The Many Definitions of a 3PL (Third Party Logistics)
Third party logistics has simplified shipping for thousands of companies. 3PL’s is the abbreviated term that describes third party logistics, meaning a company that provides outsourced logistics operations and freight management. While there is a lot of great information on what a 3PL is and does, it is also true that there are several definitions of a 3PL – and different ways that they are described.
There are several individual jobs that 3PL’s provide – and just as many industries they serve. Here are some of the facts about 3PL’s, in order to clarify their roll in the logistics industry.
What Services Does a 3PL Offer?
A 3PL is retained by a shipper (or for clarification a company or organization) to handle most of, if not all of the tasks involved in the logistics process. A few of the specific jobs they undertake include
Transportation of Freight
A 3PL can handle every aspect of the transportation of freight. From setting up the logistics network, to monitoring and tracking freight, and following up with the recipient. Specifically, they work with multiple transportation or asset-based carriers. However, they also provide services that are applicable to transportation of freight including:
• Transportation cost and service improvement: A 3PL typically maintains a strong relationship with partners in the transportation industry – including multiple carriers that offer the same logistics services in the areas in which they serve. They will negotiate the best rate for their clients – however, not always the cheapest. Their goal is to ensure that all freight shipped to a recipient is done so safely, quickly, and without damaging the product.
• Freight billing and auditing: Once the shipment has been completed, a 3PL will take care of the billing and auditing of the freight charges to protect the assets of their clients. In many instances, a 3PL will find errors on the billing that negatively impacts their client’s financial strength. Sometimes the errors are simply a mistake or type-errors, while in other instances they are fraudulent.
• Filing Freight Claims and Cargo Insurance: A 3PL is responsible for looking after the best interests of their clients – specifically, protecting their assets. To accomplish this task, they will file cargo insurance paperwork and freight claims on behalf of their clients in the event that their commodities are damaged by carriers throughout the process.
• Managing all types of shipping: Businesses require different shipping methods for individual customers or applications. The 3PL provider will manage those specific methods – including FTL, LTL, international cargo shipping, air freight, overnight, and parcel shipments.
• Green Logistics and Sustainability Services: A 3PL needs to also consider the brand of their clients, by setting up green logistics programs and supporting logistics programs that provide sustainability.
It’s also the responsibility of a 3PL to provide several basic warehouse functions. Duties such as receiving and storage of company assets, picking, packing and shipping of order fulfillment, processing customer returns and shipping requirements, and more. Some 3PL’s will even assist in the assembly or manufacturing of a company’s products.
A 3PL also assists creating IT solutions to help their clients manage the logistics process. From setting up customer relationship management solutions, which permit their clients to track shipping information, set up automatic email or text notifications to carriers, shipping parties, and customers, relay real-time updates and more.
Why are 3PL’s Used?
There are several reasons why a company would retain the services of a 3PL.
• Reduce company costs: Saving money and reducing overhead is a major consideration for all shippers. A 3PL tends to be more cost-effective than hiring a logistics team, paying for overhead costs of running a shipping facility, and other costs associated with shipping.
• Leveraging the Experience of a 3PL: A 3PL has been there and done that in the logistics world. The 3PL has experience in all aspects of the logistics process. And they openly advise their clients on the best ways to navigate the complex logistics world.
• To ensure customer satisfaction: With experience in logistics and shipping also comes the reality that the individual that matters most is the end consumer. A 3PL not only knows this – but directs their clients to always place quality of shipping to their customers as more important than bottom line profits.
The modern-day 3PL is a vital component of the logistics industry. They serve their clients passionately, and always tailor their services for the individual company, and their logistics needs. If you’ve considered using a 3PL for your logistics management, contact them so they can clarify how they can help your company navigate the complex logistics world.