The practice of 3PL (better known as Logistics Service Provider) is fast catching on in the world of logistics. It’s a system in which you outsource your operational logistics activities, right from warehousing your items to their distribution. Doing so helps you focus on other aspects of running your business.
Third-party logistics companies are engaged in providing services that help you manage the logistics involved in maintaining your supply chain. These services include-
- Transporting your inventory
- Warehousing it
- Picking and packing the inventory
- Inventory forecasting
- Fulfilling orders
- Packaging of the inventory &
- Freight forwarding
Why should you go for it? What are the advantages?
If you are wondering why you should go for third-party logistics, we are here with a rundown on what you gain by engaging a third-party logistics provider. The major advantage of practicing 3PL is that you are left with enough time and resources that you can put into other aspects of running your business, like sales, marketing, or product development. It gives you more room to grow your business. We explain further benefits below.
Advantages of 3PL
- Reduce costs: 3PL providers enjoy greater leverage with freight companies, much more than you would as an individual shipper. As they have many customers they serve regularly, they are in a position to bargain a good deal with the shippers by virtue of the large volume of business they bring to the shippers frequently.
- Scale-up and down when you need to: As is the usual trend, just as other businesses, you too must facing demand fluctuations. There are times when demand is at a peak which is often followed by a slump. As you don’t need to commit capital to maintain your inventory, you can manage fluctuating demand more effectively.
- Explore new markets: If your 3PL provider operates on an international scale, it gives you the opportunity to foray into new markets abroad. Since you would be operating using your provider’s infrastructure, you wouldn’t need to invest in storing or distributing your inventory in the new market yourself.
- Reduce risks: As a business owner, you may face the risk of shipping delays occasionally. When any delay occurs due to unavoidable circumstances, your 3PL provider will rush to make alternative arrangements to fulfill every order. What’s more, you are also protected from any damage or loss of goods.
- Take advantage of your provider’s experience and knowledge in the field: Any job is done best by the one who’s an expert in it. If you are starting out as a business owner, it’s best to let a 3PL expert take care of the logistics. Order fulfillment, warehousing, and freight transportation pose challenges when you run your business. It’s best to let experts in the field deal with these challenges.
Here is an infographic of top 50 3rd Party Logistics Providers:
Having discussed the advantages of engaging a 3PL, there are a few shortcomings as well that you need to consider. We list them out for you.
Disadvantages of 3PL
- You have limited control over the delivery process: With a 3PL provider taking care of delivering your items to the customers, you are pretty helpless when there are delays. In case of delays, your customers will approach you, not your 3PL providers. Such a situation leaves you in a bit of a mess.
- You shall need to make a big initial investment: Yes, you do enjoy the benefits of cost reduction in the long run. However, if you hire a 3PL provider, you need to invest in engaging one right at the beginning of your business. You shall have to pay for a large warehouse even if you don’t really need it. These costs can be prohibitive.
- You can’t reach your stock when you need to: Your 3PL provider’s storage facility might be far from your location. In such a scenario, you would be at a great disadvantage if face issues with quality control or if your stock needs regular physical inspection.
Current Trend in the 3PL Sector
Having discussed the pros and cons of 3PL logistics, let’s take a peek into a current trend that has been noticed in the sector. There has been a trend of consolidation in the industry covering all sectors. It refers to the recent wave of mergers and acquisitions that has been occurring in the sector. Let’s look into a few such deals and the impact they have had.
- MNX acquires Network Global Logistics: helped create a leader dominating time-critical logistics
- Penske bought Old Dominion Truck Leasing: helped expand the core business of leasing trucks
- Road One bought First Coast Logistics: helped them strengthen their drayage network
- Transportation Insight acquired Nolan Transportation Group: helped it boost its truck brokerage and freight management business
- Lineage brought many cold storage companies: helped it challenge the domination of Americold
Benjamin Gordon, a managing partner at Cambridge Capital and BG Strategic Advisors, points out the geographic 3PL expansion that is expected to quicken deliveries. Some such acquisitions and their impacts are-
- CFI acquired Optimal Freight: helped in an asset-based expansion improving trade across borders in North-America
- FedEx partners Wirecard: helped provide retail outlets and payment processing services across Germany and India
Gordon also observes changes brought about by acquisitions and mergers in the ground-based 3PL service sectors.
- BNSF bought Unlimited Freight: helped them add flatbed capacities
- Pilot bought Manna: helped expand into furniture
- Ryder bought MXD: helped it become the 2nd largest player in big and bulky e-commerce
- Hub Group bought CaseStack: helped combine asset-light warehousing and intermodal logistics
There were technology-driven mergers and acquisitions as well.
- Project 44 acquired GateHouse: helped gain access to European visibility data
- Australia’s Wise Tech bought many US-based customs brokerage technology companies
There are also those deals driven by logistics + technology.
