What are 3rd Party Logistics Services and How Do They Work?

What are 3rd Party Logistics Services and How Do They Work?

As a business owner, we can understand that you have a lot on your plate ranging from production to sales. Therefore, we would advise you to opt for a 3rd party logistics service. Outsourcing the logistics of your business will not only lighten the burden on you but also ensure that all the transportation and warehousing is handled by experts, ensuring higher efficiency.

The 3rd party logistics provider offers to manage everything from the transportation of goods, warehousing of raw and finished stock, accounting of trash and recycling it, cross-docking and preparing the product for distribution. While these are the various services offered by the third-party logistic provider in general, there are various types of shippers providing distinct bundles of services.

  • Logistics Services Based on Transportation

The services of third party logistic provider that offer transportation are not limited to it as they offer to package and to handle services as well. Then again, they can either be leveraged and non-leveraged. The former leverages the assets of other firms, while the latter deal with only the parent firm, using their assets.

  • 3 PLs for Distribution and Warehousing

These logistics providers have a lot of past experience in warehousing and handling distribution of goods without retaining the ownership.

  • Forwarder 3PLs

Forwarders are basically the middlemen who ensure that your goods reach the right set of 3rd party logistics providers that offer a wide range of services from warehousing, packaging, to distribution. Remember, the forwarders do not own any assets whatsoever.

  • 3rdParty Logistics Services based on Shipping Management

Such services are comprehensive as they cater to all the shipping requirements of your business. They offer a transportation management system, freight management system, and accounting services to help you handle the more cumbersome tasks.

Also, negotiating with the carriers and claiming the insurance becomes a breeze with the shippers as they ensure that you get the best possible deals.

  • 3rdParty Logistic Services for Finance

These services that take you through all the financial aspects involved in logistics such as making payments for freight, auditing and accounting for cost, and controlling the expenses. Plus, you can use the tools they offer for keeping track of the inventory in the day-to-day course of the business.

Various Levels of Outsourcing Logistics

Now that you know the types of 3PLs you can outsource to, here are the various levels at which the process works.

  • Transactional Outsourcing

Such outsourcing is strictly limited to the transactions between you and the 3PL provider with no assurance for a long-term contract. For instance, you can hire a 3PL service to provide warehousing for your surplus produce.

  • Tactical Outsourcing

Any business requires systems and tools for making sure that the transportation and distribution of goods are taking place efficiently. Therefore, Tactical Outsourcing comes with a promise of long-term association, providing your business with high-tech systems to manage freight, inventory, and the supply chain. In this way, you can gather the data, compile it into reports, and work on discrepancies that arise.

  • Strategic Outsourcing

Such outsourcing is based on a long-term partnership, and as a result, the entire supply chain of the company is taken care of by the 3PL. Both the partners, in such contracts, have established transactional transparency for the smooth running of the business.

In the end, logistics are an integral aspect of any business that is involved in the production of goods and services. Hence, it is better that it is taken care of by seasoned professionals.

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