Tag Archives: third party logistics

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!

How to Build a Strong Relationship with Your 3PL

relationship with 3plMore and more companies of all sizes are turning to 3PLs for help with their transportation management. Supply chains are becoming more complex, and securing capacity has become a challenge. 3PLs bring their expertise and solid resources to help shippers improve their logistics operations, while also driving cost savings, and generally make shippers’ day-to-day transportation challenges easier. It is important to set up a strong relationship with 3PL.

Here are some tips on how to build a good relationship with 3PL:

Know what you need

Establish what is important for your company and what you are looking to achieve through this partnership. Make sure to outline your key objectives and requirements to your 3PL before you continue growing your relationship. This will help set the tone and your expectations which will solidify the foundation for a successful partnership.

Measure the performance

It doesn’t end with outlining the objectives which set the general direction you want to go. Once you are clear on the general requirements, it’s time to get to details. Establish a set of KPIs and evaluation metrics which are in line with your general objectives and communicate them to your 3PL. This will help you monitor and evaluate your 3PL’s performance and contribute to achieving bigger objectives.

Know your 3PL team

Any partnership and relationship are solely about people. Get to know your 3PL representatives not only professionally, but personally, too. The better you know each other, the easier it will be to work together and be efficient. At the end of the day, you will be working together every day. Having occasional face-to-face meetings to discuss their performance and review objectives is highly recommended as well.

A 3PL is a powerful tool in managing your supply chain effectively both, time- and money wise. There’s nothing quite like a stable long-term partnership with a 3PL who knows what you need before you even say it.

Learn more about our Outsourced Transportation Management services!

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4 Reasons To Use A 3PL In Times Of Capacity Crisis

It’s not a secret that we are all currently operating in the conditions of the record-breaking capacity crunch. The crisis has been caused by several factors which we have previously discussed in our post, even more so with the ELD mandate finally going into effect on December 18th. This fact adds up to the reasons to use a 3PL in the tight capacity time.

reasons to use a 3plPredictably, capacity tightened further during the last week of December. Yes, there were fewer trucks out there due to holidays, but same goes for loads.

We witnessed the load-to-truck ratio increase significantly compared to the same time last year, vividly illustrating current market conditions.

According to recent DAT data, dry van load-to-truck ratio hit the highest monthly average ever recorded by DAT of 9 dry van loads per truck (139% higher than in December 2016). The flatbed ratio increased by 77% compared to the same time last year hitting 35.6 loads per truck, while reefer ratio of 14.1 loads per truck was 73% higher than that of December 2016.

Undoubtedly, this affects both, shippers and 3PL’s. However, a 3PL may have better capabilities of navigating in the tight market.

What are the reasons to use a 3PL in the capacity crisis?

Carrier Relationships

A well-established 3PL will have years of thoughtfully developed and nurtured carrier relationships. Strong relationships are crucial for stability and better rates, and you will be able to benefit from them.

Buying power

Hand-in-hand with the above, a 3PL has volume across various transportation modes, which gives them leverage in negotiating with new carrier contacts and developing mutually beneficial relationships. This helps them constantly expand their network and move your freight easier.

Expertise

3PL’s work with various customers and come across various, often uncommon, situations. They might be able to offer an alternative, more efficient and cost-effective, solutions for your freight based on their previous experience.

Support

It wouldn’t be called “crisis” if it was pleasant! At the end of the day, a 3PL is there to make your life easier. Their priority is to provide value-driven transportation solutions for their customers and make their supply chain operations a little less stressful.

We are already in 2018, and the forecast remains the same: the crisis is not expected to pass before the end of the year. The best way to survive is to use all the tools at your disposal and maximize your efficiency.

Learn more about our Outsourced Transportation Management services! 

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Busting The Myths About Non-Asset Based 3PLs

We understand why it might often be assumed that an asset-based carrier has more advantages than a 3PL. Quite often, shippers don’t feel comfortable working with non-asset based 3PLs and end up limiting, and thus hurting, their supply chain.

There are a few common myths surrounding the never-ending Asset Based VS Non-Asset Based 3PLs battle. It’s time to look at these misconceptions and destroy the myths.

