What is 3PL? A Guide to Third-Party Logistics

As industries become increasingly reliant on fast, cost-effective transportation, businesses across various sectors—from construction and oil & gas, to manufacturing and forestry—are requiring access to expert freight management to remain competitive. 

As a result, many businesses are moving away from managing their freight in-house and turning to third-party logistics providers for support. These days, the right 3PL isn’t just a freight broker; it's a strategic partner that manages shipments from point A to point B with precision while giving your business the efficiency and competitive edge needed to grow.

What Does a 3PL Do?

A third-party logistics services provider manages supply chain operations on behalf of businesses across different sectors. Key 3PL functions include:

• Freight brokerage: Matching shipments with vetted, cost-effective carriers across all modes, including truckload, LTL, rail, ocean, and air.
• Transportation management: Planning and executing end-to-end movement of freight, including route optimization, documentation, and regulatory compliance.
• Supply chain optimization: Designing tailored logistics strategies that enhance delivery speed, reduce costs, and mitigate risk across your entire transportation network.
• Specialized freight handling: Managing oversized, heavy-haul, or sensitive cargo for industries like construction, oil and gas, and forestry.
• Real-time tracking and analytics: Full visibility into freight movements and performance through integrated technology platforms.

Benefits of Using a 3PL Provider

When businesses move beyond managing their freight in-house and turn to a trusted 3PL, they gain access to benefits that improve efficiency and keep them competitive:

• Flexible, scalable solutions: Unlike fixed logistics models that require long-term contracts or rigid commitments, many 3PLs provide flexible service agreements that adapt to your needs.
• Optimized freight spend: 3PL providers leverage their carrier network and market insight to negotiate better rates, consolidate loads when possible, and reduce inefficiencies. As such, you'll have lower overall transportation costs.
• Dedicated logistics team: 3PLs often provide dedicated teams that function like an extension of your business. They can manage scheduling, routing, billing, documentation, claims support, and more.
• End-to-end visibility: 3PL providers like Jones Logistics provide access to state-of-the-art software like Turvo with real-time tracking, centralized communication, and complete visibility into your freight from dispatch to delivery.
• Time savings and operational focus: Handing off complex tasks to your 3PL partner allows you to focus on core business priorities like expansion, customer service, and production.

Challenges of Managing 3PL For Your Business

Businesses that move their freight in-house or without the right 3PL partner often face challenges like these:

• Limited carrier network: Finding reliable carriers, vetting credentials, and negotiating rates can occupy a great deal of time and energy. Without an established network, you're more likely to face delays, inconsistent service, and higher shipping costs.
• Time-intensive operations: Managing an entire freight operation requires full-time attention. Even small errors or delays can disrupt your supply chain and hurt customer relationships.
• Legal and compliance burdens: Shipping freight involves strict insurance regulations and other legal requirements. Failing these guidelines can lead to penalties, claims and disputes, delays, and loss of trust.
• Financial risk from claims and disputes: Freight claims, chargebacks, and accessorial disputes can be costly and time-consuming to resolve. Without expert support, you may struggle to recover losses or defend against wrongful charges.
• Lack of technology infrastructure: It's hard to run efficiently without access to a Transportation Management System (TMS), real-time tracking, and freight analytics. Without these tools, optimizing routes, reducing costs, or gaining visibility into performance will be challenging.
• No dedicated logistics support: In-house staff must juggle complex logistics tasks alongside their primary roles. This can strain resources, delay shipments, lead to high employee turnover rates, and damage key business relationships.

Inside 3PL Freight Operations: How Strategic Logistics Works

Instead of managing freight in-house, once you partner with a third-party logistics provider, they take on the burden of coordinating and executing freight movement:

• Needs assessment: A 3PL partner will work closely with your team to evaluate shipping volumes, lanes, service requirements, and cost goals.
• Carrier selection and booking: A 3PL will leverage an extensive carrier network to match your shipment with the most suitable carrier while negotiating on your behalf.
• Transportation coordination: A 3PL will handle all logistics, including scheduling, route optimization, and documentation.
• Real-time tracking and communication: A 3PL's advanced platforms gives your team full visibility into shipment status, delivery ETAs, and exception alerts.
• Billing, claims, and support: A 3PL will manage invoice, audit, and claims issues so you don’t have to.

Outsourcing 3PL Shipping vs. Self-Shipping

When it comes to shipping, businesses typically face two choices: manage logistics in-house or outsource to a 3PL provider. In-house shipping may seem straightforward at first, but the time, cost, and strain on your team can quickly become overwhelming. Here are the pros and cons of each:

When Should You Consider Using a 3PL Partner?

You might be ready for a 3PL if all or most of the following are true:

• Your business is experiencing, or will experience, significant growth: 3PL providers can help you keep pace without investing in new resources and expertise.
• Your company is expanding into new geographic markets: The right 3PL provider can help navigate logistics challenges and customs regulations.
• You have specialized freight or compliance requirements: If you're moving oversized loads, operating in regulated industries, or navigating complex compliance and permitting issues, a 3PL can manage the details and reduce risk.

What To Look For In Your 3PL Partner

When looking for a 3PL logistics services partner, you should look for the following qualities:

• Industry expertise: Look for a provider with proven experience in your specific product type (e.g., lumber or glass bottles) or industry (e.g., manufacturing or forestry). Ask for case studies or client examples in your niche.
• Carrier network strength: A strong 3PL partner should have deep relationships with a wide range of reliable carriers, including truckload and LTL. That way, you get greater flexibility and faster response times, even when demand spikes or capacity is tight.
• Reliable customer support: Select a 3PL provider with a responsive, knowledgeable, and dedicated customer success team or account manager. 
• Technology partners: The right 3PL should offer real-time tracking, centralized communication, and performance reporting via modern TMS and logistics platforms, such as Turvo.
• Compliance and certifications: Your 3PL should be fully licensed, bonded, and insured, as well as familiar with any industry-specific requirements.
• Customer service and communication: Look for a logistics partner that prioritizes proactive communication, transparency, and accountability. The better the customer service and communication, the smoother working with them will be.

Is It Time to Partner With a 3PL Provider?

If you’re looking for a reliable, seamless 3PL dedicated services provider, look no further than Jones Logistics. With over 26 years of experience in developing seamless and effective supply chain solutions, we can effectively arrange and manage shipments across all modes of transportation, including air, land, ocean, and rail. You’ll also get optimized freight spend, a dedicated logistics needs team, full visibility from start to finish, and more.

Contact us today to discover how we can help scale your business.