Tips on How to Choose a 3PL Provider

The job of storing and transporting products has become increasingly challenging. Modern supply chains often span thousands of miles and involve dozens of suppliers — which means there are a lot of things that can go wrong every minute of every day. Adding to that complexity? Larger order volumes from e-commerce, new flexible fulfillment schemes, and growing customer expectations for fast, low-cost delivery. And let's not forget demand volatility, labor shortages, route closures, natural disasters, and other disruptions.

It's not surprising that more and more companies are turning to experienced third-party logistics providers, or 3PLs, to manage critical parts of their supply chains. 3PLs excel at managing physical assets like inventory, warehouses, and trucks — bringing specialized expertise, established carrier networks, and operational efficiency that most companies can't replicate in-house. In this blog post, we'll explore what makes a great 3PL partner and share five key questions to ask when choosing the right 3PL for your business.

3PLs maximize their customers' returns on their investments in product inventories, warehouses, trucking fleets, equipment, and labor resources. For example, a 3PL is specifically equipped to leverage advanced technology, like a transportation management system (TMS), to help shippers move products more efficiently, accurately, and cost-effectively — aligning operations with the needs of shippers and achieving optimal outcomes in cost, service, sustainability, and other metrics.

With their hands-on execution experience and operational expertise, leading 3PLs like Redwood deliver tangible value across the physical supply chain. They seamlessly blend the right services and solutions for each customer's business and can align assets, systems, and processes around the same objectives — providing stakeholders with access to real-time data and visibility. The result? A responsive and efficient supply chain operation that easily adapts to new customer demands and physical disruptions like extreme weather. To learn more about modern logistics solutions, download our logistics guide.

Working with a 3PL means companies can focus on their core business competencies. They can be confident that critical supply chain functions are being managed and optimized by experts with unparalleled knowledge, resources, and expertise.

Find Your Perfect 3PL Match

Now comes the hard part: Choosing the right third-party logistics partner in a crowded industry. We recommend separating the true 3PL leaders from the followers by asking these five questions when you meet with a potential partner.

1. What services and solutions do you offer?

A strong 3PL should be able to offer a comprehensive range of supply chain capabilities your business might need — from freight brokerage and managed transportation to warehousing, fulfillment, and distribution services. The right candidate will combine operational excellence and innovation with hands-on, real-world experience at the execution level. These broad capabilities ensure that your 3PL partner will have no vested interest in pushing a particular service, solution, or carrier. Instead, they'll be able to create a tailored logistics plan and footprint that address your specific challenges and objectives. Beware of any logistics provider that seems to impose the same "one size fits all" solution on every customer. Your business is unique — and it demands a unique approach, based on a wide range of available capabilities. Another red flag? A 3PL that focuses on serving a single industry or leveraging one transportation mode. That's a sure sign you may get a generic, cookie-cutter recommendation.

2. What have you achieved for other customers?

While it's true that every supply chain has unique characteristics, demands, and objectives, don't hesitate to ask for customer references. A successful 3PL will have hundreds of success stories, across multiple industries and business models. They should be able to demonstrate their proven ability to cut costs, improve service levels, increase speed and efficiency, and deliver other benefits. While 3PLs may be bound by customer confidentiality agreements, they should at minimum be able to share anonymous success stories and statistics. You don't want a 3PL who applies the same approach to every customer engagement — but you do need proof that they've "been there and done that." Your 3PL partner needs to understand logistics optimization at a deep level, with proven operational excellence. Readily available customer success stories are a great measure of their knowledge and capabilities.

3. Do you invest in ongoing innovation and expansion?

The world of logistics never stands still, which means your 3PL partner needs to take a dynamic approach to growing its service and solution capabilities. For example, RedwoodConnect — our proprietary integration platform — was developed specifically to meet our customers' need for tighter connectivity as they add new systems and tools to their stack. Redwood Hyperion is an innovative, cloud-native solution that helps shippers meet their sustainability goals, from automatically tracking emissions to purchasing carbon credits. We continually invest in leading technologies like artificial intelligence (AI) and machine learning (ML) to deliver practical value to our customers. And Redwood Mexico has quickly become a robust service capability — with 150 experts and six facilities — that addresses customers' growing needs for cross-border logistics. Your 3PL partner should be similarly focused on forward-looking technology and facilities investments that maintain their competitive edge.

4. How extensive is your carrier network?

It's impossible to achieve success alone in today's complicated logistics landscape. Look for a 3PL that works closely with a range of carriers across all transportation modes. They'll understand the differences among carriers and service levels — and they'll be able to match your specific needs with the right capacity and pricing. You'll also want to identify a 3PL partner with extensive carrier relationships and negotiating power. They'll be able to achieve the best service at the lowest possible cost, simply because they have so many options. And when disruptions inevitably occur, they'll have deep bench strength — and be able to offer a wide range of alternative carriers and shipping modes.

5. How quickly will my organization start realizing returns?

While every customer engagement is different — and there are always unexpected roadblocks on the road to supply chain optimization — a qualified 3PL will be able to rapidly implement new solutions and institute operational best practices to help you maximize your investment. Your business should start seeing cost reductions, increased service levels, speed and efficiency improvements, and reduced resource demands in weeks or months, not years. The right 3PL partner will get new capabilities up and running quickly to seize some "quick wins" that energize your supply chain. But they'll also create a strong foundation for long-term gains and a sustained competitive advantage.

Final Thoughts

The benefits of collaborating with a 3PL have been proven over thousands of successful customer engagements. So why not start your own search today by contacting Redwood?

As a full-service 3PL, Redwood is qualified to manage critical aspects of the supply chain on your behalf — allowing you to leverage our expertise, technology, and carrier relationships with full flexibility. Find out why the world's leading logistics teams rely on Redwood every day.