Myth #1: 3PL is a middle-man, thus, their service will be more expensive.

You remove an extra tier and save money. It seems straight-forward, right?
non-asset based 3PLs

Well, this is actually not true! 3PL’s can offer better rates due to their extensive carrier base and volume. 3PLs take full advantage of discounted backhaul rates and use their volume to negotiate the best rates. In addition, a non-asset based 3PL will always negotiate in the customer’s best interest as they are not putting your freight on their own trucks.

Myth #2: It’s harder for a 3PL to provide stable capacity for your freight

They never have a truck right there in the yard which they can send to pick up your load immediately.

They don’t, but an asset-based carrier might not have a free truck sitting there waiting for the load, either. As already mentioned above, a 3PL has constant access to an extensive carrier base and has much better chances of finding a qualified available carrier to receive your shipment.

3PLs are constantly building strong relationships with carriers to be able to provide stable capacity for their customers even in the times of a capacity crunch.

Myth #3: It’s harder to rectify issues with non-asset based 3PLs

It will take longer, and it will be much harder to resolve issues/claims when you have to go through an extra company between you and a carrier.

You might think so, but the successful resolution and customer satisfaction is a 3PL’s first priority, and they will fight for you on your behalf. Instead of going directly after a carrier (who will tend to be more interested in defending their own interests), you will have a 3PL claims department working in your best interest to get the claim taken care of.

Overall, a 3PL will always be on your side – It’s literally their job to minimize potential issues and make the process as smooth as possible for you.

Have any of the above been holding you back from partnering up with non-asset based 3PLs? Maybe this will help you tackle your fears and open new supply chain opportunities for your business.

Don’t put unnecessary limits on your supply chain. Looking for a 3PL to help you handle your transportation needs? We are here to help!

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Perks of Using a 3PL for your LTL Shipments

LTL, or Less-then-Truckload, is quite popular across the board nowadays. If there is no rush –  there is no reason to pay for the whole truck to ship just a few pallets. This is where LTL comes in handy. Using a 3PL for your LTL Shipments can benefit your business in many ways. 

It might seem easier to handle your LTL shipments directly through the LTL carrier, cutting out the middle-man – a 3PL. But is it really the case? Let’s look at a few benefits of shipping your LTL freight through a 3PL.

Here are the main benefits of using a 3PL for LTL shipments:

Expertise3pl for ltl

Freight shipping is literally their specialty, LTL included. Who can find the best way to handle your LTL freight than someone who is doing it on a daily basis? A 3PL is helping many customers handle their LTL shipping – they have seen different lanes, products, issues. This experience helps them evaluate your shipping and choose the most efficient option and anticipate potential risks.

Cost savings

Your company might only ship a few pallets a month while a 3PL is shipping a significantly higher volume across the whole country on a daily basis. What does that mean for you? Their volume and buying power gives 3PL leverage when negotiating rates with LTL carriers. By partnering up with a 3PL, you get access to these discounted rates.

Visibility

It’s crucial for any business to know what is happening with their freight at any point in time. Many companies are afraid of the loss of control when using a 3PL for LTL. The truth of the matter is, you gain more visibility into where your shipment is that you may not have had previous to outsourcing. A team of professionals is focusing on providing the highest level of service to your company – from providing the list of carriers for your shipment (including rates, transit times and other shipping details) to detailed updates all along the way.

Additionally, PLS can offer you extra perks. ‘Where technology and logistics merge’ isn’t just a fancy statement! We pride ourselves in our proprietary state-of-art software, designed specifically to make your LTL shipping a unique and pleasant experience.

Do you want to be in full control of your supply chain? That’s an option, too! We will provide you with access to our LTL system for quoting, scheduling and tracking your LTL freight. You will personally manage your LTL shipping while taking advantage of our user-friendly technology and discounted rates.

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Read more: Are you making these LTL shipping mistakes?

You and Your 3PL

Trust and Respect. The two things needed for a successful business, personal, and… a 3PL relationship.

