What is 3PL Logistics? Why do shippers use 3PLs?
3PL Logistics Services
What is 3PL Logistics?
3PL (Third-Party Logistics) involves efficiently matching carriers that need freight with shippers that need carrier capacity.
Why do Shippers use 3PLs?
Shippers partner with 3PLs for three primary reasons: freight cost savings, advanced TMS technology, and scalability. Firstly, 3PLs help reduce freight costs. By leveraging their shipper network's relationships and negotiating power, 3PLs can secure better rates for transportation and warehousing. Secondly, 3PLs offer sophisticated Transportation Management Systems (TMS) that drive data-driven decision-making. TMS systems provide valuable insights and analytics, helping businesses optimize their logistics operations.
Lastly, 3PLs provide scalability. As your business grows, you can scale up operations without significantly increasing costs. Conversely, if your business shrinks, you avoid payroll and fixed costs, naturally reducing expenses.
Overall, managing a trusted vendor like TLI is much easier than handling an in-house logistics team. This streamlined approach allows you to focus on your core business while benefiting from the expertise and efficiency of a 3PL partner.
Shipper's Guide to 3PLs
Terms like "brokerage," "3PL," and "non-asset-based provider" are commonly used in logistics, but their meanings and applications might not be clear. Knowing when and how to use these providers can significantly impact your supply chain efficiency.
Nearly every large enterprise shipper uses a combination of third-party providers to transport freight. According to our research, +80% of shippers believe that utilizing third-party support in at least some areas of supply chain management is beneficial.
If you're not incorporating 3PLs into your supply chain operations, you might be missing out on key advantages such as streamlined shipping, increased carrier capacity, and more competitive rates. Leveraging 3PL managed transportation services can simplify your logistics, provide greater flexibility, and enhance overall efficiency, ensuring your supply chain remains robust and responsive to changing demands.
3PL Logistics vs Freight Brokerages
Is there a difference between a freight broker and a 3PL?
Yes, there is a difference between a freight broker and a 3PL (Third-Party Logistics provider). While all freight brokers are considered 3PLs, not all 3PLs are freight brokers. Many 3PLs offer freight brokerage services, but they also provide a wider range of services.
Think of "3PL" as an umbrella term. Under this umbrella, freight brokerage (including truckload, LTL, intermodal, etc.) is a non-asset-based service. A freight broker is a type of 3PL that specializes in brokering freight, but this is just one of many services a 3PL can offer.
For example, TLI is much more than a freight broker. We offer truckload brokerage, LTL brokerage, international shipping, supply chain consolidation, vendor management, freight invoice audit services, software as a service (SaaS), and TMS (Transportation Management System) technology. In contrast, a typical freight broker primarily focuses on only truckload brokerage. Even then, TLI's truckload brokerage team is among the best in the market.
Research on supply chain outsourcing indicates that freight brokerage is the most common area for shippers to outsource. A 3PL like TLI is a versatile tool in your supply chain management arsenal, and using the right tool for the right job can significantly enhance your logistics operations.
What are 3PL services?
Truckload Brokerage: Coordinating full truckload shipments by matching shippers with carriers.
LTL Brokerage: Combining shipments from multiple shippers to fill a truck, reducing costs.
Intermodal Routing: Using multiple forms of transportation (e.g., rail and truck) to move freight efficiently.
Air and Ocean Freight Forwarding: Managing the shipment of goods via air or sea, handling logistics and documentation.
Supply Chain Consulting and Optimization: Analyzing and improving supply chain processes for greater efficiency and cost savings.
Managed Transportation: Overseeing and managing a company's transportation needs, from planning to execution.
RFP (Request for Proposal) Management: Handling the process of soliciting bids from carriers to find the best shipping solutions.
Carrier Scorecarding: Evaluating carrier performance based on key metrics to ensure quality and reliability.
Warehousing: Providing storage solutions for goods until they are needed.
Distribution and Fulfillment: Handling the distribution of goods to end customers, including order processing and delivery.
Asset-Based vs Non-Asset-Based: What does this mean?
Every vendor should be an asset to your supply chain, but they don't need to own physical assets to add value. Asset-based providers own their transportation and warehousing equipment, while non-asset-based providers leverage relationships and networks to deliver services. Both types can enhance your supply chain efficiency and flexibility.
| Asset-Based | Non-Asset-Based |
|---|---|
| Are usually a trucking company | Work with many motor carriers |
| Own their own equipment (trucks, trailers, warehouse) | Do not own physical equipment |
| Service area & capacity determined by physical location of fleet | Service Area and capacity determined by carrier network |
| Often focuses only on freight transportation | Can offer a wide range of supply chain services |
| Employ their own drivers | Do not employ drivers |
| Typically offer one mode | Multi-modal |
How do I get setup?
Shippers seeking to partner with the best 3PL in the market can simply fill out the form on our webpage. An expert from TLI will then reach out to you to launch the program and collaborate on optimizing your logistics operations.
TLI Insights
For the latest insights, tips and commentary surrounding the logistics industry, look no further. Shippers will find thoughts from the award-winning team at Translogistics covering everything related to your transportation processes and plans. If you have a question we are readily available at marketing@tli.email
Social Media:
Check out more Blog Posts from TLI:
