In a world where margins are squeezed, understanding your 3PL costs can be the difference between success and failure. The cost of third-party logistics is one area that many businesses underestimate. This post will cover what you need to know about 3PL costs so that you don’t make any costly mistakes.
Why use 3PL services?
There are numerous reasons that make retaining the services of a seasoned and professional 3PL logistics company a worthwhile investment for any business owner. Here are some of those reasons:
It’s easy for business owners to believe they have all of these skills when needed, but really, this type of work needs special expertise, which is why it beneficial for entrepreneurs to partner with a 3PL specialist like Invenco.
What are 3PL costs?
3PL refers to third party logistics, which means that your business outsources the shipment of its goods to a company that specializes in moving freight. These companies are paid per package and often charge based on weight or volume instead of distance traveled.
The cost for shipping includes many different things. Here are some additional expenses you may need to know about:
What’s not included in the 3PL costs? The cost for shipping does NOT include:
Types of available 3PLs
Before you proceed to tap third party logistics companies and incur 3PL costs, it’s imperative to understand the various types of services that are provided. Depending on your needs, one type may be more suitable than the others:
Full-service providers manage everything from picking up and delivering freight to processing customs clearance charges.
These firms will move shipments between designated points with no other operations handling or labor costs incurred by your company during shipment (customs clearance/temporary facilities rental). These could also be called “van operators.”
Third-Party Logistics Management
Third-party logistics management entails a firm managing inventory at your facility for delivery to customers without any additional labor required at either endpoint of transport. This is usually in conjunction with an online order fulfillment system like Shopify.
Third-Party Logistics Provider
These companies manage the entire 3PL supply chain for your company, including inventory, order fulfillment, warehousing, and distribution to customers. They can also handle any necessary customs clearance charges and temporary facilities rental at both ends of transport.
The type you should opt for depends on the size of the business, the complexity of operations & products being shipped, among other factors.
Third-party Logistics Distributor
Third-party logistics distributors operate in the same manner as 3PL providers but work with wholesale companies rather than retail customers; they provide warehousing, order fulfillment, customer service, and tracking capabilities without handling the products.
How can you cut on 3PL costs?
Any business is out to turn a profit and reducing 3PL costs is the best way to go about this.
Here are some ways you can cut on your third-party logistics provider costs:
At Invenco, we believe every business is unique, and we will work with you to find the best solution. If you are an entrepreneur who owns a business that requires third party logistics services, give us a call to ensure every single product is delivered promptly to your customer’s hands.