Understanding concepts of Third-Party Logistics Companies

What do you mean by third party logistics?

Outsourced logistics services are provided by 3PL (third-party logistics) providers and include anything involving administration of one or more aspects of procurement and fulfilment activities. The term "3PL" in business refers to any service agreement that includes the storage or delivery of goods, and it has a broad definition. A 3PL service might be one provider, like shipping or warehouse storage, or it could be a system-wide package of services that can handle supply chain management. According to ibis world, as of 2022 there has been an increase of 1.4% from 2021- there were 14,302 Third party logistics companies in the USA. So, the need of these business has been growing. 

Let’s understand it through an illustration - A book publisher engages authors, editors, and graphic designers to create publications, but it may not wish to manage customer ordering or shipping. The book publisher, on the other hand, utilises a fulfilment centre to handle online orders and a trucking company to transport its freight. Both the carrier and the fulfilment centre serve as 3PL service provider in USA. The fulfilment and shipping of book orders can also be handled by a single 3PL supplier. 

What does third party logistics provider do?

An expert business that offers consumers a variety of distribution, storage, transport, and fulfilment services is known as a third party logistics provider. The client’s contract with the 3PL company to handle these kinds of tasks, and they depend on the 3PL supplier to provide full-service management of certain services. Most large firms utilise 3PL providers because they are essential to supply chain management and are used by all major corporations worldwide. Contracts, agreements, and service level agreements will be meticulously written to detail and describe all the services a 3PL supplier offers. These documents will go into detail about the broad scope, duration, price, and other key elements of any services the 3PL provider provides.