The advantages of working with a 3PL to boost post-Covid operations

The tendency of companies to hire 3PLs to take charge of their freight transport needs is growing.

“The global 3PL market is estimated to reach USD 1. 3 trillion by 2024, registering a strong CAGR over the forecast period, 2019 – 2024. The factors driving the growth are the increasing outsourcing of major transportation and logistics services and growing e-commerce penetration” – GlobeNewswire

What is a 3PL?

3PL  or Third Party Logistics Provider is a company that provides non-asset based transportation services, as well as warehousing and inventory management services, among others.  A Third Party Logistics Provider is the meeting point between the shipper (eg. manufacturers or retailers) and the solution to its transportation and storage needs.

More about  Logistics providers classification here. 

Is a company in charge of organizing and managing the storage and transport of the cargo of a third party (shipper), through the selection and contracting of the services of the carrier that will offer the real transport service of the load. In other words, a 3PL is the meeting point between the shipper and the solution to its transportation and storage needs.

What a Third Party Logistics Provider can do for you?

• Negotiates transportation rates with carriers
• Provides cargo insurance to protect the goods transported.
• It recommends the type of truck in which your cargo should be transported and books the truck to transport your cargo on the day and time you need it.
• Organizes and manages the cross-border crossing of your cargo
• Provides warehousing services
• Guides you through the transportation of your cargo, requesting the documents you require for the transportation and border crossing. The freight forwarder advises you on the rules and procedures for importing and / or exporting goods to a specific country.

The advantages of working with a 3PL to boost post-Covid operations

1- Costs reduction  and more options

One of the reasons why companies choose to contract the services of a 3PL provider is the need to reduce transportation costs. A 3PL provider can offer more competitive rates than the ones that a company or shipper could obtain alone, for three reasons:

1) Preferential rates by volume. 3PL providers have preferential rates because they transport large volumes of goods and make a large number of loads. For example, Mexicom Logistics, a 3PL  specialized in the North America region, transports goods of more than 650 customers, so it is able to guarantee constant loads to his carriers. At the same time, carriers guarantee Mexicom Logistics preferential rates for its loads.

2) Cargo consolidation. Brokers or  3PL providers that specialize in a specific region,  have frequent requests for freight transport for the same route, so it is possible to consolidate merchandise of two or more customers in a single truck. This is advantageous for the customers because they will pay less for a consolidated load than for a full truckload service.

3) Price comparison based on expertise. Third Party Logistics Providers have a large network of suppliers. They also transport goods frequently on the same routes, so they know the flows, as well as the supply and demand level on frequent routes.  Its expertise allows the freight forwarder to have a point of reference when determining if a cost is high or low and to identify the most competitive rates for its client.

2- High-quality service guaranteed

Today, more than ever, the quality of the delivery service is of greater importance for the success of a company. Companies know that the best marketing strategy is the recommendation by their own customers. And that the best way for them to obtain a customer’s recommendation is to offer an excellent service.

Third Party Logistics Providers have a large network of contacts, this allows them to connect shippers only with the carriers that offer a service of the highest quality and that are best suited to their transportation needs in terms of the type of truck needed, times of delivery and price. 3PLs have a solid experience that allows them to know the strengths and weaknesses of each of the transport providers with which they have already worked.

That is why companies prefer to hire a 3PL Provider. They have the ability to hire a reliable provider, they are capable of solving problems as soon as they arise and they have the ease of finding another carrier or offering new alternatives to solve a specific shipper need. In this way, companies do not risk the quality of their service by betting on a single carrier.

3- Knowledge of the industry, lower risk

Specialization is a production method in which each entity performs specific tasks and manages to develop a high level of efficiency in this task. Companies hire 3PLs because they know they are hiring a transportation expert. For Third-Pary Logistics providers, freight transport is the heart of their activity, transportation is what they do best.

Mexicom Logistics transports more than 55 thousand loads per year and has more than 15 years of experience.  Its optimal level of efficiency and an expertise, allows Mexicom to anticipate potential problems, reduce risks, predict real delivery times, recommend the most suitable equipment,  identify the most suitable routes, etc.

4- Knowledge in border crossing

Another advantage of working with a 3PL is the knowledge they have on international shipments.

The border crossing for the transportation of merchandise between the United States and Mexico is one of the busiest in the world. Its geopolitical position, the type of goods that are transported and the high cross-border control, make the transportation of merchandise across the border of Mexico and the USA a complex process. Shippers prefer their 3PL handles the border crossing.

3PLs with experience in the border crossing process, know the process, the documents, times and other requirements, in general, to cross the border without hassle.

Read also: Understanding the USA-Mexico shipping process

Sources:

https://www.export.gov/article?id=Freight-Forwarders-and-Shipping-Companies

https://www.atkearney.com/transportation-travel/article?/a/freight-forwarders-thinking-outside-the-box

https://www.great.gov.uk/operations-and-compliance/use-a-freight-forwarder/?source=operations_and_compliance

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