Both these brokers of 3rd parties offer access to shipping quotes, customs solutions, and overall supply chain solutions. Determining if a Freight forwarders vs 3PL is better can be alittle tricky though. Firstly, we’ll define a 3PL. Secondly, we’ll define a Freight Forwarder. Then we’ll compare who outsources supply chain services vs who keeps said services in-house. Lastly, we’ll determine which of freight forwarder vs 3PL services offers better value for your supply chain.
Per Techtargets definition of a 3PL, “A 3PL (third-party logistics) provider offers outsourced logistics services, which encompass anything that involves management of one or more facets of procurement and fulfillment activities.” A 3PL warehouse, can outsource all logistics all the way until products arrive at their prep center. Then, product fulfilment is executed in-house by the 3PL team.”
Freight Forwarder Definition
Per Crowley’s definition of a Freight Forwarder, “A freight forwarder is a firm specializing in the arrangement of cargo on behalf of shippers. In most cases, freight forwarders provide a variety of supply chain services, including:
- Ocean or air freight transportation
- Inland transportation from origin and/or to destination
- Preparation of documentation
- Warehousing and storage services
- Consolidation and deconsolidation
- Cargo insurance and customs compliance
….freight forwarders represent intermediaries. They are the step between shipping customers and the services that move cargo. This goes for ocean freight, land transportation, air freight, rail services, and more.
Freight forwarders use existing relationships to negotiate the lowest price for cargo moves.”
What’s The Different Between a Freight Forwarder vs a 3PL?
What Does a Freight Forwarder Do?
First off, lets talk about what a Freight Forward is not…
A freight forwarder is not:
- A shipping line
- A trucking company
- A customs broker
- A warehouse
A freight forwarder is a broker of these services who all operate independently of the freight forwarder. To clarify, the freight forwarder never touches your goods. They have not boots on the ground. They simply coordinate different sets of professionals into a supply chain for your products.
What Does a 3PL Do?
So how is that different than a 3PL? To start, a 3PL works with a Freight Forwarder as its outsourced service provider for these logistics services. However, the 3PL also offers access to a warehouse at the end of the of supply chain. This final destination offers long term storage, product distribution, and business to consumer (B2C) order fulfillment. As such, the 3PL offers a complete end-to-end solution for supply chain management.
Alternatively, a freight forwarder only moves products from origin (factory) to destination (3PL warehouse or Amazon directly), through a network of outsourced partners. To be clear, a 3PL can broker all the same services a freight forwarder brokers. A 3PL can just as easily string together a shipping carrier, customs broker, and LTL pick up from port to their own warehouse. So where a 3PL can be your ‘freight forwarder’, a freight forwarder cannot be your 3PL.
Freight Forwarder vs 3PL – What’s Better For My Supply Chain?
Comparing services between these two brokers of services can be tricky. A freight forwarder will offer a quote and dates for shipping in your supply chain. A 3PL will offer a competing quote for the same services. Now you need to compare. Who’s shipping goods quicker? And who’s shipping them cheaper? The numbers should look similar. If the numbers do not look similar at all – that can be a red flag.
In other words, never trust a broker who promises the sun, the moon, and the stars for your supply chain solutions. If their shipping time is half that of the other quote – that’s a red flag. If the shipping price is half of the other quote – that’s a red flag. However, to ensure you can provide the best analysis of these numbers – strengthen your baseline of data. Secure 4 quotes for comparison. Only then can you resolve if a freight forwarder vs a 3PL will offer better value to your supply chain.