Third-party logistics, or 3PL, is a service that helps businesses of all sizes ship their products to customers. This can be anything from simple shipping and warehousing to more complex services that involve managing inventory and customer service.
There are many benefits to using a third-party logistics provider (3PL) for your business, including lower costs and increased efficiency. Here are just some reasons why small businesses should consider partnering with one:
Freedom to Focus on the Core Business
3PL providers are experts in their field and can manage your supply chain efficiently. It means you can focus on your company’s core business and its growth, as well as customer service.
Many small businesses start with a core team of 3 to 5 people, but the number of employees can increase tenfold or more when they grow. With all these new responsibilities, it’s easy for the small business owner to get overwhelmed and overlook important details like managing inventory or shipping orders.
Third-party logistic companies know what they’re doing. They have years of experience under their belts and have seen every situation imaginable. They’ll be able to help you navigate these complex processes, so you don’t have to worry about them at all.
Economies of Scale and Lower Shipping Expenses
3PLs can offer a wide range of shipping options, including international shipping and delivery to multiple addresses. They also provide a variety of ways for you to receive your packages, such as FedEx or UPS drop-offs, pick-ups from the nearest retail location, or even direct home delivery. These options may be more plentiful than what your small business has available on its own.
Additionally, 3PLs typically have economies of scale that allow them to negotiate lower rates with carriers than smaller businesses could achieve. They operate on a larger scale and thus enjoy better rates through volume-based discounts or other means.
Greater Flexibility in Shipping Modes and Transportation Options
As a small business, one of your biggest concerns is likely to be getting the right product delivered to the right place in a cost-effective and timely manner. With access to multiple shipping modes and transportation options, 3PLs can help you meet that goal.
3PLs can offer access to a variety of transportation options that are not available as an option for small businesses. For example, because they operate on such large scales, 3PLs may have access to trucking companies, airlines, and everything in between to deliver your products or raw materials where they need to be shipped. It allows them to select the best shipping mode based on weight and size so that it gets there as quickly as possible without incurring unnecessary expenses.
Improved Customer Service Levels
According to Statista, 56% of respondents from the US stated that they have higher expectations for customer service. Customer service is one of the most critical factors in customer retention, which small businesses often need help with.
For example, if a customer calls a small business to ask about their order and is put on hold for 20 minutes before someone answers the phone, they will likely be unhappy with the experience. And they might decide never to order from that company again.
However, third-party logistics companies can provide better customer service experiences than small businesses because they offer 24/7 support and personalized customer service. If a third-party logistics company handles all of your deliveries and returns, no matter what time of day or night you have an issue with an order, there will be someone available who can help you quickly.
Access to Greater Technology, Assets, and Compliance Expertise
One of the main advantages of working with a third-party logistics provider is access to technology, assets, and compliance expertise. According to Forbes Advisor, 99.9% of US businesses are small.
Small businesses often need more resources or budget to invest in sophisticated technologies like location-tracking systems or real-time freight tracking. Third-party logistics providers can provide you with these tools at a low cost, so you can focus your energies on growing your business.
Third-party providers also have access to more assets than small businesses do, which means they can provide transportation services that are more cost-effective than those provided by any single customer. It will save your company money while reducing its carbon footprint and other environmental impact factors.
Third-Party Logistics Allow Small Businesses to Focus on What They Do Best
The global 3PL market grew from $997.51 billion last year to $1,099.3 billion in 2023. You can focus on what your business does best by outsourcing your logistics to a third-party provider.
The logistics provider has economies of scale that can reduce costs for small businesses and provide more flexibility in shipping modes and transportation options. For example, some third-party providers may offer greater capabilities for managing freight to other countries or expedited delivery options at an affordable cost.
Third-party logistics providers are also experts at supply chain management, a critical function that requires specialized knowledge and insight into how products flow through the supply chain from origin to destination. These providers have teams of experts who understand how to manage inventory levels onsite, balance workloads with transportation assets, coordinate deliveries between multiple locations, create forecasts based on historical data, and much more.
Third-party logistics is an excellent option for any company looking to expand its business. It’s important to remember that there are many benefits of using a third-party logistics company, including high-quality products and services. But you should also know that it takes time and patience before your business can benefit from using third-party logistics providers.