- Yusen Logistics acquired ILG: helped gain an e-commerce based warehouse platform
- FedEx bought P2P Mailing of the UK: helped provide e-commerce transportation solutions and expand FedEx’s cross-border operations further.
List of Top 50 Third-Party Logistics Service Provider
|Sl. No||Company Name||Address||Revenue (USD)||Phone Number||Website|
|1||C.H. Robinson||14701 Charlson Road Eden Prairie, Minnesota, 55347||16,631||1-800-323-7587, 952-683-3950||http://www.chrobinson.com/|
|2||XPO Logistics||Five Greenwich Office Park Greenwich, Connecticut, 06831||10,850||(855) 744-7976||http://www.xpologistics.com/|
|3||UPS Supply Chain Solutions||UPS World Headquarters 55 Glenlake Parkway NE Atlanta, Georgia, 30328||9,814||1-800-742-5877, 1-800-PICK-UPS||http://www.ups-scs.com/|
|4||J.B. Hunt (JBI, DCS & ICS)||615 J B Hunt Corporate Dr. Lowell, Arkansas, 72745||8,214||800-452-4868||http://www.jbhunt.com/solutions/dedicated/|
|5||Expeditors||1015 3rd Ave, 12th Floor Seattle, Washington, 98104||8,138||(206) 674-3400||http://www.expeditors.com/|
|6||Kuehne + Nagel (Americas)||10 Exchange Place Jersey City, New Jersey, 07302||6,594||1-201-413-5500, 1-201-413-5777||http://www.kn-portal.com/|
|7||DHL Supply Chain North America||360 Westar Blvd, Westerville, OH 43082, United States||4,178||+1 614-865-8500||http://www.dhl.com/us-en/home/our-divisions/supply-chain.html|
|8||Coyote Logistics||2545 West Diversey Avenue Chicago, Illinois 60647, US||4,000||18776269684||https://coyote.com/|
|9||Ryder Supply Chain Solutions||11690 NW 105th Street Miami, Florida,||3,731||305-500-3726||http://www.ryder.com/supply-chain.aspx|
|10||Hub Group||2000 Clearwater Drive Oak Brook, Illinois, 60523||3,684||800.377.5833, 630.271.3600, 630.964.6475||http://www.hubgroup.com/|
|11||Total Quality Logistics||PO Box 799 Milford, Ohio, 45150||3,643||800-580-3101, 513-831-2600||http://www.tql.com/|
|12||FedEx Logistics||942 South Shady Grove Road Memphis, Tennessee, 38120||3,170||(901) 818-7500||https://www.fedex.com/|
|13||DB Schenker (Americas)||150 Albany Ave. Freeport, New York, 11520||3,025||516-377-3000||http://www.dbschenker.com/|
|14||Burris Logistics||501 SE 5th St. Milford, Delaware, 19963||3,022||(800) 805-8135, (302) 839-5157, (302) 839-5175||http://www.burrislogistics.com/|
|15||Transplace||3010 Gaylord Parkway Suite 200 Frisco, Texas, 75034||2,886||(866) 413-9266||http://www.transplace.com/|
|16||Schneider Logistics & Dedicated||3101 Packerland Dr. Green Bay, Wisconsin, 54313||2,711||800-558-6767, (920) 592-2000||http://www.schneider.com/|
|17||Panalpina (Americas)||1776 On-the Green 67 Park Place Morristown, New Jersey, 07960||2,596||973 683 9000, 973 254 5712||http://www.panalpina.com/|
|18||Landstar||13410 Sutton Park Drive, South Jacksonville, Florida, 32224||2,542||877-696-4507||http://www.landstar.com/|
|19||Echo Global Logistics||600 West Chicago Avenue Suite 725 Chicago, Illinois, 60654||2,440||800.354.7993, 888.796.4445||http://www.echo.com/|
|20||CEVA Logistics (Americas)||3201 Centre Parkway 30344 East Point United States||2,427||800 355 0350, 281 618 3100||https://www.cevalogistics.com/|
|21||DSV (Americas)||DSV Air & Sea, Inc 100 Walnut Avenue, Suite 405 Clark, New Jersey, 07066||2,358||732 850 8000, 732 850 8010||http://www.dsv.com/|
|22||Penske Logistics||Route 10 Green Hills Reading, Pennsylvania, 19603||2,300||800-529-6531, 610-775-2449||http://www.penskelogistics.com/|
|23||Transportation Insight||310 Main Ave Way SE Hickory, North Carolina, 28602||2,290||828.485.5283, 828.485.5020||http://www.transportationinsight.com/|
|24||GEODIS North America||485C U.S. Highway 1 South Suite 410 Iselin, New Jersey, 08830||2,139||(732) 362-0600||http://www.geodiswilson.com/|
|25||NFI||1515 Burnt Mill Road Cherry Hill, New Jersey, 08003||2,000||877.634.3777||http://www.nfiindustries.com/|
|26||Worldwide Express/Unishippers||2323 Victory Ave. Suite 1600 Dallas, Texas, 75219||1,650||800.758.7447||http://www.wwex.com/|
