A supply chain of management that a company uses to outsource its fulfillment and distribution services, in the business world, is known as a third party logistics or 3PL. This type of logistics management company will plan and store the goods and services a company provides. In turn, they are a liaison that fulfill the transportation requirements of customers, starting at the originating party and ending with the consumer.
Here are some types of third party logistics providers:
– Courier companies
– Freight forwarders
– Transportation services
Third-party providers are logistics specialists that perform within a specific integrated operation. Such things as transportation and warehousing services can be customized for each business they serve. This also depends on the type of delivery required and the service demands for all products a company provides to the greater community.
Production and procurement of goods are some of the services these companies offer. The target of these logistics companies in 2014 reached a total of US$750 billion. It is also well known that many Fortune 100 companies use third parties and that the expected growth of another 5% is being predicted. By 2024 the logistics business will reach US$1 billion.
What types of other services do they provide?
Value-added aid and services in such areas as tracking, specialized packaging, security systems, cross-docking and tracing of products are some of the other services the logistics companies provide for their clients. There is also a great cost-saving for larger companies that use 3PL parties.
Specialized Logistics Experts
The advantage of using these types of third party companies is that they have established network systems and low overhead costs. This in turn gives an edge to any business, and also brings great savings for their clients.
– A 1PL is a single service provider that is geographically specific. They only serve specific products and use their own shipping method. For example, depot companies and port operators are 1 PL’s. They have their own warehouses and regulations.
– A 2PL uses logistics services to assist them that are external and can provide such things as forklifts and trucks for handling the cargo they are moving for their clients. This type of logistics company started once globalization began. Companies started to outsource their courier, freight, ocean carriers and parcel services to independent logistics companies so as to be more effective and save on costs.
On Demand Transportation
Also known to be similar to telemarketing logistics, these centers assist customers with the following 5 types of transportation:
1) Full truck load – The truck leaves the destination full of merchandise
2) Less truck load – A partially full truck that is leaving the logistics center
3) Direct courier – Also known as “Hotshot”, as the merchandise is delivered directly
4) Best or Next Flight out – Is when shipping is done by means of commercial airlines
5) International Expedited – Used for overseas packages and goods
A lot of time and money can be saved when a producing or selling company trusts a third party logistics to take over. These larger freight management companies are familiar with the shipping requirements, have updated IT systems and 3PL equipment. It’s very beneficial for a large or even mid-size company to utilize third party resources for an increase in profitability and savings.
Justin Bright – CEO Brighter Logistics