier. However, they have different roles. A 3PL provides a much more extensive variety of services that just managing a particular shipment. Third-party logistics providers focus on building trusted, long-term relationships rather than simply executing one or two operations. A 3PL can help manage any volume of freight shipments, your supply chain, and any other logistics function.

3PL vs Freight Broker: Which option to choose?

If you need to send a few shipments occasionally, a freight broker can be a cost-effective and helpful solution. For companies with complex supply chains, a 3PL will be a better fit in terms of partnership, equipment, freight rates, and services.

4 Best Transportation Methods for Oil and Gas Shipping

It is hard to imagine our lives without fuel. Every day, we rely on the oil and gas industry to supply us with energy to keep multiple processes running. In order to provide us with necessary materials like oil and gas, companies must ensure they transport it in a convenient and reliable way. Choosing the right transportation mode and a robust strategy is crucial for efficient oil and gas shipping.

The role of transportation in the oil and gas industry

Transportation is an essential part of the oil and gas industry. However, due to the hazardous nature of transported products, it can be complicated. Crude oil, natural gas, and oversized drilling equipment all require special handling and increased safety regulations. Therefore, cargo security, delivery speed, and proper transportation equipment play a significant role in the oil and gas supply chain.

To ensure successful delivery, energy companies use various modes of transportation. Sometimes, it can be challenging to choose the proper mode.

Here are some of the most popular ways of transporting crude oil and gas across the world:

Trucks

The easiest and most utilized form of transportation in the oil and gas industry is trucking. With on-the-road transportation, you can schedule shipments at any time and move them at any place. This advantage makes trucking way more beneficial than other transportation modes. Also, it moves smaller amounts of oil, meaning that the extent of damage in case of cracks or leaks is relatively small.

Additionally, there are various types of trucks that can perfectly suit the needs of the industry.

  • Flatbeds are open trailers that are commonly used for oil and gas equipment shipping because they let you move loads of any size and shape. Rigs, pipes, and drilling equipment are usually oversized and overweight, which makes it hard to move via any other transportation method except a specialized truck.
  • Hotshots are trailers connected to a pick-up truck that is made for moving small and urgent shipments. Whenever you need to quickly transport a piece of equipment to a remote site, hotshot is a perfect option.
  • Oil tankers are special cylindrical containers connected to trucks. Tankers are adjusted to moving liquids, and they are good for moving oil as well. Although you cannot ship a large volume of oil through the truck, the vehicle can take it to any destination you need.

Pipelines

This transportation method suggests that oil is gathered and then transported directly to the site or plant via a pipeline network. Despite pipeline shipping being a hot topic of discussions between industry experts, it is a fast and reliable way to distribute oil. New technology helps advance the safety of this mode, and pipelines have sensors for monitoring important indicators like temperature, pressure, etc.

Pipeline transportation has its disadvantages. Firstly, it limits areas and destinations you can ship to because the pipeline infrastructure is not developed enough. Additionally, pipelines move enormous amounts of oil, so when an accident happens, the damage is very serious and it’s often hard to liquidate the consequences.

Ocean

Ships are a slow, inexpensive, reliable way to move extremely large volumes of fuel. Ocean transportation has one big advantage over other shipping methods, which is that you can transport materials globally. Despite longer transit, it is the most efficient mode for moving oil across the world. Essentially, ocean shipping is mostly used as a part of a large intermodal strategy.

Rail

Rail was a primary way to move oil for more than 150 years. Rail transportation makes oil containers less prone to damage compared to other shipping modes. This method doesn’t have enough flexibility to move oil at any point. But, when combined with other modes, rail can be extremely beneficial for a fairly fast and cost-effective way to move oil long distance.

Oil and gas transportation with PLS

Regardless of the shipping method you choose, it is essential to find a reliable transportation provider. At PLS, we have more than 27 years of experience and providing logistics services for oil and gas companies across North America. We can help you enhance your transportation strategy with our customized solutions, 45,000 carrier network, and a variety of modes.

Learn more about our oil and gas shipping services!

How Does Supply Chain Management Work?

Supply chain management is a set of activities that includes supply, production, and distribution of a company’s goods. This production cycle plays an enormous role in any business. Proper supply chain management can reduce transportation costs and enhance productivity, and in order to succeed, companies should learn how supply chain management works.

What processes does supply chain management include?

A supply chain process can be described as a simple example: imagine a cake. First, raw eggs are transported from the farm to the grocery retailer. Then, the eggs are bought by a bakery to bake a cake. The cake is then either set out in the bakery or delivered to a grocery store to be sold to the final customer. All of the processes that stand in-between the raw egg and shelve-ready cake are classified as a supply chain.

So, how does supply chain management work? As a first look, the process can seem very complicated. However, supply chain contain many important key components that make it work properly.

What are the core components of supply chain management?

Transportation

Essentially, transportation is one of the main components that make the supply chain work. Transportation plays a crucial role in every step of product movement, allowing companies to focus on arranging well-organized, smooth logistics for their goods.

Communication and visibility

Supply chains are different in every industry. No matter if it’s a small local business or a large enterprise, supply chain management is a complex process. With so many links involved, it requires proper handling. Without efficient communication between manufacturers, suppliers, vendors, distributors, and retailers, supply chains would fall apart in no time. That’s why consistent communication between all parties is crucial for efficient supply chain management. Another essential part of a successful production cycle is visibility into the supply chain. That means you can easily access and analyze all the needed information to make strategic decisions.

