Factors to Consider When Choosing a 3PL
Third party logistics involves outsourcing of functions such as transportation, packaging, warehousing and freight forwarding to an outside agency. Third party logistics or 3PL is a huge industry worldwide. In the U.S. alone, a whopping $750 billion was generated in 2016 by third party logistics. The number is expected to increase by 4.6% between 2016 and 2024.
Globally as well, the 3PL market is expected to be worth $935 billion by 2020. More than 50% of shipping companies are increasing the 3PL usage in 2017. More than 80% of shippers believe there has been improved customer service due to 3PL.
Clearly, 3PL is an important and critical part of the entire supply chain and logistics industry. Selecting the right 3PL provider is essential to ensure efficient and economical service.
Three factors that matter while choosing 3PL
Here are some factors to consider when choosing the 3PL partner:
Experience: Companies that have been in the industry long enough to know the procedures and challenges thoroughly are the best bet. Choose a company that has at least two to three years of experience in the field. Along with experience, reputation is another important consideration. Negative reviews or faulty practices contribute to a bad reputation. Carrier compliance management system and monitoring of safety ratings are some of the essential factors to consider in a 3PL provider. Besides, it is also important to check what kind of clients the provider has serviced and how many of them are long term clients.
IT Services: With the ever expanding use of technology innovations in logistics, the 3PL partner needs to be up to date with the right solutions. Checking the kind of IT services the 3PL provider provides is crucial. According to the Annual 3PL study, technologies related to transportation management, electronic data interchange and warehouse management are some of the most sought after IT services.
Transparency and flexibility: The most important feature of a successful relationship between shippers and 3PL providers is the transparency and flexibility to adapt to changing demands. Customers demand complete transparency with regard to goods starting from source to end of a supply chain.
The right 3PL provider should also be flexible enough to scale the operations as required. Given the market fluctuations, there could be low or increased demand at times. A 3PL provider who has the required experience and width to handle all kinds of operational requirements is the right choice. Check if the provider has worked with both big and small enterprises before and is able to make constant adjustments to suit your changing shipping needs.
Oceanstar by Seldat has built a favorable reputation as a global transportation logistics and procurement partner over many decades. We provide the advice and supply chain management you need, whether it be for the procurement of products or the transportation of cargo via ocean, air, trucking, or rail. Click here to learn more about our network and contact us if you would be interested in speaking with an Oceanstar representative.
View Part 2 of this blog series here: (Factors to Consider When Choosing a 3PL: Part 2)