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What Is Third-Party Logistics?

A third-party logistics (3PL) provider works with shippers and carriers to coordinate freight and manage logistics operations, including warehousing, transportation, price negotiation and distribution.

A 3PL provider is an outsourced logistics service that helps move freight from one point to another. Depending on the 3PL provider and the shipping company’s needs, 3PL providers can handle all of the supply chain tasks or just one part of it.

Warehousing

Many 3PL providers offer warehousing services to shippers. Shippers don’t need to have their own warehouse or transportation facility when using a 3PL provider. Shippers also don’t need to worry about managing the warehouse. The 3PL provider will manage it.

Transportation

There are different types of 3PL providers that specialize in different transportation methods, such as intermodal, less than truckload (LTL) or rail freight. Depending on shipping needs, one type of 3PL provider may be better for the shipper than another.

Price Negotiation

3PL providers, in general, are able to negotiate lower prices on behalf of the shipper. 3PL providers have a lot of connections with carriers, so they are able to get the best prices for the shipper.

Distribution

Using a 3PL provider lowers the shippers’ risk because they don’t have to invest a lot of capital to create their own distribution network. 3PL providers have a distribution network set up already.

If you are interested in learning more about 3PL, take a look at some of our previous blogs:

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