Comprehensive Guide to Choosing the Best 3PL Logistics Company

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Choosing the best 3PL logistics company comes with multiple careful considerations and requires a deep understanding of the business pain points in terms of logistical distribution and delivery orchestration. However, before we discuss those key considerations, it is important to understand the core capabilities of a 3PL service provider and what makes a 3PL service provider the best choice for a business. 

Also, it is important to know how to get the best value out of the 3PL service providers and how businesses can leverage the right automation platforms for onboarding multiple service providers. 

We discuss the answers to all these and many other questions related to choosing the best 3PL logistics companies in the following sections.

What Is a 3PL and What Does It Do?

Third-party logistics or 3PL service provider offers logistics and distribution facilities to third-parties or businesses such as retailers. These services vary from one 3PL to another and comprise packaging, inventory management, warehousing, transportation, distribution, and order fulfillment. It is important to note that the 3PL service offerings and core capabilities might vary greatly from having self-owned fleets/warehouses to leased ones.

As the 3PL companies specialize in goods movement and deliveries, they can help businesses unlock operational efficiency without having to participate in actual planning. 

With the diversification of delivery models and eCommerce gaining strength in various forms in domestic and international markets, the 3PL offerings have also been changing. Best 3PL logistics companies are offering technology-driven smart, and agile capabilities to their customers, such as 10–minute deliveries, same-day deliveries, white-glove deliveries, etc. 

This diversification is also nudging the retailers to deliver in multiple customer segments and driving the need to onboard multiple 3PL service providers. Now, gaining operational excellence in multiple 3PL models is somewhat challenging as manual management and coordination spur inefficiencies and confusion. 

Hence, businesses are increasingly opting for ways to manage multiple 3PLs via smart automation. We will discuss more about the smart 3PL management platforms in the upcoming sections. 

What Logistics Operations a 3PL Company Manages

3PL companies manage the logistics operations of various types and at various scales. Depending on the nature of the business, their offerings may differ. However, some of the fundamental logistics operations that almost all third-party logistics companies provide are as follows:

Warehousing

Here, warehousing means that a 3PL storage facility receives inventory from businesses and stores the incoming goods in a secure manner. 3PLs typically arrange for the merchandise to be transported to their stockroom and then manage and control inventory on the firm’s behalf. 

When a 3PL warehouse receives supplies, the staff immediately places the merchandise at designated stacks/locations.

Inventory Management

3PLs have a wide network of fulfillment locations to store inventory and facilitate shorter delivery times to customers. Each stock-keeping unit (SKU) has its own storage space, which can be a container, or a pallet, depending on the item. 

Storage capacities differ among 3PL companies, but the majority of them can handle existing stock while also having the scalability to expand the range of products and order quantity. 

Transportation

For transportation, 3PL providers are in charge of transporting services or goods between locations. A common scenario is when a third-party logistics provider handles an inventory shipment between the consumer and the company. 

These businesses frequently use smart technology, such as a transportation management system (TMS) or unified freight management facilities. These technologies help improve efficiency and automate time-consuming tasks such as transportation payment and financial reporting.

Distribution

Most 3PLs provide distribution services in addition to warehousing, such as packing, personalized labeling, and outbound logistics.  Once the e-commerce company gets an order, the 3PL partner takes charge of collecting the order from the fulfillment centers.

Many logistics providers use modern technology that integrates seamlessly with e-commerce portals to consolidate and track inventory, shipments, and other data in a single location. Once all of the orders are picked, the 3PL chooses the packaging material, as per SLAs, for the products’ secure shipment.

Shipping 

The next stage is to ship the orders. 3PLs work collaboratively with shipping companies to ensure proper labeling and order delivery to customers. Although some 3PL providers have identified shipping partners, others constantly compare shipping costs from various carriers to obtain the most viable option based on the delivery speed selected.

The shipping method, as well as the 3PL’s shipping guidelines and collaborations, determine the carrier and delivery speed of each order. Because 3PLs manage bulk orders, they usually receive discounted shipping charges. All through the shipping process, the 3PL makes use of integrated technology to provide real-time tracking details to the online business. 