More often than not, these terms become the exception, not the rule. Many shippers that use third-party logistics providers (3PLs) believe that micromanagement and persistent price pressure will prove the best result. In reality, the opposite is true.

Why a good 3PL relationship matters to your business?

The more is invested in a 3PL relationship with a shipper, as a partner, not a boss, the most successful that relationship will be.

In the research by Dr. John Langley, Ph.D., Supply Chain and Information Systems Group Faculty at Penn State University has done extensive research on the topic. According to him, “Effective client-3PL relationships exhibit a mutual commitment to the creation of value for both parties and to the overall supply chain”.

Dr. Langley continues, “..too much emphasis on the price of 3PL’s makes it challenging to focus on innovation and programs that drive savings and improved performance.”

What can you do, as a shipper to promote mutual trust and respect in your relationship with your 3PL? Below are 5 suggestions to do so:

Setting attainable goals

Set realistic expectations from the start, that way you’re able to work together to achieve your goal or solve your problem.

Culture Fit

This relationship is a long-term partnership. Be sure that the relationship feels right, and of course, the numbers look right.

Define the contract terms

Clearly, state the requirements and expectations to be held in your contract. By stating the activities you want to be done, operational performance expectations, and payment terms – your relationship will automatically be much smoother. If these terms aren’t clear, you and your 3PL can be on different pages and no one is happy then.

3pl relationship

Communication is key

We love to talk about how your business is doing. It is important to dedicate time to speak with your 3PL, whether it be a weekly call or monthly face-to-face – communication is the heart of our relationship.

Share your strategies

We’re here to help you! Let us know your long-term business strategies. By sharing this information, we can help you grow and flourish in your market. This shared intelligence inspires more insightful thinking and better performance on both ends of the relationship.

Interested in working with a 3PL? Have questions about PLS’s services? Need a freight quote? Contact us.

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8 Fascinating Statistics from Shippers about 3PLs

3PLs3PLs have two fundamental responsibilities – leading customer relationships, which focus on supply chain services and providing the management of those services.

Also, most 3PLs have achieved a clear focus on what they do best. So, they can provide expertise in order to enhance a shipper client’s supply chain.

What do shippers say about 3PLs?

3PLs and customers are becoming more proficient at what they do. This improves the quality of the relationship. Moreover, 91% of 3PL users and 97% of 3PL providers report their relationships are successful and their work has positive results. Successful relationships are defined by openness, transparency. Also, it ensures effective communication between the two parties.

3PL Industry Statistics

  1. The global 3PL market is expected to be worth $935.31B by 2020 because it is driven by the outsourcing of secondary business activities. (cips.org)
  2. 97% of shippers feel alignment is important to drive the effectiveness of big data initiatives. Also, 93% agree that data-driven decision-making is essential to the success of supply chain activities and processes. (Learn more about Big Data here)
  3. 75% of shippers said the use of 3PL services has contributed to overall logistics cost reductions.
  4. 86% of shippers said the use of 3PLs has contributed to improved customer service.
  5. 58% of shippers indicate they are increasing their use of outsourced logistics services this year.
  6. The most frequently outsourced activities are domestic transportation (86%), warehousing (66%) and freight forwarding (44%). (Read: The Importance of Transportation Management)
  7. 73% of shippers interact with their 3PL on a daily or hourly basis.
  8. Cloud technology used by 3PLs is helping shippers reduce transportation costs, improve visibility, manage inventory and achieve regulatory compliance – addressing the top challenges shippers face.

Final thoughts

The 3PL market is increasing globally, so 3PL providers are refining and expanding their core competencies. Also, 3PLs are a valuable asset to companies and help them add value to their business methods by reducing costs, optimizing processes, increasing productivity and saving time.

Learn more about our Outsourced Transportation Management services! 

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Source: Capgemini 2017 Third-Party Logistics Study (The State of Logistics Outsourcing)

4 Common Misconceptions about Non-Asset Based 3PLs

What is a non-asset based third-party logistics provider?