|27||Americold||10 Glenlake Parkway Suite 800, South Tower Atlanta, Georgia, 30328||1,595||678-441-1400, 678-441-6824||http://www.americold.com/|
|28||BDP International||510 Walnut Street, 13th Floor Philadelphia, Pennsylvania, 19106||1,552||215.629.8900||http://www.bdpinternational.com/|
|29||Knight-Swift Transportation||2200 South 75th Avenue Phoenix, Arizona, 85043||1,550||(602) 269-9700||http://www.knight-swift.com/|
|30||Ingram Micro Commerce & Lifecycle Services||3351 Michelson Drive, Suite 100 Irvine, California, 92612||1,500||714-566-1000||http://www.ingrammicroservices.com/|
|31||Werner Enterprises Dedicated & Logistics||14507 Frontier Road Omaha, Nebraska, 68138||1,465||(800) 228-2240, (402) 895-6640||http://www.werner.com/|
|32||GlobalTranz Enterprises||7350 North Dobson Road, Suite 130 Scottsdale, Arizona, 85256||1,384||(866) 275-1407||http://www.globaltranz.com/|
|33||OIA Global||2100 SW River Parkway Portland, Oregon, 97201||1,373||800-938-3109, 503-736-5900||http://www.oiaglobal.com/en/|
|34||MODE Transportation||17330 Preston Road, Suite 200 C Dallas, Texas, 75252-6035||1,255||972-447-0075||http://www.modetransportation.com/|
|35||Syncreon||2851 High Meadow Circle, Suite 250 Auburn Hills, Michigan, 48326||1,165||248 377 4700, 248 340 1180||http://www.syncreon.com/|
|36||Universal Logistics Holdings||12755 E. Nine Mile Road Warren, Michigan, 48089||1,148||(800) 233-9445, (586) 920-0100||http://www.universallogistics.com/|
|37||SunteckTTS||4500 Salisbury Road, Suite 305 Jacksonville, Florida, 32216||1,110||888.301.7720||http://www.suntecktts.com/|
|38||Radial||935 First Avenue King of Prussia, Pennsylvania, 19406||1,082||877.255.2857, 610.491.7000||http://www.radial.com/|
|39||APL Logistics (Americas)||16220 N. Scottsdale Road Suite 300 Scottsdale, Arizona, 85254||1,075||(602) 586 4800, (602) 586 4585||http://www.apllogistics.com/|
|40||TransGroup Global Logistics||18850 8th Ave S, Suite 100 Seattle, Washington, 98148||1,020||(800) 444-0294, (206) 244-0330, (206) 244-7463||http://www.transgroup.com/|
|41||Odyssey Logistics & Technology||39 Old Ridgebury Road Danbury, Connecticut, 06810||1,018||866.487.7481, 203.448.3900, 203.448.3901||http://www.odysseylogistics.com/|
|42||Lineage Logistics||21700 Barton Road Colton, California, 92324||1,000||800.678.7271||http://www.lineagelogistics.com/|
|43||Ruan||3200 Ruan Center 666 Grand Ave. Des Moines, Iowa, 50309||957||(866) 782-6669||http://www.ruan.com/|
|44||Crane Worldwide Logistics||1500 Rankin Road Houston, Texas, 77073||916||1-888-870-2726||http://www.craneww.com/|
|45||Agility (Americas)||Building C, 230-59 International Airport Center Blvd, #235, Jamaica, NY 11413, United States||886||+1 718-712-9444||http://www.agilitylogistics.com/|
|46||Radiant Logistics||405 114th Ave SE, Third Floor Bellevue, Washington, 98004||842||(800) 843-4784, (425) 462-1094, (425) 462-0768||http://www.radiantdelivers.com/|
|47||Nolan Transportation Group||1735 Founders Parkway | Suite 300 Alpharetta, Georgia, 30009||811||470-282-2300, 770-509-9612||http://www.ntgfreight.com/|
|48||U.S. Xpress||4080 Jenkins Road Chattanooga, Tennessee, 37421||809||(800) 251-6291||http://www.usxpress.com/|
|49||Cardinal Logistics Management||5333 Davidson Highway Concord, North Carolina, 28027||805||704.786.6125, 704.788.6618||http://www.cardlog.com/|
|50||Nippon Express (Americas)||24-01 44th Road., 14th Floor Long Island City, New York, 11101||800||(212)758-6100, (212)758-2595||http://www.nipponexpress.com/|
Note: Revenue figure is based on the 2018 year.
We have explained what third-party logistics is. The pros and cons of engaging a 3PL provider have also been discussed. It should help you decide whether you should go for it. The latest trends in the sector have been looked into as well. You now have a fairly detailed insight into the 3PL sector.