Delivery

Using a 3PL for outsourcing order delivery and fulfillment allows sellers to leverage their volume to provide discounts, multiple delivery options, and increased innovation that they would not be able to provide with the in-house operation. 3PL service providers can assist businesses in meeting customer demands for expedited shipping and lower costs. 

An established 3PL provider has an existing network of warehouses, cutting-edge technology, and trained personnel to ensure timely and efficient delivery. These 3PL providers include carrier relationship management, freight data, and reports for increasing transparency and providing real-time visibility all along the delivery process.

Reverse Logistics

Many 3PL companies provide reverse logistics, also known as returns processing. This is an important aspect of fulfillment operations. When customers return orders by shipping them back, the logistics provider (third party) processes the returns and disposes or restocks the item as per the requirement.

For added convenience, most 3PL partners provide customers with return shipping labels. Returns processing done through 3PL helps save time because e-commerce businesses do not have to handle returns in-house. Furthermore, 3PLs enable customers to track the status of their return orders easily and instantly.

5 Best 3PL Logistics Companies To Handle Your Logistics Operations 

A 3PL service provider can make or break the brand value of a business with its delivery operations. So, a lot of thought and research is required when and to whom a business decides to outsource its logistics operations. 

At present, the market for 3PL logistics companies is highly competitive. But, not everyone has the necessary technology, workforce, and automation to give businesses the much-needed boost. Here are the 5 best logistics companies that handle logistics operations with great diligence.

#1 ShipBob

ShipBob, founded in 2014, is a leading supplier of eCommerce fulfillment. This company operates in over 220 countries. ShipBob’s proprietary technology is used to provide businesses online with simple, quick, and viable fulfillment solutions.

3PL Offerings 

  • Receiving
  • Storage
  • Pick-and-pack
  • Standard packing
  • Shipping

Pros

  • eCommerce fulfillment services with quick delivery
  • Streamlined ordering system
  • Integration with well-known eCommerce platforms
  • Personalized services and customized pricing
  • Small business-friendly, with no minimum monthly order

Cons

  • Cannot fulfill Amazon’s SFP orders.
  • Cold chain compliance absent
  • High storage fees

#2 FedEx

FedEx, an American MNC, is one of the world’s largest logistics companies. This company fulfills orders for eCommerce companies that have large order volumes. FedEx not only has a large shipping network, but it also has partnerships with other companies to provide a seamless fulfillment experience.

3PL Offerings

  • Packaging
  • 3rd party warehouse management
  • Storage
  • Order fulfillment
  • Reverse logistics

Pros

  • Excellent global coverage
  • Prices for larger quantities are negotiable
  • Excellent tracking abilities
  • Unmatched customer service

Cons

  • Dependence on the US market
  • Rising transportation costs
  • Inadequate capacity-demand management

#3 WhiteBox

Whitebox is a full-service third-party logistics service provider based in Canada. This company works with high-volume brands that operate on a small to medium scale. As an industry leader in logistics, it offers FTL as well as less-than-truckload services as per customer requirements.

3PL Offerings

  • Applies shipping labels
  • Product description optimization
  • Professional photography for the products
  • Packaging
  • Shipping
  • Quality assurance
  • Inspection
  • Warehousing
  • Fulfillment

Pros

  • Advanced reporting, with on-demand analytics and forecasting
  • A full-service marketplace management solution handles listings
  • Amazon benefits from Whitebox’s top-regarded seller account
  • A dedicated account supervisor provides high-level client support

Cons

  • Order minimums are prohibitively high.
  • Monthly fee for software
  • Inadequate pricing transparency

#4 Redhawk Logistics

Redhawk Logistics provides third-party logistics services across the US, Canada, and Mexico. Alongside point-to-point freight shipping, this company offers superior 3PL bulk freight storage and distribution services.

3PL Offerings

  • Freight services
  • Warehousing
  • Shipping
  • Distribution

Pros

  • Personal account supervisors provide effective customer service.
  • Software for custom inbound logistics and optimization
  • Asset-based  warehousing and distribution services

Cons

  • Parcel order fulfillment is not available
  • Support platform tailored to enterprise-level customers only
  • Limited network of carriers

#5 Red Stag Fulfillment

Red Stag Fulfillment is a specialized eCommerce shipment fulfillment provider. It works with products that require special handling – including bulky, fragile goods as well as high-luxury items. 

