Ever wonder how big companies keep their operations running so smoothly?
Here’s a little secret: almost 90% of Fortune 500 companies work with a third party logistics company to get the job done. But why?
It’s pretty simple. Partnering with a third party logistics company allows them to focus on what they’re really good at, like growing their business, while the logistics experts handle all the nitty-gritty details.
Imagine not having to worry about shipping, warehousing, or inventory management. Sounds great, right?
That’s exactly what a third party logistics company does for these big players, and it could do the same for your business too.
Whether you’re just starting out or looking to take your operations to the next level, teaming up with a 3PL company might just be the smartest move you can make.
Curious to learn more? Keep reading to find out all the reasons you must partner with a 3PL company.
An Introduction to Third Party Logistics
Third party logistics, often called 3PL, is all about outsourcing your supply chain operations to a company that specializes in logistics.
So, instead of handling things like shipping, warehousing, and inventory management on your own, you bring in a third party to take care of it for you.
Think of it as getting an expert team to handle the behind-the-scenes work, so you can focus on what you do best—growing your business.
When you partner with a third party logistics company, they take over the heavy lifting, literally and figuratively.
They manage the transportation of your goods, store your products in their warehouses, and make sure everything gets to where it needs to be, on time and in good condition. They can also help with things like order fulfillment, packaging, and even returns.
In short, third party logistics companies are the experts that make your supply chain run smoothly without you having to stress the details.
What Does a Third-Party Logistics Company Do?
Third-party logistics companies offer a variety of services, so the exact process can differ depending on which 3PL you partner with.
However, here’s a general idea of how it typically works:
Sending Your Inventory to the 3PL
First, you send your inventory to the 3PL, either from your own storage facility or directly from the manufacturer.
Organizing Products in the Warehouse
Once the 3PL receives your products, they organize everything by SKU in their warehouse.
Processing Customer Orders
When a customer places an order, you can either send the order details to the 3PL manually or have it done automatically through software.
Picking and Packing Orders
A worker at the 3PL then picks the items from the shelves and packs them up for shipping.
Shipping the Orders
Finally, the 3PL arranges for the shipment to be sent out using a local carrier, like DHL, UPS, FedEx, or USPS.
This streamlined process helps ensure your products get to your customers quickly and efficiently.
The Difference between 3PL and 4PL
While looking into 3PL services, you might also come across something called 4PL. So, what’s the difference?
A 4PL takes things a step further by acting as a middleman between you and the 3PL that handles your logistics.
Essentially, when you hire a 4PL, they manage all the 3PL services on your behalf. This extra layer of management is sometimes referred to as “double brokering.”
4PL companies often provide complete supply chain management, covering everything from 3PL services to manufacturing, inventory procurement, and beyond.
They’re designed to handle all the logistics so you can focus entirely on your business.
Why You Should Team Up with a Third Party Logistics Company
Managing your supply chain can get complicated, especially as your business grows. That’s where a third-party logistics company comes in.
By teaming up with a third party logistics company, you can let the experts handle the logistics while you focus on what you do best. It’s a simple way to make your operations smoother and your business more efficient.
Let’s see why partnering with a 3PL could be a great choice for you.
1. Variable Costs
It turns out that 75% of shippers have found that using 3PL services has significantly reduced their logistics costs.
The reason is simple: a good 3PL is always on the lookout for ways to boost efficiency, cut costs, and add real value to your business.
In traditional in-house fulfillment, a large portion of the costs—over 50%—comes from labor.
On top of that, you’re locked into fixed expenses for things like facilities, material handling equipment, and IT systems, no matter how many transactions you process.
But with 3PL services, things work differently. Instead of being stuck with fixed costs, the amount you spend can fluctuate based on the volume of transactions processed. Essentially, your costs adjust with your business activity.
By working with a 3PL, those expenses shift from being fixed to more flexible, depending on how much storage space and services you use.
This makes your costs more variable, allowing you to better manage your budget as your business grows or changes.
2. Scalability
Is your business ready to grow but unsure how to handle the logistics? This is where a third-party logistics company can make all the difference.
3PLs offer the flexibility to scale your operations up or down based on demand, without the need for major investments in infrastructure or staff.
Whether you’re facing a seasonal spike or expanding into new markets, a 3PL can quickly adapt to meet your needs.
They have the resources and expertise to handle increased volumes, new locations, and more complex logistics challenges, allowing your business to grow without the usual headaches.
This scalability ensures that as your business evolves, your logistics operations can keep pace effortlessly.
