The trend towards 3PL (Third Party Logistics) has become an increasing part of the Transportation Industry year over year for the past 20 years. Many companies offer services such as over the road trucking utilizing Vans and Flatbeds, warehousing services, freight pay & audits, Less-than-Truckload, distribution and order fulfillment. While there are some companies that do all of the above many 3PLs choose to concentrate on just a few in order to create a niche for themselves. The main reason for using a 3PL is to utilize experts in the industry and allow the company that uses the 3PL to focus directly on their business model with someone that wants to be a partner in your transportation needs.
Access America Transport is focused on Van, Flatbed, Refrigerated /Reefer, Oversize freight, Inter-modal and Less-Than-Truckload shipping. We saw an opportunity from companies that needed to outsource their transportation spend to a party that solely focuses on transportation. We have customers Nationwide that use us for a variety of their shipping needs. Like in any industry that is booming, once a company does something well many more will follow, which will make the 3PL industry to become more competitive with pricing and experts in their niche. The 3PL trend is not just seeing an increase in overall companies being created yearly, but also in shipping companies trusting 3PLs to manage their freight. Imagine that you as a manufacturer didn’t have to hire 4 shipping managers to run your company, but rather only have 1 that works with a 3PL in the transportation industry. Also, your accounts payables / receivables department will only have 1 source to deal with for transportation, no matter how many different modes or shipments that your company ships during a month.
Deciding on how to effectively choose and use a 3PL will solely be based on a company’s needs for the immediate and future business model. A 3PL fits nicely for a company when they are allowed to leverage the amount of business that they are currently managing with the business that the 3PL would be allowed to mange for the shipper. If a manufacturer has $1M in freight spend, but the 3PL has $100M in freight spend then combining the freight will inevitably have a lower transportation cost due to increase in business that a carrier can receive.
Understand too, a 3PL is in the transportation market every day and will see a market trend much more quickly than a typical shipper will see it. If you already have rates in place then you may be paying too much for the rate per mile or all in cost. A 3PL will also invest more heavily (as a whole) into technology and will allow their customers to use this at little to no cost. Many 3PLs that concentrate on LTL or Less Than Truckload have invested into programs that are much like Expedia or Travelocity. Technology like this allows the shipper to obtain many LTL quotes with minimal amounts of information within seconds. Trace and Tracking visibility in ‘real time’ (EDI) is a must in today’s shipping market and again many of the larger 3PL companies provide this available to their customers as just another part of what is their ‘value add’ service.
If you are a company that ships hundreds or thousands of shipments a year then you will need help with rating all them by a RFQ (Rate for Quotation) or RFP (Rate for Proposal). This can be a very tedious and take hours / days to accomplish. Time is money and this may only take you away from your core business. However, a 3PL can obtain rates from many carriers and provide the RFP / RFQ within a very short time period. One of the biggest mistakes that a shipper makes is not having a good carrier vetting process in place. Your best bet is to always ask how your transportation provider is vetting the carriers that they put on your loads. Safe Stat scores and CSA 2010 rules are 2 of the best ways to make sure that the carrier you are allowing to run your shipment is current on insurance and safety ratings. If you are not currently managing this then you are leaving you and your company at risk.
Questions to ask yourself about a 3PL:
1) Is the 3PL financially stable?
2) How diverse is the 3PL and exactly what transportation mode do they excel?
3) Can the 3PL provide KPI (Key Performance Indicators) for your business model?
4) Can the 3PL provide continuous improvements to your shipping needs?
5) How does the 3PL stand out in the market place?
6) Is it ok to use more than 1 3PL for your particular business model?
A 3PLs ultimate goal is to increase efficiency, cut freight spend, deliver with fewer issues / on time and overall become a partner with your business for years to come.
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