3PL Offerings

  • Warehousing
  • Shipping
  • Order fulfillment
  • Inventory management
  • Returns processing

Pros

  • Discounted shipping rates 
  • Boasts a high level of order fulfillment accuracy
  • Robust set of automated system features
  • Quick return processing
  • Great customer service

Cons

  • Ideal for sellers of specialized products.
  • No international warehousing option.
  • The user interface is not appealing. 
  • Has only two warehouses in the US

5 Things To Keep In Mind While Choosing a 3PL Company 

Each third-party logistics company has various strengths and drawbacks. Choosing the right 3PL partner for businesses involves considering numerous factors, including cost-effectiveness, security, and customer satisfaction. Here are a few factors that must be kept in mind while finalizing 3PL companies to partner with:

1. Service Offerings

Whether it is reverse logistics, order processing, or inventory warehousing, businesses should always check the services offered by the 3PL company. Moreover, the third-party logistics provider must be such that it is flexible to adapt to the changing needs of businesses. 

2. Ability to Scale

With altering consumer demands, the e-commerce sector is growing at a rapid speed. This makes it important to select a 3PL company that can scale up and expands as per business requirements. This should be possible both across various geographical locations as well as the volume of sales. 

3. 3PL’s IT Capabilities 

The 3PL company must employ the latest technologies with an IT support team that can effectively meet business requirements. This can be in the form of the utilization of business intelligence for quick decision-making or top-quality on-demand assistance. 

4. Customization Offered in Services

Depending on the nature of the industry, businesses require different levels of customization. It is essential that the chosen 3PL partner understands the customization requirements for the business, whether it is customer service or multi-channel availability.

For instance, e-commerce businesses need a 3PL partner that can provide customized solutions for the integration of the supply chain network. 

5. Customer Service 

3PL providers that invest in efficient customer service understand the importance of service quality and excellence for both the business and its brand. They are able to identify and resolve customer issues in a prompt and proper manner within a short time window.

How Much Does a 3PL Company Charge

It totally depends on the 3PL services you need for your business. For example, one business may need a 3PL to look after its last-mile delivery. On the other hand, another business may require it for everything, including warehousing, inventory management, first mile, middle mile, and last mile. You can check the pricing models of the company to have an idea of the cost.

Third-party logistics companies charge different businesses varying fees depending on the services provided for the fulfillment of orders. The breakdown of the total expenses for the companies can be under four major categories:

  • Total receipt value of inventory 
  • Warehousing and storage 
  • Picking and packaging of orders
  • Outbound shipping expenditure 

The individual costs for each of these services are dependent on a number of factors such as order volume, location of warehouses, and pricing model of the company. The greater the total volume of orders, the lesser the per-unit costs for the business. 

Due to the inherent complexity and differences in size, inventory volume, and order size, it becomes difficult to accurately estimate how much the services of a 3PL will cost. It is crucial to discuss the business needs with potential 3PL partners to understand better the cost and services offered. 

How Can Shipsy Makes it Easier For You To Manage Multiple 3PL Partners 

Shipsy’s AI-powered logistics management platform streamlines the task of choosing and collaborating with delivery partners. Multiple 3PLs for pickup/delivery can be managed from a single dashboard, and the in-built intelligent allocation engine ensures superior performance at the lowest possible cost. 

If you have outsourced your logistics operations to multiple third-party logistics providers, then Shipsy’s courier aggregation platform is exactly what you need. The platform helps you to manage and monitor multiple 3PLs under one roof. 

Features like daily shipment reports, multimodal visibility, and workflow automation help boost your enterprise to the top in an increasingly competitive market. 

With Shipsy, businesses can be assured of transparent logistics operations and can experience: 

  • 18% reduction in shipment returns
  • 64% increase in customer satisfaction
  • 26% increase in delivery NPS
  • 24% increase in on-time delivery
  • 28% reduction in customer complaints

For more information and to get started with Shipsy’s courier aggregation platform, get in touch with experts and schedule a demo today!

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