How 3PL Works: Everything Your Business Needs to Know About Third-Party Logistics

If you need shipping, freight, and other services for your business, it may be time to outsource your 3PL needs. Here’s how it all works.

Does your company need to deliver more than 20 orders in a single day? Do you need extra storage for your inventory? Is your business growing rapidly?

Most small and medium business owners tend to believe that they don’t need to ask for help from a logistics company. Truth is, however, that it’s not so much about how young or old you are in business.

It’s about how much you need to improve different functions within and without the business.

Third-party logistics, also known as 3PLs, handle different duties on your behalf giving you more time to focus on growing your business.

If you need to outsource shipping, freight, and other services for your business, it may be time to outsource your 3PL needs.

Here’s how it all works.


Is it peak season? Do you have a huge discounts promotion? Are you running a flash sale? These are different scenarios that will have a direct impact on the number of orders and volume of product.

As the demand for your products increases, you may find that your internal warehousing capabilities are inadequate

3PL companies come in to offer you temporary or full-time storage for your inventory. You can use warehousing services to pack your merchandise or products into various sizes or quantities to suit the respective orders from customers.

A warehouse provides a convenient solution by having all your warehousing needs sorted. They are so efficient and can facilitate same-day, next-day or two-day deliveries both locally and worldwide.

So, what makes a good warehouse? Here’s a simple method to follow when looking for a warehouse to partner with.

  • Network. How many warehouse locations do they have and are they as spread out as your customer base is? Find a warehouse that has a vast network of locations. This way, your customers can enjoy faster delivery irrespective of where in the world they reside.
  • Charges. What is their pricing model? Are they open and transparent about how much they charge for their services? A reputable warehouse should account for returns, destruction in their pricing. Find that warehousing 3PL company that is willing to grow along with your business demands.
  • Time Schedule. If you are using the same warehouse for storage and for distribution, it is important to stay informed about their daily time schedules. When do they begin work and when do they stop? This way, you know when they can and cannot fulfill order demands.
  • Insurance. Be clear on what you want to be covered. For example, some businesses ask that their merchandise be insured while in storage, during delivery and in case of returns. These insurance demands may change or increase depending on what your business needs are.

Intermodal Shipping 3PL Companies

Intermodal shipping third-party logistics companies bring a higher sense of convenience for a business looking for reliable means of transportation.

Be it by rail, by truck or by ship, 3PL companies work to help you save money and time through improved shipping services at affordable rates.

They have internationally certified containers that can pass through border points to different countries without the need to change them.

Shipping is an integral part of any business whether you need transportation of goods within your country or between different states. It’s the only way to ensure that no matter how far your customers are, they can purchase various products offered by your company.

Expedited Freight

As a business, you want to make all customers feel that they have equal access to your products.

When a customer far away from you has to wait longer for their order to be delivered, they can feel left out. It may prompt them to look for alternative products that are easily accessible. So how do you make sure you capture all the sales?

Enter, expedited freight services. Here, 3PL companies make sure that you honor your orders. Especially if you are falling behind schedule on deliveries, or if you have urgent orders that need to get to their destination fast.

They take all the hard work off your plate.

All you have to do is pay a slightly higher premium to cover the freight expenses and have enough supplies to cater for all the orders.

Transportation Logistics Services

Once the goods are made and packed they are now ready for sale. But how do you get them from the manufacturer’s facility to the warehouse, the wholesale and retail stores or to the doorsteps of your customers? This is where transportation comes in.

A 3PL company transports the goods from your local or overseas manufacturer/supplier to wherever you need the goods to be. They are in charge of all the paperwork, they work hard to meet your schedule and do their best to save you money.

But what specific transportation services do 3PL companies offer? They include:

  • Export and import requirements: If you need goods to go to a location outside the country or to come from overseas and get to where you or your clients are, 3PL companies ensure that everything regarding transportation works out.
  • Domestic or local freight: Here the third party logistics company finds you the most competent, fast, yet cost-effective freight transportation. It can be either by rail or by truck. They also manage and overlook the pick-up and delivery schedules to ensure that everything is on track.

Distribution Logistics Services

Distribution entails storing goods and shipping the same goods to various customers. They can distribute goods either B2B (business-to-business) or B2C (business-to-consumer).

The 3PL company makes sure that all the goods are handled with care, stored in the proper environment and shipped safely.

Some of the main functions here include:

  • Product kitting and packaging
  • Order packing and processing
  • Warehousing and inventory
  • Parcel shipping to consumers
  • Management of returns sent back by consumers owing to one out of many reasons
  • Freight shipping to other retail businesses

How Much Does 3PL Services Cost?

Out of the above-listed services, you may find that you need one, two, three or all four of the services offered by the company. The final cost is usually determined by your specific demands, the consultancy fee and any other overhead costs that may arise during the logistics process.

With the right partner, you can find a good 3PL company that is well able to cater to all your demands. Contact us to get help on any matter relating to logistics.

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