Third-party logistics (3PL Partner) is expected to be worth over $935 billion worldwide by 2020, according to CIPS. This is likely driven by the progression in globalized shipments and the growing need to scale quickly and efficiently without sacrificing quality interactions. In fact, in 2016 75% of shippers reported that 3PL services have contributed to a reduction in their logistics costs; and, 86% said it contributed to enhanced customer service and quality of deliverance.
3PL is growing across the globe as transportation managers look to reduce expenses and improve processes. In response, 3PL companies are improving and refining their offered services to keep up with this demand.
So how do you choose a 3PL Partner that will be the best for your logistics and operations team?
3PL is a broad term that is often applied to various types of transportation contracts. According to the U.S. Bureau of Transportation, 3PL is simply defined as “outsourcing all or much of a company’s logistic operations to a specialized company.” Narrowing this broad definition further, 3PLs tend to specialize in integrated operations of the supply chain, including anything from warehousing to transportation.
Thus, it is important to fully understand the variations of 3PL companies and specialties to find the right match for your organization.
The Types of 3PL
There are two key types of 3PL providers that you should be aware of when choosing which company is best suited for your needs. Basically, these two categories are broken up into whether or not the provider owns the assets they use for their services or they partner with others who specialize in these specific areas.
Asset-based 3PLs own their own trucks, distribution centers, and warehouses. These tend to be used mostly by large corporations for the high quantity of goods.
It is highly specialized and often comes at a higher price-point. These operations are best for long-term contracts and international transportation. Asset-based companies are good at having a few key clients that they deal with on an exclusive, personal basis.
Nonasset-based are the majority of 3PL providers. These companies do not own their own vehicles or equipment, and they contract out with other trucking companies, carriers, distribution centers, and various warehouses as needed. These operators can partner with a variety other companies, from air freight to truck freight, or even from intermodal marketing to circulation entities. These partnerships provide flexibility and customization of services to their consumers
Choosing A 3PL Partner
Choosing the right provider to outsource to is not a simple task. In fact, choosing the wrong outsourcer could delay processes, expend significant time and money, and damage your bottom line. These contracts between shipper and outsourcer are not to be taken lightly.
So how do you choose the 3PL partner that is right for your company’s operations management? Below are the five questions to consider when researching a 3PL provider.
- What are the services that are offered by this company?
- How personalized and customizable are these services?
- Do they utilize a strong data and software system?
- How will they enhance your efficiency?
- What is the cost?
Contact Nebraska Warehouse to see how we would care for your logistics while streamlining your supply chain management!