A non-asset based third-party logistics provider is a firm that doesn’t own equipment, but partner with carriers to provide transportation services. There are many myths and misconceptions about non-asset based 3PLs. However, none of them are telling the truth. So, we have outlined the most common stereotypes, and crushed them:

Misconception 1: We don’t need to work with a logistics firm since we own our own fleetnon asset based 3pls

Fact: Whether your company leases or owns its own fleet of trucks, complications arise in the quest to maximize shipping efficiency.

Government Rules and Regulations

Carriers and drivers are responsible for safety and compliance. So when government and transportation associations rescind, suspend and update the standards for drivers, it can be difficult to keep up. When demand shifts and current events call for change in capacity or routes, outsourcing lanes could be a better option than relying on your private fleet.

Rising Costs and Capital Investment

Operating your own fleet comes with financial obligations. This means that fuel, equipment, accounting, and insurance costs affect the bottom line. Besides unpredictable costs that can be unprofitable, there are also liability issues. Also, all fleets must carry insurance, usually with exorbitant deductibles. In case of an accident, a private fleet could suffer excessive financial loss. After accidents, lawsuits typically arise, and truckers rarely come out on top. Transfer this burden to a carrier who has a good reputation on the road. When working with non-asset based 3PLs, you can find a carrier who meets your company’s safety requirements and values.

Customer Service and Added Value

For unique or unusual freight, a company will often use a 3PL to find the perfect driver. Public carriers are just as competent as private fleets with regards to routes, customers and products. Through a network of carriers, a 3PL can assign a driver to specific accounts. This way, they can develop a relationship and recognize the routes, products, and requests.

Driver Landscape

Private fleets haven’t escaped the problems of the driver shortage. What if your top drivers leave you for a competitor? Public carriers have relationships with 3PLs, so they can help find solutions to guarantee capacity through backhauls or less than truckload moves. Also, for a private fleet, the driver shortage limits options.

Does your company have a private fleet? Find out how PLS can find you backhaul opportunities here.

Misconception 2: Partnering with a transportation management provider for customized solutions will eliminate my job

Fact: Outsourcing transportation management doesn’t mean turning over your job responsibilities. So, outsourcing specific parts of business operations to an expert is not uncommon. Also, outsourcing is a relationship, a strategic partnership, which adds value to the entire organization. Outsourcing provides more time for you to focus on your core competency and discover cost-saving results.

Outsourcing should be seen as a resource, to produce more efficient processes; it’s a tool that generates data to make better decisions; it’s an identifier of inefficiency and a key to overall growth.

Organizations expect to spend, on average, $65.4 million on transportation, freight services, and equipment in the upcoming year.

Misconception 3: If I work with non-asset based 3PLs on transportation solutions, I’ll lose any or all visibility non asset based 3pls

Fact:  A 3PL’s transportation management solutions provide your company with historical and real-time shipment data. When leveraged and managed properly, big data is used to make smarter operational decisions and optimizes supply chains.

Visibility represents the real-time status of supply chain operations

Consumers, manufacturers, and suppliers want to know where their order is at any point in the supply chain. For companies that want to keep visibility into its supply chain and shipments, they can partner with a 3PL and integrate advanced TMS technology that allows information to be gathered from internal and external sources. The real value in increased visibility includes more effective management, simple monitoring and the ability to optimize business intelligence and practices.

Misconception 4: 3PLs offer a one-size-fits-all strategy

Fact:  Transportation management has a suite of services to fit your business needs. A 3PL managing your transportation will work behind the scenes while you manage and monitor the decisions that are best for your business. A 3PL provider will enable you to eliminate tedious day-to-day activities and deliver customized monthly reports comparing current and historical data.

Solutions to consider from a 3PL:

  • Freight Brokerage
  • Managed Transportation
  • Full Outsourced Transportation
  • Technology and Management
  • Risk Mitigation

Whether you have objected to working with a 3PL because your business is too big, too small, has never used brokers or only uses preferred carriers, it’s time to reconsider.

A 3PL is able to provide an evaluation of current processes and find solutions that will cut transportation spend and improve service and processes. Also, it can create shipment visibility and efficiently manage inventory.

