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:
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Freight Audit & Pay
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Inventory Management
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Warehousing
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Order Fulfillment
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Final Mile Customization
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:
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Cost Savings
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Reduce Capital Requirement
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Scale & Flexibility
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Gain Expertise & Knowledge
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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
- 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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