(3PL) Third Party Logistics Providers
3PL logistics companies receive inventory, store until it’s ready to be shipped & ship them out as needed. Here’s everything you need to know.
Third-Party Logistics and International Freight Shipping
Third-party logistics companies (or 3PLs) manage fulfilment and other supply chain services, giving you more time to grow your business.
Hiring a 3PL for warehousing, picking & packing, returns, and other services means that your business gains access to the equipment, facilities, supplies, labor, and technology needed to fulfill orders without building the necessary infrastructure internally.
What is a 3PL company or provider?
Traditional and enterprise businesses typically manage shipping and logistics operations in-house, but this isn’t always cost effective. 3PLs empower small to medium or ecommerce businesses to scale operations with constrained budgets and manpower. Third-party logistics companies connect your manufacturing operations and your end customers, providing all the services you need to outsource shipping logistics.
Ensuring that your products arrive on time and intact, without unnecessary cost, is vital to the success of your business.
Global shipping logistics are complex, with multiple parties involved at different stages of the supply chain. Freightos.com is a marketplace for global freight, which involves getting your freight from the manufacturer at the point of origin to the port or warehouse of destination.
Once received at the destination port or warehouse, goods need to be unloaded and delivered to your end customer. This may involve storage, unpacking and reconsolidating packages, labelling, and other services that aren’t generally handled by freight carriers or forwarders.
This is where a 3PL steps in.
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The role of Third Party Logistics
Working with a reputable 3PL can improve customer experience, save time, resources, and cost, and assist in inventory management. These benefits translate into business growth and enhanced profitability, so finding the right 3PL partner is an important step for a growing business.
Third-party logistics providers manage ground transportation, warehousing, and fulfillment on behalf of businesses. Many 3PL companies don’t own their warehouses and delivery fleets, instead they aggregate and manage these services with leases and contracts. Some 3PLs offer more services than others, so it’s worth comparing various options depending on your individual business needs.
Some of the ways that a 3PL can help you include:
- You will likely save time by outsourcing logistics management rather than doing it all on your own.
- By consolidating the cost of warehousing, shipping, and inventory management, you could save money compared to managing everything in-house.
- The responsibility of handling all of your own logistics carries might be more than you want to carry. When outsourcing to a 3PL, professional logistics providers assume accountability.
- Reputable 3PLs will keep up with shifting regulations and emerging technologies that you might not be aware of.
- When working with a 3PL, you’ll be able to customize services to ensure the most efficient execution of your shipment.
- When setting up logistics management in-house, you’ll have to invest significant resources and time. A 3PL will already be equipped with technology and processes for a turnkey solution.
- Using a 3PL will likely lower your shipping costs since you will gain access to special pricing reserved for fulfillment network partners.
Once your goods complete the journey from origin to destination and clear customs, they’re ready for the last leg.
Last leg or last mile logistics, also known as order fulfillment, involves receiving inventory, storing goods until they are ready for delivery, and getting individual orders delivered. 3PLs may also manage returns, or reverse logistics.
When your goods arrive at the 3PL warehouse, your products will be placed into inventory along with lots of other shippers’ products. The warehouse employees will pick and pack individual orders and deliver them to your customers.
3PLs manage inventory, delivery, and often returns for multiple companies simultaneously, delivering greater speed and efficiency than managing fulfillment on your own. Plus, when it’s time to scale or add new offerings to your product line, 3PLs can handle the additional volume seamlessly.
When to hire a 3PL
Even if you’re running a small retail business out of your garage, a third-party logistics provider could be beneficial. But if you haven’t taken this step yet, here are some indications that it might be time to move fulfillment operations to a 3PL:
- Your shipping volume exceeds what you can efficiently manage on your own. More inventory means more work – if you are getting bogged down in fulfillment it’s time to look at hiring a 3PL.
- You have more inventory than storage space. If the boxes are piling up in every corner, a 3PL warehousing solution will enable you to expand your product offerings.
- Your customers want expedited shipping and easy returns. These can be difficult to execute solo. By engaging a 3PL you’ll be able to offer additional delivery options and facilitate returns for your customers.
- You’re ready to secure capital for expansion – and don’t want to use it to build logistics infrastructure. Maintaining reserves while paying a 3PL incrementally may make more sense when you’re growing your business.
- You’re planning for expansion and need to scale operations. If you add new products or begin selling in new geographies, it will be difficult to keep up with fulfillment. A 3PL is more agile and can quickly accommodate the shifting needs of your business.