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

Written by Rick LaGore | Jun 13, 2019

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 3PLs: