In the minds of some shippers, a common objection to working with a third party logistics (3PL) firm is that they ‘get between’ the shipper and the carrier. There can be a misconception that creating another layer by adding a 3PL as a vendor might reduce communication or disrupt service.
This couldn’t be further from the truth. In reality, a good 3PL can provide multiple invaluable services to a shipper – many of which they hadn’t even thought of or didn’t know they were missing. In addition, there are ways that 3PLs can even help carriers in their relationships with shippers.
In essence, the addition of the right 3PL to a shipper’s relationship with a carrier is not a disruption, but an asset. They bridge the gap in the relationship that can make it mutually beneficial for all three parties. Here are some ways how:
3PL ⇔ Shipper
Better Goal Setting. Bringing their knowledge of the market and logistics expertise to the shipper, a good 3PL can be an invaluable asset in helping shippers set realistic goals and measure progress.
Work Flow Efficiencies. In most cases, shipping in any organization is not the core business of the organization. For a 3PL, it is. That kind of expertise injected into the organization can add significant efficiencies in multiple departments – accounting, supply chain, customer service – that results in putting money to the bottom line.
Electronic Communication. The demands on companies to communicate electronically with their customers around shipping and delivery are increasing every year. An experienced 3PL adds a level of technology that can help alleviate that headache. In addition, 3PLs deal with carriers every day. They bring sophistication to any company’s communication with a carrier that is invaluable.
Improved Reporting. By improving clarity of information, technology, and transparency to the shipping process, improved data collection and better reporting is the outcome. In today’s business environment, not just more information – but the right information – is critical for sound and swift decision-making.
3PL ⇔ Carrier
Reduced Shipper Turnover. When a particular service gets viewed unfairly as a commodity, price then becomes the only differentiator. The reality, however, is that all carriers are not created equal. They have different levels of training, expertise, insurance, and market knowledge. A good 3PL can help keep the right carriers with customers that need and appreciate their unique skill set, thereby limiting commoditization and turnover due to lack of knowledge.
Business Development Opportunities. In addition to reducing shipper turnover, 3PLs can also bring business development and new shipping opportunities to carriers. 3PL’s, due to their extensive shipper and carrier database, can introduce and better match certain carriers to shippers that can better appreciate their brand of service. They can also help carriers curb imbalances in specific lanes.
Uniform Electronic Communication Platform. Utilizing technology in communication can dramatically reduce manual processes – billing, calling, mailing – which results in a reduction of cycle time. This helps carriers reduce their costs, which can often be passed on to the shipper resulting in a win for all three parties. In addition, a 3PL’s expertise and sophistication can go a long way to anticipating and interpreting issues on both sides and averting a problem before it happens.
Simplified A/R, Billing, and Collection. 3PL’s are familiar with the idiosyncrasies of the billing of each of the shippers and oftentimes have automated them. This learning curve saves carriers a tremendous amount of time, which results in getting paid faster. It can also prevent mistakes that could lead to further delays or lost bills altogether.
So the next time someone in your organization says that you don’t need a 3PL because your company has shipping covered, tell them you disagree. The more complex your business gets and the faster technology changes, the more you need the help of an expert to bridge gaps in your organization.
The right 3PL can be that bridge.