In recent years, logistics has been one of the fastest growing service sectors. Today, there are many logistics providers that provide comprehensive services for the delivery of goods. These services are commonly referred to as Third-Party Logistics. Third-Party Logistics (3PL) is a system of additional services that includes both traditional warehousing and intermediate storage (so-called cross docking) of cargo, as well as design and development of information systems, and the use of subcontractor services.
What does 3PL logistics mean?
Third Party Logistics implies the provision of a range of services, which includes:
-organization and management of transportation;
-accounting of warehouse stocks;
-preparation of commodity and customs documentation;
-provision of warehouse storage;
-loading and unloading;
-delivery of goods to the destination.
For the first time, the concept of a 3PL provider was used back in the early 70s. Then this term was used to denote intermodal marketing organizations responsible for cargo transportation. Until the 70s, only 2 parties appeared in contracts for the transportation of goods – the sender of the cargo and the carrier. Intermodal marketing organizations became an intermediary that delivered goods from the shipper to the carrier.
Today, this concept applies to any company that provides the above range of logistics services.
Reasons for the Demand of 3PL Logistics
3PL services are in demand due to the fact that operators go beyond “direct” logistics and provide customers with a huge range of additional services. For example, some companies provide an opportunity to choose the most suitable way of storing the transported goods. Clients can count on pallet, cell, or nomenclature storage. Other additional services include goods insurance, sorting, packaging, etc.
These services are also in demand due to the fact that Third-Party Logistics operators are ready to provide their own fleet of vehicles, qualified assistance from lawyers, economists, brokers, and other specialists.
Due to the diversity of this direction, trading and industrial firms can completely entrust all processes related to logistics to the provider. Delegation of responsibilities allows you to get rid of the bureaucratic routine related to transportation, accounting, unloading/loading, and other logistics processes. Thus, trading companies can focus on developing their core businesses, increasing sales, developing marketing policies, etc.
Another benefit is that there is no need to invest in creating your own logistics solutions. Such cooperation allows not to waste time and money on creating the necessary infrastructure, recruiting personnel, etc. Therefore, third-party logistics is a unique opportunity to save financial, human, and time resources.
Not all logistics companies can obtain the status of a 3PL operator. In order to obtain this status, you must meet a number of requirements. First, the provider must have specialists from various fields directly related to logistics processes on its staff. The staff of such a company must necessarily include lawyers, accountants, and customs brokers. Their specialized assistance allows you to establish optimal interaction with both customs, tax, and other supervisory authorities.
Secondly, a Third-Party Logistics operator must have a well-developed infrastructure. The main requirement is the presence of a warehouse complex that corresponds at least to class B. The provider must also have its own transshipment warehouses for temporary storage and subsequent transshipment of goods from one transport to another.
Thirdly, companies providing a full range of services must have their own transport fleet, which allows the delivery of a wide variety of goods (oversized, fragile, perishable, etc.).
Benefits of 3PL providers
By using the services of Third-Party Logistics providers, you can count on the following benefits:
Full responsibility for all operations performed. The provider assumes all risks and, accordingly, is responsible for the integrity and safety of the transported goods;
Application of modern software that simplifies the accounting of services provided;
An extensive transport network. 3PL logistic providers not only have their own transport fleet but, if necessary, attract other transport.
Categories of 3PL providers
In conclusion, it should be said that all logistics providers of the “third-generation” are conventionally divided into 4 categories:
Standard 3PL Provider;
The Customer Adapter;
The Customer Developer.
The main category is Standard Third-Party Logistics Provider. These providers are responsible for key logistics services: sorting, warehousing, transportation, etc. For most of these companies, 3PL logistics is not the only service.
Service Developers are operators that provide advanced services. The Customer Adapter – operators that take on the main logistics functions, but do not develop new directions. But The Customer Developer is a provider that is ready to fulfill the entire scope of tasks set by the customer.
The development of international trade, the strengthening of the processes of globalization and integration, as well as the rapid changes in the needs and demands of customers, gradually lead to the fact that individual enterprises gradually become part of the global production network. Sourcing and distribution processes have also become significantly more complex, so the level of logistics knowledge throughout the value chain has gradually become a key success factor.