3PL Logistics Solutions Guide 2023: How to Plan and Manage Third-Party Logistics


3PL Logistics Solutions Guide 2023: How to Plan and Manage Third-Party Logistics

Every enterprise today, e-commerce and otherwise, is on the lookout to ensure smooth, cost-effective, and time-bound delivery of products to customers. These factors are mainly attributed to fast-evolving consumer expectations, increased competition, and demand for quick supply and delivery. 

This creates a huge operational caveat for businesses in the form of cost-efficient, scalable and optimized delivery operations. This is where 3PL partners come into the picture. Robust 3PL logistics solutions guarantee sufficient flexibility and serviceability irrespective of geographical or time constraints. The global 3PL logistics (3PL) market is expected to grow with a CAGR of 8% and reach more than USD 1.75 trillion by 2026. 

However, hiring a 3PL partner is not child’s play. You have to factor in multiple considerations like regional presence, fleet type, and warehouse availability, to name a few.  

Below, we will explore the various aspects of 3PL logistics management, business necessity, the challenges involved, upcoming trends to keep an eye on, and more.

What Are Third-Party Logistics (3PLs)?

Third-party logistics (or 3PL) refers to the outsourcing of logistics processes, by an enterprise, to a third-party business for optimized deliveries. This primarily involves packaging, inventory management, warehousing, transportation, and order fulfillment on the part of the 3PL service provider.

Businesses outsource both inbound and outbound logistics to third-party logistics providers owing to their expertise and tech-enabled platforms. A 3PL service provider can be a single service provider, such as transportation or warehouse storage, or it can offer a systemwide bundle of services capable of handling more activities in supply chain management.

Next, we discuss the services offered by a 3PL provider.

What Does a 3PL Service Provider Do?

The short answer is – third-party logistics solutions. A 3PL provider offers logistics for any other business and these logistics can be at any point in the supply chain. It can be used to transfer goods from the main manufacturing unit to a warehouse (first mile), from one warehouse to another (middle mile), and from the distribution hub or warehouse to the customers (last mile).

It might seem odd to hand over the operational control to an outside company, but this helps you, as a business, to focus on more critical goals.

Mentioned below are typical competencies handled by 3PL service providers:


The first step is getting inventory to 3PL for shipping and order fulfillment. To accomplish this, 3PL providers coordinate the inbound shipments with freight forwarders to manage the bulk shipments from the manufacturers to the distribution centers. Subsequently, the 3PL warehouse processes and stores products before they go out to the customers.


This step is initiated when a customer places an order. It is sent to the warehouse or fulfillment center where the seller’s inventory is stored. This is followed by identifying the location of products and picking them out of designated storage areas. 

As the types of orders vary in size, complexity, and pick type, the 3PL you decide to choose needs to support all types of orders. This is vital as an eCommerce or business-to-consumer (B2C) order is vastly different from a B2B one.


Once an order is ‘picked,’ the products are organized and prepared for packaging. 3PL logistics solutions can also work with the seller to identify the best way to package the product in a secure, presentable, and cost-effective manner. In addition, clear business rules for packing different orders are necessary to allow quick and precise fulfillment. The 3PL must have technological systems and operational processes in place to ensure that the orders are accurate and shipped at scale. This is paramount, especially during peak season.


Shipping can be the most complicated and expensive aspect of the fulfillment process. This is due to the involvement of factors like a large number of shippers, numerous shipping options per carrier, shipping cutoff times, and shipping locations. 

However, with the expertise of 3PL providers, you can benefit from an efficient shipping strategy, ensuring significant savings on shipping costs. This also helps ensure faster shipping speeds and a better overall fulfillment experience for customers.


Whatever the reason, returns are part of the shopping process. And have an impact on the customer experience. Therefore, 3PLs have a streamlined approach to processing return requests. They ensure hassle-free pick-up, document the receipt of those products, and communicate with the seller to identify what is to be done with the returned orders.

Now that we understand the broad workings of a 3PL service provider, let us move on to another critical question – Is having a single 3PL partner enough? Or, do businesses need multiple 3PL partners?

The answer is – Yes. Let us find out how.

Why Do Businesses Need Multiple 3PL Service Providers?

Increasing Serviceability

Having a single 3PL might end up limiting your choice to carry out deliveries. It is possible that the 3PL service does not deliver to certain pin codes. With the last-mile delivery sector growing by leaps and bounds, you would not like to miss out on offering services to potential customers. Having multiple 3PL service providers allows you to extend the geographic reach of your products.