With a vast network of 300+ warehouses, Teamship connects brands with the right 3PLs to offer the scalability you need, exactly where you need it.
3. Customer Satisfaction
When it comes to keeping your customers happy, partnering with a 3PL company can make all the difference.
By 2025, more than 80% of 3PL providers are expected to utilize 3PLs.
These partnerships make sure your customers get exactly what they ordered, when they need it.
Here’s how a 3PL can boost customer satisfaction:
- Faster Deliveries: By outsourcing your logistics to a third-party, your products will get to customers quicker.
- Improved Tracking: Customers can easily track their orders, reducing uncertainty.
- Efficient Returns: Smooth return processes keep customers happy even after the sale.
By leveraging 3PLs, you can ensure that your customers enjoy a seamless, hassle-free experience from start to finish.
4. Expert Knowledge
As an eCommerce business owner, you probably don’t have the time to master every aspect of shipping and logistics. That’s where a third-party logistics company (3PL) comes in.
With a team of logistics professionals, a 3PL stays up to date on the latest trends and complexities, so you don’t have to worry about it.
Beyond their expertise, 3PLs also have access to valuable resources and networks, such as marketing agencies and custom packaging providers.
This allows them to constantly improve supply chain efficiency and make optimizations that support your eCommerce success.
Through its vast 3PL network, Teamship connects you with industry experts who are well-versed in the latest trends and complexities, so you can focus on growing your business instead of worrying about logistics.
By relying on our expertise, you can focus on your business while your chosen 3PL handles the logistics behind the scenes.
5. Focused Time Management
Running a business means juggling a lot of tasks—marketing, product development, and logistics.
Time is always limited, and that’s where a third-party logistics provider (3PL) can help. By outsourcing logistics, you free up time to focus on the key areas of your business.
Even companies that manage their supply chains well know that logistics can be time-consuming.
When expanding into areas like eCommerce, handling fulfillment can pull you away from your core work.
Partnering with a 3PL allows you to focus on what matters most, while the logistics are handled by the experts. It’s a smart way to manage your time better.
Connect with Top 3PLs Through Teamship
Does handling logistics feel more complicated than it needs to be?
Teamship makes it easy by connecting you with the best 3PL warehouses through our network of 300+ warehouses across the US and Canada.
We help you simplify your logistics and grow your business with key features that make managing everything simple and quick.
What we Offer
- 3PL Partner Management: Handle all your 3PL partners in one place without the hassle of jumping between systems.
- Fast RFQ Wizard: Need quotes quickly? Our RFQ wizard helps you get them fast so you can make decisions quickly.
- Expansion Capabilities: Whether you’re growing locally or in new markets, Teamship gives you the flexibility to scale easily.
Want to take the stress out of logistics? Schedule a demo and see tap into our network of warehouses.
Final Thoughts
Partnering with a third party logistics company can do more than just take care of your shipping and warehousing—it can really help your business grow.
With the right 3PL, you can streamline your operations, cut down on costs, and stay flexible as your business expands.
Whether you’re looking to scale up, enter new markets, or just make things run more smoothly, a 3PL can give you the support you need to keep everything on track.
In the end, it’s about finding the right partner to help your business succeed and grow.
Frequently Asked Questions
1. How do 3PLs take orders for Amazon FBA from clients?
When working with Amazon FBA (Fulfillment by Amazon), 3PLs handle the entire process to make things easier for businesses.
So, how do 3PLs take orders for Amazon FBA from clients? It starts with you sending your products to Amazon’s fulfillment centers, where Amazon takes care of the rest—storing your inventory, picking and packing orders, and shipping them out to customers.
Amazon also manages returns and customer service, streamlining the entire fulfillment process.
It gives your business the opportunity to reach a global audience, helping you increase sales and grow your customer base.
2. How does Amazon 3PL work?
Amazon 3PL allows third-party sellers to offer a wide range of new, used, and refurbished products on the platform.
The process for placing an order with an Amazon 3PL seller is simple and works just like any other purchase on Amazon.
Customers browse, add items to their cart, and complete their order through the standard Amazon checkout system.
Once the order is placed, the third-party seller, with the help of Amazon’s logistics network, handles the fulfillment and shipping, ensuring the items are delivered to the customer efficiently.
3. How big is the 3PL industry?
In 2023, the U.S. 3PL industry was valued at approximately USD 247.4 billion.
It’s projected to experience significant growth, with an expected compound annual growth rate (CAGR) of 9.2% between 2024 and 2030.
This rapid expansion in the 3PL industry reflects the increasing demand for third-party logistics services as businesses seek more efficient ways to manage their supply chains.