As e-commerce continues to grow and supply chains become more complex and global, logistics becomes more important. Customers want their purchases faster and cheaper, and the logistics power of giants like Walmart and Amazon are forcing all sorts of other companies to step up their game to stay competitive and consider the benefits of using a 3PL.
However, the logistics market of the 21st century offers more than its fair share of unique challenges, and the truth is that often tackling them in-house is simply not realistic, especially for small and medium-sized businesses. Outsourcing logistics to external logistics providers, so-called 3PLs, is becoming increasingly popular.
What is behind the rise in popularity of 3PLs and why does it make sense for many companies to adopt them? Here are seven reasons why outsourced logistics are gaining the upper hand across road, rail, sea and air.
1. Helps to take advantage of experience and expertise.
A 3PL will be able to provide a level of knowledge and experience that most organizations do not have access to internally. If a company operates with a good 3PL, they can expect to have access to:
- Extensive knowledge of shipping laws and regulations.
- More experienced and knowledgeable drivers.
- Inside information on recipient locations and delivery windows.
- Optimized systems designed by experts that eliminate waste and reduce costs.
- Faster and more accurate paperwork.
These benefits can significantly improve operational performance and continuously create value throughout a shipper’s supply chain.
2. Reduces or eliminates the cost of maintaining a fleet of vehicles.
Maintaining a fleet of vehicles can be incredibly expensive, especially for companies that need to ship using larger vehicles like articulated lorries. Having your own fleet usually means significant investment in equipment, maintenance, training, fuel, taxes, inspections and safety equipment.
A 3PL has already made all of these investments as part of its core business model. They make these significant capital and maintenance investments so their customers don’t have to make them. They can also use their expertise to further expand these resources through techniques like LTL (less than a truckload) shipping.
3. Allows companies to focus on their core competencies.
The logistics industry is complex and competitive, and it takes a long time to learn. Employees who have to develop into logistics experts alongside their other tasks eat up time for delivery coordination, maintenance, billing – and the many other daily tasks of logistics management. Bringing logistics experts on board can work, but is unlikely to be cheap.
Using the services of a 3PL helps a company reduce these expenses. By utilizing a freight forwarder with ready-made capacity, a company can focus on its core competencies without having to deal with complex logistics matters that it may not have expertise in.
4. Provides access to a well-developed network of resources.
Networking is everything in logistics. Operational performance depends on access to a broad network of carriers and drivers, and building that network requires a significant investment of time, effort and money. Logistics partners must also be checked. It is important to ensure that they have a broker’s license, guarantees from the carrier, appropriate insurance and other evidence.
A 3PL has already done the hard work of cultivating resource networks across a wide area and range of services. Companies working with 3PLs gain access to these well-developed networks. 3PLs with national or global reach also make it much easier to expand into a new territory because they have already laid the groundwork by expanding their network there.
5. Offers more scalable and customizable services.
Flexibility is invaluable in creating better logistics performance, so adaptability and scalability is another key benefit of using a 3PL. In the e-commerce era, it is common for many businesses to experience large and sudden fluctuations in demand, and a business that relies on its own logistics capabilities may struggle to fulfill an important order on time.
Working with a 3PL means a business will have fewer problems expanding its services when needed and can also coordinate with the 3PL to ensure it is well prepared for busy periods. Special requirements such as refrigerated transport are usually also easier to find via a 3PL who can draw on their sophisticated resource networks.
6. Offers improved solutions for the last mile.
The logistics of the last mile have always been notoriously difficult to master. In the e-commerce era, it has become both more complex and important when consumers expect packages to be delivered to their doorstep at lightning speed.
Businesses that need last mile logistics can easily find a 3PL that specializes in last mile solutions. In addition, 3PLs often offer services that are highly demanded by consumers, such as B. white glove delivery and they have more resources to bridge the last mile in remote areas that are difficult to access.
7. Creates better options for dealing with obstacles.
Anyone who’s ever worked in logistics knows how common it is for a breakdown, a storm, a jammed loading dock, or any of dozens of other things that can go wrong. For a company that does not have the resources of a 3PL, these challenges can cause tremendous disruption in the supply chain and create destructive ripple effects.
For a 3PL, these issues are old hat. A quality 3PL will have backup systems in place to handle the many common issues in logistics, from dispatching roadside assistance to rescheduling other shipments to make up for a delay. That kind of peace of mind is hard to quantify.
With so many excellent 3PLs available today, many companies have found that there is no point in wasting time and resources on internal logistics. A good 3PL can help a company eliminate the headaches of logistics so they can get back to doing what they do best while the 3PL leverages their technology, network and expertise.
Teamwork drives the best companies of the 21st century, and it’s becoming increasingly clear that a 3PL is an indispensable complement for many teams.