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

June 13, 2019 Rick LaGore

Freight management

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:

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 3PLs:

Other Articles of Interest:

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