When discussing logistics and the management of supply chains, the phrases “freight forwarding” and “3PL” are sometimes used interchangeably. However, despite their superficial similarities, there are significant differences between the two services that companies need to be aware of to make informed decisions.
What is Freight Forwarding?
Shipping products from one location to another is often difficult for companies, especially small businesses and online stores, but freight forwarders can help. A freight forwarder is a third party that arranges the shipment of cargo through air, sea, or land on behalf of the shipper. The forwarder is in charge of selecting the most efficient form of transit, obtaining any required paperwork, and ensuring the cargo arrives at its destination on schedule and in one piece.
What is 3PL?
Third-party logistics, sometimes known as 3PL, is an umbrella term that refers to a wide variety of services pertaining to the management of supply chains, transportation, and logistics. A third-party logistics (3PL) firm helps e-commerce and other businesses manage their entire supply chain networks by providing them with the resources and knowledge necessary to do so, starting with sourcing and procurement and continuing through transportation, storage, and distribution. A third-party logistics (3PL) business may offer value-added services such as inventory management, order processing, order fulfillment, and returns management in addition to managing the logistics of transferring items from one location to another.
Although freight forwarding and third-party logistics (3PL) may seem to be the same service, there are some significant distinctions between the two. One of them is the breadth of services on offer. As was mentioned earlier, the primary emphasis of freight forwarding is on the transportation of products, but the scope of services included by 3PL is much broader and includes logistics as well as supply chain management.
The degree of control and visibility that firms have over their own supply chains is another significant point of differentiation. Because the forwarder takes care of the details, firms that use freight forwarding often have less control over the logistics of their shipments than they would with other shipping methods. Because the 3PL provider collaborates closely with the business to handle the management of their logistical requirements, the business has more visibility and control over its supply chain.
In addition, third-party logistics providers often have access to a greater variety of transportation alternatives, which may include a fleet of vehicles as well as a network of carriers. Because of this, they are able to provide organizations with holistic logistics solutions that are both more flexible and more cost-effective.
Benefits of 3PL
The benefits that enterprises may receive from collaborating with a 3PL company are as follows:
- Cost Savings: By outsourcing logistics to a 3PL company, businesses can save money on transportation, warehousing, and other logistics-related expenses.
- Improved Efficiency: A 3PL company can help businesses streamline their supply chain activities and improve their overall efficiency.
- Increased Flexibility: A 3PL company can provide businesses with a wide range of transportation options, allowing them to be more flexible in meeting their logistics needs and goals.
- Expertise: A 3PL company has a team of experts who can provide businesses with valuable insights and guidance on logistics and supply chain management.
There are significant variations between the two services, despite the fact that freight forwarding and 3PL may seem to be comparable at first glance. Whereas third-party logistics comprises a wide variety of logistics and supply chain management services, freight forwarding is mainly concerned with the transportation of products.
When determining whether to work with a freight forwarder or a 3PL provider, businesses should take into consideration the particular logistical requirements they have. Third-party logistics companies provide a variety of services to assist organizations to save money, enhance efficiency, and obtain significant benefits in logistics and supply chain management. These service providers may also help businesses achieve a competitive advantage in their respective industries.