Many brands have found out the hard way what a 3PL is not, but surprisingly few know exactly what they are. The truth is, if you’re going to partner with a 3PL, or are considering it; whether you’re going to store in one or receive a service via a 3PL, you should be aware of exactly what a 3PL is — and what they are not.
There are significant differences between what a 3rd Party Logistics provider (3PL) is and what they are not. This article will explain those key differences that you should understand before you make your choice in the best 3PL service for your business.
Confusion about 3PL
The 3PL industry is a very confusing one. Many people in the logistics field don’t understand the difference between a 3PL and a transportation broker. There are also some who believe that a 3PL is actually a form of transportation broker.
The truth is that there is a lot of confusion about what exactly a 3PL does and how it differs from other types of logistics companies. The following are some of the most common myths about 3PLs:
A 3PL is not:
- A transportation broker: A 3PL does not act as a broker for the shipper and carrier. The shipper contracts directly with the carrier. The 3PL facilitates the transaction.
- A distributor:- A 3PL does not sell products or services to shippers or carriers. It merely provides them with services, such as transportation management and freight billing/payment processing.
- A freight carrier:- A 3PL does not operate its own fleet of trucks or other vehicles. Its business model is based on providing transportation management services to customers through an extended network of carriers who provide their own equipment and drivers.
- A manufacturer:- A 3PL is not involved in manufacturing goods; however, it may be involved in warehousing finished goods from suppliers before they are shipped out to end users (B2B) or after they are sold to retailers (B2C).
A 3PL is a:-
- Transportation Provider: A 3PL can provide transportation services to its customers. This includes everything from truckload shipping to parcel delivery services.
- Order Fulfillment Provider: A 3PL can fulfill orders for its customers by organizing shipments and paying for postage when necessary.
- Inventory Management Provider: A 3PL can provide inventory management services for companies that require assistance with keeping track of their inventory levels as well as managing shipments between different locations or warehouses.
- Storage Provider: A 3PL can provide storage facilities where companies can store excess inventory or other items they do not need at any given time but don’t necessarily want to get rid of either (such as seasonal merchandise).
PROS and CONS of 3PL
Cost savings: A 3PL can help reduce the cost of shipping goods because a 3PL only charges for the services it provides, like loading and unloading goods.
Flexibility: Using a 3PL means that you have more options when it comes to shipping because the 3PL can handle any type of product or service.
Expertise: A 3PL has expertise in moving goods from one location to another on a consistent basis, so they will likely be able to handle your shipments with ease and efficiency.
Improved productivity: Working with an experienced 3PL means there is less need for you to hire staff or invest in new equipment. This can lead to greater productivity as well as lower labor costs.
Here are some of the cons of 3PL:
Storage space is not always available: This can be a problem when you don’t have a warehouse or when it’s not located near your business.gofreighthub.iois an affordable professional 3PL company that provides customers with the best possible service at an affordable price. Our transportation experts have more than 5 years of experience in the industry, so you can be sure that your shipments will be handled by an expert who knows exactly what he’s doing.
You can’t always control the quality of the product: If you’re shipping food, for example, you need to know that it’s being handled correctly and that it will arrive at its destination fresh and safe for consumption.
Higher cost: 3PLs charge more than manufacturers, distributors, or retailers for the same goods. This is typically due to using more expensive shipping methods (such as air freight) and higher labor costs.
No control over delivery times and locations: The time it takes for goods to be delivered can be longer than expected, since 3PLs may not always have the right inventory on hand at the right time. In addition, there is no guarantee that the product will arrive at its destination on time or in good condition if it’s shipped by air rather than ground transport.