Finance

A complex supply chain suggests high financial responsibility. Bills, invoices, and reports are key points you can’t run production without. Accounting plays a large role in supply chain management since all of the payments have to be documented and stored in a proper way.

Final thoughts

Of course, supply chain management involves numerous other activities and processes. However, the above listed are the primary parts of any supply chain. Today, companies constantly work to enhance their efficiency by applying various supply chain management practices and technologies. With more innovations and automation, it becomes easier to focus on the strategic part of the supply chain management than on its execution.

Learn more about our Supply Chain Management services!

How a 3PL Can Help You Get Lower Freight Rates

If you are frequently shipping freight, there’s a good chance know what third party-logistics companies do. In fact, 3PL’s can help your business in many ways, and one of those ways is getting lower freight rates for you.

Why is outsourcing so popular?

Outsourcing logistics to a 3PL provider has become more common among many companies, regardless of their size and expertise. Many businesses have chosen to outsource their logistics because of the growing importance of customer experience. People want faster shipping and cheaper delivery costs.

Inventory, warehousing, and logistics costs are constantly rising. Managing logistics becomes costly and complicated for companies to do themselves, so businesses are seeking efficient solutions to save costs on transportation. One of the best ways to cut transportation costs is getting low freight rates on a regular basis. Outsourcing transportation to a 3PL can help companies in many ways and help get you the best rates for your freight.

How can a 3PL get you better freight rates?

An experienced third-party logistics provider has a wide network of carriers and freight brokers with reliable and trusted relationships. This lets a 3PL negotiate exclusive rates for your company. The negotiating process is usually held through a freight broker, who arranges the final shipping cost for a customer.

What are other ways a 3PL can help save transportation costs?

Apart from better freight rates, here are some other benefits of partnering with a 3PL:

Available carrier capacity

One of the primary advantages of third-party logistics providers is that they let you access a wide range of carrier capacity. Regardless of your freight type and volume, an experienced 3PL will always provide you with the required equipment. You don’t have to interact with multiple people and can instead have a single point of contact for anything.

Supply chain management

Usually, a 3PL provides you with a dedicated person or team of experts to manage your company. Apart from freight brokerage, you can also use a 3PL for managing your supply chain. Professional analysts can define gaps in your current supply chain and can help you outline a new strategy. This eliminates waste operations, and, therefore, reduces unnecessary costs.

Custom approach

While you focus on your business, a 3PL should focus on seeking efficient solutions for you. An experienced logistics provider will learn your businesses characteristics and needs so that they can provide you with useful solutions (for example, freight consolidation or shifting to multimodal transportation). Developing a custom approach to your company helps 3PL’s reduce your transportation costs.

Final thoughts

Collaborating with a 3PL can significantly reduce overall transportation spend of your company through competitive freight rates, supply chain management, carrier capacity, and experience in the logistics industry.

Looking for freight quotes? Get one here!

5 Challenges Logistics Managers Face Every Day

logistics

In present-day global economics, logistics plays a key role in facilitating trade. Also, by extension, ensuring the success of business operations. Logistics managers have seen increasing challenges to create and keep efficient and effective logistics and supply chain methods.

Here we discuss five of the biggest logistics challenges faced on a daily basis.

Key Challenges Faced by Logistics Managers

1. Customer Service

Logistics management is all about providing the right product in the right quantity to the right place at the right time. Customers want full transparency into where their delivery is at all times. In this day and age, the location of a customer’s shipment is as interconnected as your social network. In fact, as customer expectations have increased, their willingness to pay for fast shipping has decreased, with just about 64 percent of consumers unwilling to pay anything extra for less than two-day shipping.

2. Transportation Cost Control

One of the highest costs contributing to the ‘cutting transportation cost’ concern is fuel prices. Higher fuel prices are likely to increase transportation costs for U.S. shippers this year by pushing up fuel surcharges. Additionally, rising U.S. diesel fuel prices are escalating surcharges added to freight rates, which is reversing a two-year trend that cut into the revenue and earnings of truckers as fuel prices plummeted.

3. Planning & Risk Management

In order to stay as efficient and effective as possible, periodic assessments and redesigns of each business sector are necessary. These adjustments are put in place in response to changes in the market, such as new product launches, global sourcing, credit availability and the protection of intellectual property. Managers must identify and quantify these risks in order to control and moderate them.

4. Supplier/Partner Relationships

It is important to create, understand and follow mutually agreed upon standards to better understand not only current performance but also opportunities for improvement. Thus, having two different methods for measuring and communicating performance and results in time and effort wasted.

5. Government and Environmental Regulations

Carriers face significant compliance regulations imposed by federal, state and local authorities. As well as federal regulations, environmental issues such as the anti-idling and other emission reduction regulations brought about by state and local governments have created concern that the compliance costs could exceed their benefits.

With the landscape of business operation continuously changing, there is a shift in the ensuing challenges as well. Therefore, staying up to date with these changes and taking preemptive measures to ward off challenges is a sign of successful logistics management.

 

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What is a 3PL? And Why Do Companies Use it?

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 Businesses Use Third Party Logistics Providers (3PLs)?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 the 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.