What is a 3PL?
What is a 3PL? When a company is looking for a solution to handle its logistics, transportation, and warehousing needs it will typically contract an outside party to handle the workload. This type of arrangement is handled by a Third Party Logistics company or a 3PL, its more common moniker.
What is a 3PL (Third Party Logistics) Company?
3PL’s are third parties that provide logistics services. Many campanies do not have logistics departments in house, that’s where a 3PL provider comes in.
3PL’s offer a broad range of services from trucking to distributing products. The trucking aspect may involve delivering products to a store or picking up a container from a Port; where as the distribution side involves handling, sorting, and preparing products before they reach their final destination.
3PL’s are contracted to manage a significant part and in many cases, all of a firm’s logistics needs including transportation, warehousing, cross-docking, and distribution among other services.
According to some estimates, 3PL companies have brought in nearly $90 billion in gross revenue since 2007.
The 3PL industry came from humble beginnings back in the 1970s and 1980s when companies began to outsource more of their logistics services to third parties. Those arrangements were helped along by the passage of the Motor Carrier Act of 1980, which curtailed the Interstate Commerce Commission’s oversight on trucking.
Some industry experts have said the new law made it possible for more 3PL startups to grow and freight management became much more accessible for these fledgling firms. Today, 3PL companies have expanded in a variety of directions.
Contracting typically starts with a detailed description of the services that are needed including what logistical tasks will be performed, which locations are involved, and information on deliveries, facility sizes and volume, among other needs that are generally outlined in a request for proposals.
As markets become increasingly more global, third party logistic firms are providing a valuable role for multinational manufacturers and retailers. A 3PL is a company that works with shippers to manage its complex global logistics operations, find competitive advantages, and help address its capacity challenges by economically sourcing transportation when trucks and drivers are scarce.
To provide a more smooth and expedited logistics process, 3PL providers eliminate the need to invest in warehouse space, technology, transportation, and staff while saving a firm from costly mistakes and allowing it to build a global logistical network with lower risk and higher return.
3PLs eliminate paperwork, billing, audits, training, staffing, and optimization. These providers can help maximize profits, reduce wait times, and improve customer service.
Third party logistics providers offer a vast available resource network in which relationships can be leveraged and volume discounts can be achieved. These economic advantages can help to lower overhead and provide speedier service—all resources that might be unavailable in-house.
But the trend is toward fewer, yet larger players. The 3PL market is being consolidated from small firms to large multi-million dollar firms, such as National Retail Systems, Inc.
As for the future, 3PL growth is predicted to continue to rise. Global firms will continue to seek out sophisticated solutions from third party firms due to continued demand for extreme efficiency of inventory and working capital management.
Third party firms will be called upon by many middle market manufacturers, wholesalers, and retailers that lack their own sophisticated internal operations to tackle these logistical challenges. As more small-to mid-size firms strive for greater efficiency in their global supply chain networks, 3PL growth will be driven to even higher heights over the next decade.
What is a 3PL? There are several types of third party logistics companies to be aware of.
From there, selecting one of three 3PL models can help guide which provider to select. Companies that have their own personnel, warehouses, and trucks are defined as asset based 3PLs.
A second model is management-based, which provides managerial and technological service to carry out logistics but uses the assets of other firms to make it all happen.
The third 3PL model is the integrated provider. These types of companies can marry the functions of the first or second model while providing additional services requested by their clients.
Companies tend to use 3PLs for a number of reasons. For one, some don’t have the expertise, resources or time to carry out logistics. By contracting with a 3PL, they can not only obtain access to sophisticated equipment and IT systems, companies can realize cost efficiencies that would likely be much higher if they chose an in-house arrangement.
Another reason why companies use 3PLs is they generally don’t require an extreme amount of upfront capital because the third-party providers supply the trucks and warehouse facilities. This arrangement also allows the client to have more time to focus on their core business.
NRS includes Keystone Freight Corp. and National Retail Transportation, Inc. Keystone Freight Corp. provides truckload, store delivery, and dedicated fleet 3PL services. National Retail Transportation, Inc. provides consolidation, drayage, and distribution services.
NRS is recognized by Inbound Logistics as a Top 100 Third Party Logistics Provider.
For more than 60 years, NRS has been providing 3PL logistics services for retailers. The company is a U.S. EPA SmartWay partner with environmental strategies that includes clean idle trucks, LNG yard switchers, speed management policies, eco tires, fuel additive programs, truck stop electrification, engine shutdown policies, low wattage lighting, solar technology, and waste recycling programs.
The Ultimate 3PL
National Retail Systems, Inc. (NRS) includes Keystone Freight Corp. & National Retail Transportation, Inc. (NRT). NRS is an asset based 3PL that has been providing logistics services for the World’s leading retail companies for 60+ years. Our hub locations include: New York & New Jersey; Los Angeles, CA; Inland Empire, CA; Savannah, GA; Columbus, OH; Greensboro, NC; and Baltimore, MD.