Ensuring Uptime for Delivery

Uptime is a measurement of reliability, generally expressed as a percentage of time the system has been working or is ready to use. Now, if you have employed only one 3PL provider, you are tied down by the availability of riders and vehicles of that particular service provider. 

During rush seasons, this may result in delays and failed deliveries. From a customer’s POV, the reliability of your brand would be severely diminished. Having multiple 3PL service providers ensures continued productivity, even during times of high demand.

Keeping Costs in Check

You might risk cost overruns with only one 3PL service provider. Firstly, you depend on a fixed set of vehicles and riders, who might be inefficiently utilized. Secondly, you do not have much choice regarding service costs and other charges. 

With multiple 3PL service providers available, you can easily select delivery partners based on pricing for each assignment. 

Offer Multiple Delivery Modes

Nowadays, multiple delivery options such as same-day, next-day, or express delivery are available for shoppers to choose from. And customers are increasingly being particular about the fulfillment of their preferred delivery type. 

With a single 3PL service provider, it might happen that, due to constraints, the customer’s preferred mode of delivery might not be feasible. This might result in a failed delivery or an angry customer. So, selecting multiple 3PL service providers allows you the flexibility to alter partners to suit the customer’s needs.

Customizable Delivery Options

Imagine you have to deliver perishable goods, but your lone 3PL service provider has no temperature-controlled transport. You surely will end up with damaged goods, which will mostly be returned. To avoid such incidents, it is better to have multiple 3PL service providers. 

This allows you easy access to specialized delivery options. Many businesses leverage IoT-based 3PL logistics solutions to keep track of container temperature and nearby weather conditions. 

In the following section, we will explore the various roadblocks in managing multiple 3PL service providers.

What Are the Key Challenges in Managing Multiple 3PL Partners?

Control and Coordination

Outsourcing logistics to third parties means businesses lose a certain degree of operational control. So, they no longer have integrated 3PL logistics solutions to choose their own carrier, vehicle, rider, etc. it becomes even more complex if the 3PL service provider works with multiple parties. 

Having numerous people involved in even a single process increases instances of miscommunication, leading to disorganized deliveries and order movements.

Lack of Sync Due to Multiple Interfaces

Every carrier tends to have its own interface, and they keep upgrading the same: This requires constant efforts for businesses to keep up with their changes. While it helps ease the familiarization process for the carriers and their riders, as a business, you would have an uphill task of coordinating through different platforms.

API Integration Issues

Integrations with ERP (enterprise resource planning), WMS (warehouse management system), and OMS (order management system) is essential to ensure a seamless connection between your as well as the 3PL logistics solutions. 

However, at times, APIs can be down or not fully functional. Maintaining API functionality takes engineering bandwidth, which might not be available among the in-house talent pool.

Multi-carrier management challenges

Inconsistent Communication with Customers

Multiple 3PL partners would mean multiple interfaces. One has to update the status to keep track of delivery fulfillment regularly. Missing out or delaying doing so would create an environment of opaque dealings. 

Moreover, businesses must have multiple modes of communication to contact the service provider and customers.

Instances that Require Manual Interventions

A major drawback of having multiple independent interfaces is that it becomes difficult to have everyone on the same page. This would mean logistics managers need to step in personally from time to time to resolve any issues related to riders or customer grievances. 

When handling thousands of orders, businesses need to switch between multiple 3PL logistics solutions, and this would result in significant wastage of time and derail efficiency. 

Non-Digitization of Billing

As third-party logistics solutions offer a wide range of services, it becomes challenging to consider ever-fluctuating rates, assorted billing methods, and varying SLA agreements. In the absence of digital billing, problems may arise in the form of disconnected data, human error, conflicting customer agreements, time delays, etc.  

Next, we discuss how investing in smart 3PL logistics solutions can help businesses overcome these challenges.

How Can Automation Overcome the 3PL Management Challenges?

In an increasingly fast-moving world with competitive marketspace, automation is the key to success. AI/ML-powered 3PL logistics solutions can fundamentally streamline processes in terms of speed, accuracy, and competency across every operation involved with 3PL-based fulfillment.

Here are some of the most crucial ways automated 3PL logistics solutions can help businesses.

Improved Flexibility

Smart 3PL logistics solutions help businesses cater to multiple delivery types, such as same-day delivery, next-day delivery, time-bound delivery (2-hour, 90-minute, slotted and 10-minute delivery), and express delivery. Businesses working with multiple partners require smart integrated dashboards for managing, tracking, controlling, and monitoring operations.

