What is a 3PL and How to Choose a 3PL Logistics Company

Many companies have traditionally handled all operations in house. However, as technology advances and demands on business increase, many companies find that it is necessary and beneficial to outsource logistics to an expert provider. Partnering with a professional logistics coordinator can allow your company to focus on customer satisfaction, marketing, and growth. A 3PL logistics company can oversee necessary logistic processes, ensure smooth operations, support business growth, and increase customer satisfaction. To learn more about 3PL and how to choose a 3PL logistics company that suits the needs of your business, continue reading.

What is 3PL?

The term, “3PL,” means “third-party logistics.” With third party logistics, specific processes are outsourced depending on the specific needs of each business. 3PL emerged in the 1970s as a solution for businesses to hire specialty companies to manage their fulfillment operations such as warehousing, packaging, transportation, and delivery. Over the last several decades, technological advances and the proliferation of e-commerce have increased the demand for 3PL. The increase in demand has fueled the development of an extensive array of 3PL services and companies. These services include warehousing, inventory management, picking, packing, kitting, customization, shipping, receiving, freight shipping, and returns. Some 3PLs specialize in divisions such as cold fulfillment, hazardous material management, or abnormally sized products.  

What is a 3PL company?

A 3PL company is an outsourced logistics company. There are a variety of 3PL styles and service providers, and they all exist to oversee logistic operations so that companies can have more time and energy to focus on their core business. 3PL companies link manufacturing operations to customers and vice versa. A 3PL company usually fits into one of the following four categories: logistics, freight, warehouse, or fulfillment. Your business’s unique requirements may influence your preferences for one 3PL provider over another. It is helpful to understand the differences between and specific offerings of different providers so that you can make the best selection for your enterprise. 

What is 3PL logistics? 3PL logistics companies offer specialized, limited services that are ideal for businesses that want to manage many operations in house but need to outsource specific aspects of their processes. 3PL fulfillment companies that oversee many processes from receiving materials to delivering products, and everything in between. When a business hires a 3PL to manage their fulfillment needs, space is typically rented in a large warehouse that stores products from multiple companies. 3PL warehouse companies oversee stocking, organizing, and inventory. 3PL warehouses are designed to optimize efficiency, save time, and lower costs. 3PL freight companies take responsibility for every aspect of cargo transportation and work with different carriers to deliver orders to clients. 

Advantages and Disadvantages of 3PL

3PL services are beneficial because they allow businesses to outsource specific components of their overall operations, decrease costs, save time, flexibly respond to changes in order volume, and allow businesses to scale in an affordable manner. 3PL logistics companies provide businesses with the benefit of focus, extensive experience, and finely honed skills. Working with a 3PL company can allow for greater flexibility when sourcing and selling products. 

The disadvantages of 3PL services typically arise when the fit between company and provider is not ideal or the 3PL company does not meet your high standards. It is important to choose an expert provider and make sure the services match your business’s needs. Partnering with a 3PL company entails handing over control of your logistics operations so it is critical that you choose a partner who can reliably provide the services and standards your customers require. 

3PL vs 4PL

Fourth-party logistics (4PL) companies integrate numerous 3PLs to optimize all delivery needs and streamline the entire fulfillment process. 4PLs facilitate a single point of contact for the entire supply chain, provide large-scale logistical support, and decrease operational costs over the long term. However, 4PLs can be too expensive and extensive for small and medium sized businesses. Additionally, they typically require intense onboarding and provide limited control over processes and operations. Ultimately, 3PLs are ideal for businesses that need help in one or two specific areas. 

How to Choose a Good 3PL Logistics Company

A good 3PL logistics company is an asset to a business. To choose a good 3PL logistics company it is important to evaluate your business needs and assess the provider’s area of expertise, locations of operation, customer support, security, costs, and more. 

First Star Logistics is a global freight brokerage company with over 60 years of experience in logistics. First Star Logistics uses cutting-edge technology and applies specialized services to ensure customers across the globe can operate efficiently. To learn more about what a trusted logistics provider can do for you, contact First Star Logistics today!