A Third-Party Logistics provider (3PL) is a company hired by another business to outsource services related to all the operations during global trade, order fulfillment, and supply chain.
They offer many advantages that bring benefits to businesses like savings in costs, better time efficiency, access to technology, improved operations, and inventory management just to mention a few.
The commercial market is already a highly competitive one, and even more so when we’re talking about physical global or online commerce.
This is why more and more businesses are constantly seeking ways to streamline their operation; make them more efficient, reduce costs, and have a smooth flow within all the processes they go through with so many different aspects to take care of.
A Third-Party Logistics provider becomes their ally and best business partner, overseeing that everything is taken care of in a proper and timely manner while the company takes care of other aspects of the business.
What Is a Third-Party Logistics (3PL) company?
Third-Party Logistics (3PL) providers are specialized service providers offering a wide range of logistics and supply chain management services, they’re hired by companies looking to outsource these services to improve efficiency and more time to focus on other essential functions.
The services a Third-Party Logistics (3PL) company offers are usually diverse and adapt to different business types and needs, they usually cater special solutions depending on what their clients require.
They offer a range of services such as transportation, warehousing, inventory management, order fulfillment, customs brokerage, and consulting services; allowing businesses to benefit from their expertise, resources, technology, and infrastructure that would otherwise be difficult for businesses to get on their own or very costly to maintain.
They’ve been around since the early 1980s, when businesses began to use better-organized logistics to distribute products directly to consumers from suppliers and warehouses.
Before this era, companies used to manage all their warehousing and shipping activities in-house, which caused a lot of tension among manufacturers, suppliers, transporters, and ultimately unsatisfied customers.
It also implied a big investment in infrastructure that many businesses couldn’t afford, especially new emerging businesses.
In the 1990s when the commerce industry went global, it created new business opportunities and Third-Party Logistics (3PL) providers; experienced huge growth and technological advancements especially during 2000 when the internet exploded as a mainstream tool, enabling third-party providers to expand their reach, become more efficient, tap into new online and technological tools, collect, analyze and compare data, increase their range of services offered, etc.
Nowadays, 3PL providers are essential in global and online commerce as they manage and optimize supply chain operations for companies of various industries, offering services such as warehousing, fulfillment, transportation, packing, tracking, brokerage, consultation, and many more.
How Third-Party Logistics Work
Third-Party Logistics (3PL) providers become strategic partners for other companies, offering many services to optimize their supply chain. By outsourcing logistics, companies benefit from the expertise of a Third-Party Logistics (3PL) provider, taking advantage of its resources, and consulting their industry experts.
These providers are an extension of a company’s logistics department in a way. They handle tasks such as warehousing, transportation, inventory management, order fulfillment, and customs clearance, ensuring efficiency.
They usually have great global network knowledge, advanced technologies, many industry contacts, and the infrastructure needed to handle large company’s needs.
Third-Party Logistics (3PL) providers allow businesses to adapt, become more productive and efficient with their shipments, and reduce unnecessary costs while increasing customer satisfaction. This opens the door to many strategic growth opportunities.
Here are just a few examples of how businesses use a Third-Party Logistics (3PL) provider across different industries and how these companies benefit from it:
- An online retailer could partner with Third-Party Logistics (3PL) for them to handle their order fulfillment, warehousing, and delivery. This would optimize their ecommerce fulfillment and enhance customer satisfaction. This is an example of an Ecommerce fulfillment service.
- A physical store could better their supply chain operation, and reduce inventory costs at the same time. Also improve the product availability by hiring a Third-Party Logistics (3PL) who manages the warehousing, the inventory, the packing, and the delivery. This is an example of a fulfillment service.
- A small-scale retailer could partner with Third-Party Logistics (3PL) to get warehousing and distribution services so that they can reach a wider customer base without investing excessively in their infrastructure. This is an example of Warehousing services.
- A food processing company would benefit from getting a Third-Party Logistics (3PL) for specialized refrigerated warehousing and transportation services, to make sure the freshness and quality of their perishable products stay intact.
This would be an example of special warehousing and special transportation services. - A manufacturing company that outsources its transportation and logistics to a 3PL, can then focus its resources and attention on production instead. This is an example of a Logistics Transportation service.
- A food company can hire a Third-Party Logistics (3PL) to handle temperature-controlled storage, transportation, and distribution of perishable products, ensuring compliance with regulations and requirements and maintaining the integrity of the goods at the same time.
This is an example of storage and specialized services. - Another online store reaches out to Third-Party Logistics (3PL) for them to be responsible for their reverse logistics, handling returns and replacements. This is an example of e-commerce fulfillment.
- An electronics company looking to expand globally can hire a Third-Party Logistics (3PL) with a global network to handle customs clearance on their behalf and to get export consulting services. This is an example of Customs Brokerage and Consulting Services.
- A manufacturer hiring a Third-Party Logistics (3PL) to arrange expedited air freight services to ensure shipments are always delivered on time or for them to reach their destination faster to meet tight deadlines. This is an example of Air Freight Services.
- A retailer might look for a Third-Party Logistics (3PL) with a large network of ocean freight carriers to help its businesses expand internationally. The 3PL would provide access to reliable shipping routes at competitive rates. This is an example of Ocean Freight Services.
What Services are Offered by Third-Party Logistics Provider?
Although different Third-Party Logistics (3PL) providers offer various logistics services and some specialize in specific types of businesses, locations, or areas of international commerce, the standard services offered in the industry are:
Procurement and Receiving Services
- Ordering and receiving goods.
- Managing inventory.
