What is a 3PL Company and How Does it Help Shippers?

You work in the logistics industry, so you’re probably familiar with the term “3PL.” But did you know that last year, the U.S. 3PL market net revenue grew 11.8% to $86.2 billion? Considering this level of growth, it’s easy to see that 3PLs are increasingly becoming a major player within the industry. So, what is a 3PL company and how can a 3PL help shippers? If you’re looking for this information, we’ve got you covered!

To start with the basics, 3PL stands for third-party logistics. 3PLs are the middle man between you (the customer/shipper) and the carrier. Some 3PLs handle warehousing and distribution, while other 3PLs focus solely on the non-asset based transportation management segment. 3PLs who specialize in transportation management work with customers and shippers who need a product shipped. Customers and shippers turn to a 3PL who will then find a qualified and reliable carrier to move their product efficiently. 3PLs employ freight brokers who help carry out this process. Freight brokers are the customers’ main points of contact at the 3PL. In this sense, the terms “freight brokerage” and “3PL” are interchangeable.

You might find yourself thinking, “Why can’t a customer just ship their own product or find a carrier themselves?” It ultimately comes down to resources and time. Many customers simply do not have the time or money it takes to own and maintain their own truck fleet. Trying to find carriers at a good rate is an extremely time-consuming process in today’s tight market.

Additionally, a 3PL offers one main point of contact (your freight broker). This can be a huge help for customers because rather than having to coordinate communication with multiple points of contact via numerous dispatchers and drivers who are transporting your loads, your freight broker is your dedicated personal transportation representative who manages all those different communications for you!

By leaving the transportation management details and communication process to 3PLs, customers and shippers can focus all their time and money on their core business processes.