Definition of Third Party Logistics Company (3PL) in 100 Words

Definition of Third Party Logistics Company (3PL) 

A third-party logistics company (3PL) offers outsourced logistics and supply chain service solutions for shippers.  A company can outsource all or just a portion of their logistics requirements.

According to Armstrong & Associates the third party / contract logistics market size is $184.3 billion.

90% of Fortune 500 Companies utilize a 3PL in their logistics and supply chain strategy.

Third Party Logistics Services:

• Freight Brokerage

• Freight Management

• Freight Consolidation

• Freight Audit & Pay

• Inventory Management

• Warehousing

• Order Fulfillment

• Final Mile Customization

• Technology

When companies outsource logistics functions, they can either choose a single service or bundle the above services to craft a customized logistics services solution that best fits their company's needs.

Third Party Logistics Benefits:

• Cost Savings

• Reduce Capital Requirement

• Scale & Flexibility

• Gain Expertise & Knowledge

• Technology

Third party logistics service relationships can be:

• Transactional
  • The 3PL is used on an as needed basis with no long-term contract.
• Tactical
  • The shipper and 3PL have a negotiated long term agreement outlining services and prices.
• Strategic
  • The shipper and 3PL have a negotiated long term agreement outlining service management fee, with a pass through on all costs making for a fully transparent relationship.

Professional Organizations Associated with 3PL's:

• Counsel of Supply Chain Management Professionals (CSCMP)
• Transportation Intermediaries Association (TIA)
• International Warehouse Logistics Association IWLA)

• When to Use a Freight Broker in Your Logistics Strategy
• The Ultimate Comparison Guide on Freight & Logistic Services
• Benefits of Managed Transportation Services: Comprehensive Guide
• How Much Does Managed Transportation Services Cost? A Comprehensive Pricing
• Comparison between Freight Broker and Managed Transportation Services Freight Operation Models

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