- Also managing stock levels and re-ordering with suppliers and manufacturers when needed.
- Arranging the transport of goods from suppliers to the warehouse.
- Receiving goods into the warehouse and managing storage until the goods are ordered or need to be relocated.
Order Fulfillment and Ecommerce Fulfillment Services
- Receiving orders from customers
- Managing inventory and deducting from stock levels.
- Picking the selected items from storage or warehouse.
- Packing goods for shipping.
- Arranging the loading and distribution of goods.
- Storage and Warehousing Services.
- High-security storage for valuable, volatile, or sensitive goods.
- Inventory management
Distribution Services
- Offering different types of distribution methods.
- Fleet optimization.
- Tracking of goods.
- Consolidation and deconsolidation of goods.
Freight Forwarding Services
- Organizing and managing shipments.
- Arranging the transportation of goods by air, land, or sea (Air freight, Ocean freight, or Road Freight services).
- Customs brokerage. Handling customs clearance and documentation for international shipments including services like customs clearance, tariff classification, duty drawback services, and compliance management.
Supply Chain Management Services
- Managing all aspects of the supply chain, from sourcing materials to delivering products to customers’ doorsteps.
- Customized solutions specific to each business’s needs and goals
- Offering value-added services such as picking and packing.
Technology and Integration Services
- IT systems integrations
- Inventory management and data exchange services
- Reporting and analytics
- Reverse logistics services for product returns and exchanges
Specialized Services
- Temperature-controlled shipping solutions for perishable goods.
- International shipping and logistics services for cross-border trade.
- Audit and analysis services.
- Consulting Services
These are all Third-Party Logistics (3PL) provider services with chain supply optimization in mind.
They all support businesses in managing their international supply chain operations more efficiently while reducing costs, saving time, handling processes more efficiently, helping companies stay compliant with different regulations, and ultimately driving business fulfillment into success.
This gives you peace of mind that everything is being handled by knowledgeable, experienced experts in the industry.
Benefits of Working with a 3PL Provider
The main benefits for a business working with a Third-Party Logistics (3PL) provider are:
Cost Savings
They can save money on warehouse space, technology, transportation, and staffing costs; because Third-Party Logistics (3PL) providers can negotiate better freight prices and offer lower warehousing costs, this saving can then be passed on to customers through lower or free shipping prices boosting customer satisfaction.
Expertise
Third-Party Logistics (3PL) providers have wide knowledge of supply chain logistics and customs regulations, offering their expertise and industry connections to streamline processes.
Time and Money Savings
Outsourcing logistics to a Third-Party Logistics provider (3PL) eliminates the business need to invest in warehouse space, technology, transportation, and additional staff. Moreover, companies outsourcing can focus instead on other essential functions and competencies like sales, marketing, product development, etc.
Scalability and Flexibility
Working with a Third-Party Logistics provider (3PL) allows companies to scale up, also 3PLs can help with seasonal transitions and industry and market changes, ensuring a company stays on top of the game in an ever-changing commerce landscape.
Business Growth
By partnering with a Third-Party Logistics provider (3PL), businesses can expand into new markets, optimize procedures, and stay compliant, leading to better business practices, increasing customer satisfaction, and encouraging business growth.
How to choose a 3PL provider
First, before hiring any (3PL) Third-Party Logistics provider, you need to have a clear vision of your goals and specific needs of your business. Once you determine them, it’s time to assess your current future priorities for shipping, packaging, trading, marketing, customer service area, etc., and define which specific 3PL services you will require.
If you’re not sure of the services available or what your business needs, look for a 3PL that offers consulting and coaching services so that they can help you assess the services that would benefit your business the most.
When researching Third-Party Logistics (3PL) potential providers, look for 3PLs with backed-up experience, ideally with at least a decade in the industry. Look at their customer reviews, referrals, and overall word-to-word and online reputation.
Contact them and ask for proposals and quotes and keep in mind that 3PL more than just a service provider will become your business partner. You want to make sure you feel confident, comfortable, and in good hands. Make sure they will be able to handle everything as your business also grows in capacity and size.
A reliable Third-Party Logistics provider will have capability, stability, safety, and security, and will excel in reputation and customer service. If you focus on these points, you will be able to find a 3PL provider that is the right fit for your business, offering the services, expertise, and partnership you need to optimize your processes.
Conclusions
In conclusion, Third-Party Logistics (3PL) providers play a vital role in global commerce as they act as the back optimizers of the supply chain operations and perform different tasks in various industries.
Without them, companies would spend a considerable amount of time, money, and resources handling everything by themselves, building the infrastructure needed, training the needed staff, and maintaining their practices and knowledge of the industry up to date.
It’s almost an unsustainable approach to global business especially once a company starts growing. Third-Party Logistics (3PL) providers instead aid these businesses by leveraging their expertise, resources, and technology.
Third-party logistics (3PL) providers offer a range of services that will give companies advantages, efficiency savings, and competitiveness to the table.
At EP Logistics as a current logistic leader in the area, we have more than 20 years of experience as a high-quality Third-Party Logistics (3PL) provider working with different customers from both the United States and Mexico.
Helping them handle every bit of their logistics processes while ensuring not only they are satisfied with the service but also that their customers are too.
We offer a wide range of the logistics services mentioned previously, and our focus is customer service excellence so that you can handle the rest of your business’s functions with peace of mind.
Feel free to reach out at any time to ask for more information about our services, schedule a consultation call, or if you would like to request some quotes.
EP Logistics prides itself on taking care of our business partners and nurturing a long-term relationship that showcases the uniqueness of each one of them.