Learn more about our Outsourced Transportation Management services! 

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2 Simple Reasons 3PLs Have Remained Extremely Popular

Despite the negative connotations of the terms ‘broker’ and ‘outsourced’, third-party logistics companies have gained popularity and are employed by nearly every industry in the U.S. How did this happen? third-party

The Motor Carrier Act of 1980 deregulated the trucking industry. It allowed different types of businesses to fight for market share in transportation. Trucking companies bought warehouses, freight brokerage firms popped up. Also, smaller carriers entered the industry more regularly. So, the structure of a traditional transportation company was shaken up and the industry was changed forever.

The 3PL as we know it today didn’t truly exist until after the 2000s tech explosion and the widespread availability of the internet. This opened up entirely new ways of managing transportation.

Now, 80% of Fortune 500 companies and 96% of Fortune 100 companies use 3PL services in some form or fashion. The widespread use of 3PLs makes it clear that companies are getting serious about transportation and logistics.

But why use a 3PL? Why not manage distribution in-house? And, why are 3PLs so popular?

There are two main reasons 3PLs have become so commonplace:

Logistics Companies Have Size and Scale

When shippers partner with a third-party logistics company, they gain the benefit of the 3PL’s leverage in freight rates. Since 3PLs have such vast freight networks, they can bundle a large number of shippers’ freight together to gain buying power. In addition to this, they can create more competitive bidding from carriers. 3PLs also scale up and down with shippers, meaning long-term partnerships are more viable and shippers still don’t have to worry about freight costs during times of uncertainty. Using a 3PL is like hitting the easy button.

3PLs Deploy Superior Technology

Transportation management systems (TMS) revolutionized the way freight is hauled. These systems made it much easier for third-party logistics companies to consolidate freight, find backhauls, schedule complicated multi-modal shipments, build huge carrier networks, provide visibility into transportation, and much more. It is challenging and time-consuming for shippers to try any of this in-house. The visibility that TMS software provides is the foundation of optimization – there’s a limit to the amount of cost savings a shipper can achieve without proper visibility. TMS solutions, especially cloud-based software, not only provide fast ROI but ensure continuous improvement for as long as a shipper has access to it.

While still relatively new in the transportation industry, 3PLs, due to the value they provide, have carved out an important and permanent space in the movement of freight.

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Long-Term Partnership with a 3PL – Successful Strategies

 outsourcing logistics managementThe process of outsourcing logistics management involves a lot of trust and a costly investment for both parties. Although 3PLs find new ways to provide value for clients, many shippers are not ready to initiate strategic and long-term relationships that require deeper implementation.

Outsourcing logistics management specific parts of business operations to an expert is not uncommon. Since 3PL can reduce transportation costs and improve customer service, many companies outsource inbound and outbound transportation. 

5 major benefits of outsourcing logistics management:

  • Gain expert analysis and other resources to help in decision making
  • Free up time to focus on core competency – No more manual processes
  • Maintain/Improve customer service
  • Improve supply chain efficiency
  • Enhance operation productivity

A 3PL has the ability to discover profitable solutions through competitive analysis, inbound vendor management, and ancillary reports. Some companies find more benefits and savings from spot movements, while others need full support to centralize transportation management software.

Why use outsourcing logistics management?

When a 3PL provider and shipper enter an embedded, long-term partnership, the 3PL functions as a seamless part of the customer’s supply chain. Also, the embedded level refers to 3PLs and shippers working in close, long-term partnerships.

This form of relationship requires 3PL providers to invest in technology and facilities, so they ensure complete transparency. The main goal of an embedded level partnership is to share risks and gains between parties so that both can achieve a competitive advantage and provide customer satisfaction. Here, a 3PL becomes a part of the strategic team that will plan the supply chain strategy according to the shipper’s needs.

Final thoughts

For effective transportation management, PLS’ mission is to become an extension of the customers’ supply chain network. Fully understanding a customers’ supply chain allows PLS’ team of experts to compare rates and lanes, analyze reports and volume, and then suggest the best solutions based on customer needs.

Learn more about our Outsourced Transportation Management services! 

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