Logistics is the management of the transportation of goods from the point of origin to the point of consumption. The second party in logistics usually refers to either a 3PL provider, or a shipper. A 3PL provider, or third-party logistics provider, is a company that provides services for transportation, warehousing, customs clearance, freight forwarding and customer services fulfillment. Often times, 3PL providers are used to outsource the logistic functions mentioned above. Likewise, a shipper can also provide a variety of services related to the transport and delivery of goods.
Third-party logistics providers, or 3PLs, play an important role in the modern supply chain. There are many benefits that third-party logistics providers offer to their customers. These benefits include cost savings associated with outsourcing these logistics functions, access to a pool of skilled personnel, and a greater ability to customize services in order to meet customer needs. 3PLs can also help companies make supply chain decisions that increase efficiency and reduce costs.
In addition to the benefits that 3PLs bring to the supply chain, there are also certain risks associated with outsourcing the logistics functions of a business. These risks include the possibility of not having the expertise to manage the various stages of the transport and delivery process, the risk of assuming financial obligations if the 3PL provider fails to deliver the goods on time, and the loss of control over the transport and delivery process.
Shippers are companies that specialize in the transport of goods for businesses and sometimes for individuals. These companies offer services like pick-up and delivery, warehousing, customs clearance, and freight forwarding. Some shippers also provide additional services such as tracking and tracing of shipments, reverse logistics, security services, and document preparation. Using a shipper to transport goods can offer numerous benefits, including improved delivery times, cost savings associated with the use of well-established shipping networks and a better understanding of the international marketplace.
When deciding whether to use a 3PL or a shipper, it is important to consider the specific needs of the business. What functions need to be outsourced? What is the budget for the services? What type of goods will be transported? How will goods be tracked and traced? Will the company require additional services such as reverse logistics or customs clearance? Once these factors have been taken into consideration, businesses can decide if a 3PL or shipper is the best option for their needs.