Having flexible 3PL logistics software enables businesses to cater to diverse customer delivery demands while leveraging the carriers’ individual strengths. They can choose one carrier for hyperlocal deliveries and another one for same-day or next-day deliveries. 

Standardized Status Alerts to Designated Stakeholders

Automated 3PL logistics solutions can send trigger alerts for specific events to a specific set of persons. These triggers can be configured as well, to ensure rights-based access to the data or shipment information. 

This way, all the stakeholders are on the same page and can get access to the necessary data and shipment information as and when required. 

Access to Analytical Insights

A great benefit of automation is seamless access to data analytics, reporting, and data-driven actionable insights for smart business decision-making. This helps establish predictive patterns and offers insights for proactive decision-making. 

As a result, retailers can make well-informed business decisions to increase their revenue. Similarly, 3PL logistics solutions can help businesses use data analytics for rating, ranking, and prioritizing all the 3PL partners based on previous performance.

Ensuring Real-time Visibility

Automated 3PL logistics software provides real-time visibility into operations and order movement. This allows all stakeholders, including managers, service providers, retailers, and customers, to check the last mile order movement. As a result, businesses gain 360-degree visibility, control, monitoring, and tracking of order movements from start to finish.

Improved Operational Control

Intelligent 3PL logistics solutions enable businesses to control logistics operations at scale. Integrated dashboards compare and select 3PL service providers based on price, availability, performance, pricing, etc. In addition, documentation and functionalities, such as label generation, can be automatically created via the dashboard.

With this automation platform, even 3PL service providers can select optimization constraints to scale operations in a resource and cost-efficient manner.  

Multi-carrier management software

Automated Customer Communication

Automation streamlines milestone-specific alerts for designated stakeholders. As the ETA messages are sent before the start of delivery fulfillment runs, this ensures the availability of customers. 

As the communications are system generated, everyone involved, like the company, 3PL partner, rider, and customer, are on the same page. Moreover, due to the dynamic nature of the alerts, failed deliveries, delivery reattempts, and frauds can be easily verified.

Optimized Collaboration

3PL service providers with automated logistics systems benefit from the built-in APIs. It also helps integrate multiple avenues like eCommerce portals, customer portals, ERP, etc. This helps with steady business and smoother operations. With increased collaboration, process optimization and quicker suppliers’ onboarding is possible. 

Next, we discuss some of the recent trends in automated 3PL logistics solutions.

Fulfillment as a Service

In the last few years, the number of eCommerce stores has multiplied. Platforms have removed many traditional barriers, allowing them to open a digital storefront in a matter of minutes in a cost-effective manner.

The fulfillment industry also followed suit. And rightly so. Fulfillment as a Service (FaaS) has gained favor among online sellers as it allows them access to resources of fulfillment service on-demand at a minimal cost.

Last Mile Delivery as Brand Differentiator

Getting your products to a customer’s doorstep in a fast-paced manner without hampering the business bottom line has never been more critical. Shoppers increasingly include this as a factor while making purchase decisions. Fast, efficient, and economical last-mile delivery has become the key to retaining customers and acquiring new ones. 

Increased Demand For Data Analytics

Today’s business decisions depend heavily on data and insights for informed decision-making. 3PL logistics solutions are increasingly offering advanced features like predictive analysis and product preference data to improve their business operations.

Also, customer data profiles have become essential to ensure a personalized experience for consumers.

Unlock Operational Excellence and Efficiency With Shipsy’s Smart 3PL Logistics Solutions

Shipsy is one of the most diverse, versatile, and scalable 3PL logistics solutions that offer AI-powered end-to-end logistics management solutions for multiple industries, including 3PL logistics management. The solution comes as a highly comprehensive platform with intelligent functionalities and hundreds of custom features to streamline and optimize the order delivery orchestration.

With intelligent data insights and automated yet flexible 3PL logistics processes management, Shipsy helps businesses achieve:

  • Ensure 100% error-free 3PL invoicing
  • Reduce last-mile delivery costs by 14%
  • Auto-allocate 99.7% of the delivery task
  • Reduce freight costs by 12%
  • Increase on-time dispatch by 28%
  • Reduce delivery steps by 77%

To know how Shipsy can help you achieve all this and much more with its smart 3PL logistics solution signup for a custom demo here. 


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