What is a 3PL?
3PL Definition
A Third-Party Logistics (3PL) provider is a company that offers outsourced logistics services to other businesses. A 3PL helps in supply chain management for businesses – so the business can focus on growth, instead of infrastructure. 3PL services include transportation, warehousing, order fulfillment, inventory forecasting, product prep, reverse logistics and freight forwarding. Let’s look at those services in more depth.
3PL Warehouse Services:
Transportation – a Third Party Logistics company natrually offers access to receiving and prepping truckload shipments. These usually consist of palletized products. Full Truck Loads (FTL’s) hold 26 pallets on average. Less-Than-Truck Loads hold…well, less than 26 pallets, all the way down to one pallet.
A 3PL offers to arrange, load or unload these shipments at their warehouse facility. This warehouse service can include the use of a pallet jack and lift gate or by using a pallet jack and fork lift. As a side note, a standard service related to transportation is reffered to as Cross-Docking. This is where pallets are unloaded from one trailor directly into another trailor for the next leg of their transportation journey.
General Warehousing Services
The term warehousing can includes receiving, storage, and shipping. The benefit to a small business of using a warehouse, is scalability in product procurement, storage, and fulfillment. For example, a business may start by shipping parcels to a warehouse with their initial product launch. After six months, they may ship pallets to the warehouse instead. Within a year, that same business could be transporting a Twenty Foot Shipping Container’s (20 pallets) worth of goods.
And on the backside of warehouse services, they will be able to scale order fulfillment and inventory fulfillment as needed.
Order Fulfillment Warehouse Services
Overall, the backbone of any 3PL is the pick and pack services it provides. In terms of a 3PL vs a freight forwarder – daily order fulfillment for online stores is a major value add for sellers. Often times 3PLs have the process so well optimized, its just more cost-efficient for the seller to outsource this service all together. Order fulfillment for Amazon, Walmart, Shopify, Ebay, Etsy, and Tik Tok Shop is a standard service provided.
Product Prep – This warehouse service can include product inspections, product labeling, product bundling or kitting and product repackaging. Product prep is labor intensive and requires a far bit of infrastructure to complete in a time-effective manner. It’s best to trust a 3PL to manage this leg of your logistics journey.
Reverse Logistics – handling product returns and product removal orders takes time and space. Sellers need to preserve their time and save their space to scale their enterprise. 3PL’s offer a convient solution to this problem. Oftentimes they can offer product prep to give inventory a second chance to sell as well.
Freight Forwarding – a 3PL can serve as a freight forwarder for a business. However, a freight forwarder cannot serve as a 3PL. When we compare a 3PL vs a freight forwarder – each have their own place in the supplychain. Let’s take a closer look at how that looks.
3PL vs Freight Forwarder Services
What is a Freight Forwarder?
A freight forwarder is like a travel agent, but instead of planning trips for people, they plan how to ship products from one place to another. A freight forwarder can be a shipper or a broker of shipping. They may have a small office to manage admin tasks. But they lack a warehouse for the heavy duty tasks of logistics.
Freight Forwarder Services:
- Find the Best Route: They figure out the best way to get your stuff from here to there, using trucks, boats, or planes.
- Deal with Paperwork: Shipping things, especially to other countries, involves a lot of forms and rules. Freight forwarders handle all that paperwork so everything goes smoothly.
- Pack the Products: They make sure your items are packed properly so they don’t get damaged on the way.
- Keep Track of the Shipment: They watch over your shipment as it travels, telling you where it is and when it’s going to arrive.
As you can see – 3PL vs freight forwarding services differ between the brick and mortar warehouse a 3PL offers as opposed to the intangible services a freight forwarder offers. Imagine you’re sending a big gift to a friend in another country. A freight forwarder would take care of all the details to make sure your gift arrives safely and on time. They’re the experts in making sure products take a safe trip from the seller to the buyer, no matter where in the world that might be.