What are the 3rd party logistics?
The term “Third-Party Logistics” (3PL, or TPL) means a degree of provider’s engagement in the company’s logistics processes. For example, 1PL stands for a completely independent company’s organization of its logistics. Using the 2PL approach, a company can rent warehouses, apply to brokers and carriers, so it outsources its logistics partly. 3PL is a transfer of all processes to a third-party company, that is full logistics outsourcing. It involves many operations: warehousing, transportation, packaging, marking, etc.
Usually, one contractor takes on all processes. It organizes storage, accounting, and customer’s freight handling, goods delivery to the end consumer. Moreover, it prepares accompanying documentation. 3PL logistics is the format in which most logistics providers operate. They have their infrastructure, including a car fleet, use other transport modes if it is necessary, and employ high-quality professionals: lawyers, brokers, accountants. Thus, third-party logistics enables a business to transfer its processes to professionals and to be confident in the quality of the services.
Who is a 3PL provider?
A 3PL provider (or just 3PL) is a logistics company that provides logistics outsourcing services. Unlike carriers or couriers, the provider organizes a range of services on work with goods. These include warehousing, inventory management, freight forwarding, packaging, and orders delivery. Using the logistics provider’s services, a business gets a completely closed logistics issue and can focus on more important tasks.
3PL service quality is guaranteed. Logistics contractors have a well-built infrastructure, cooperate with proven courier services, and use software to accurately record the freight that enters their warehouse. Through their expertise and resources, they organize the most efficient supply chain. At each stage, providers prepare all the necessary documentation and are responsible for freight security. A 3PL provider is an intermediary between the supplier and the end consumer.
3PL companies features
Not every logistics company can be called a 3PL provider. It must meet certain criteria. The 3PL company staff must include customs brokers, lawyers, accountants. These specialists ensure that all the necessary documentation will be prepared and a client will have no problems during an inspection by the supervisory authorities.
3PL companies should have infrastructure: vehicles for different goods types, warehouses for temporary storage during transshipment, and Class A+, A, B+, B warehouses for the long-term storage and handling of customer’s freight. Information technologies such as the Warehouse Management System implementation facilitate efficient goods handling and reduce the error probability. This is important for 3PL companies because they deal with a large number of units from different customers. An additional benefit of a 3PL is an experience with special goods categories — fragile, perishable, explosive, etc.
What services do Ukrainian logistics companies provide?
Cooperation with 3PL providers implies a complete transfer of logistics processes to another party. Depending on the business needs, the list of logistics outsourcing services includes:
- Provision of warehouses for storage and warehousing. This is an opportunity to place a freight for storage for a certain period in the warehouse of a 3PL provider without renting premises. A customer pays for the service only upon storage. The cost depends on the space occupied in the warehouse. The logistics company is responsible for the freight safety for the storage period and guarantees the placement of goods, taking into account the norms for each product category.
- Organization of order delivery for online retailers (fulfillment). It is not profitable for an Internet store to develop its logistics, so it outsources it to the logistics provider. It organizes the process from the moment the order is accepted to its delivery to the consumer.
- Cross-docking. It is a transfer of goods from one vehicle to another without an intermediate stage of long-term storage. The service is in demand among companies, who are interested in the speed of receiving the goods.
- Packaging, pre-packing, and labeling of products (co-packing). The service helps to increase brand awareness, to identify characteristics of a particular product.
These are only the main services that 3PLs provide. In addition to them, there are also services of flow-through, bonded warehouse, complex logistics, VAS.
What infrastructure should a 3PL provider have?
A logistics company must have a well-developed infrastructure. Only then it can provide quality services to its customers.
Selecting a 3PL company, a customer must make sure that the provider has such facilities:
- Warehouses. They must be not lower than Class B premises and meet all requirements of this class: concrete or asphalt floor, ceilings height is not less than 6 meters, there are all necessary communication, ventilation, fire-extinguishing, and safety system. High-class warehouses provide optimal conditions for the storage of different goods.
- Car fleet. The logistics provider has different transport modes for transportation the customer’s goods. These are generally different tonnage vehicles that can carry goods and maintain the necessary temperature to preserve products.
- Developed transport network. Since 3PL provider services include long-distance (including international) transportation of freight, it is also important that the provider can combine the different types of transport, negotiate with other carriers and transport companies.
- Availability of transit points. To keep the customer’s goods safe during transshipment from one vehicle to another, a provider should organize the premises for their temporary storage.
- Use of IT technologies. They ensure an effective record of the goods, minimize the number of errors during the order assembling, and exchange information on the availability of the goods with the customer.
Why should a business try 3PL warehouse services?
3PL logistics allows a business to solve many issues. Besides the fact that a provider takes on an organization of the whole process of logistics and guarantees a high level of services, it is also responsible for the customer freight. If the goods are damaged or lost by the fault of a 3PL provider, it must compensate for the damage.
The main advantages of 3PL logistics are:
- Customer cost reduction. A logistics provider has a car fleet, his warehouse, or can rent storage facility with maximum benefit, has experience of cooperation with various courier companies, owns loading and unloading equipment. A customer does not need to invest in all this, it can use the provider’s resources.
- Increasing company productivity. 3PL-provider guarantees high quality and fast completion of logistics tasks even in a peak season, prepares all necessary documentation. Customers receive their orders on time, which positively influences the company image.
- Business development. When a company does not need to organize secondary processes, it can concentrate on its core activity, its promotion, growth of its range of services and products, etc. Due to the experience of a 3PL, it can be sure, that its logistics issues will be solved.
How to choose a reliable third-party logistics provider
Companies that care about the safety of goods and the quality of services choose 3PL companies responsibly.
A few tips to help you find a reliable provider:
- Trust the logistics to one company. This significantly reduces the number of links in the supply chain and simplifies the management of all processes.
- A 3PL company must maintain high-quality customer service.
- Choose a logistics provider with a wider range of services than is needed at the moment. As the company grows, the list of requirements for a 3pl provider will increase. If the provider meets the business needs at any stage, there is no need to frequently look for new contractors.
- Give preference to logistics providers with good IT potential. The cost of the services of such companies is higher, but in the future, they pay off due to the low probability of errors in work.
- Check out the feedback from the companies with which this 3PL provider worked.
TOP 3PL companies of Ukraine
Due to the high growth rate of Ukrainian e-commerce, the 3PL logistics market is constantly evolving. Today, you can choose a provider that will meet your business requirements 100%. TOP 3PL companies of Ukraine are Raben Ukraine, FM Logistics, Meest Express, Denka Logistics, etc. Usually, large logistics providers operate not only in the territory of Ukraine but also abroad. Thus, it makes sense for companies that want to expand or have already foreign partners to select large and popular logistics providers.
However, the prices of major players in the logistics market are often higher. Small companies should pay attention to less popular 3PL providers. The cost of their services will be lower and the quality guaranteed. They should, first of all, focus on business needs rather than on the provider’s popularity. If the company cannot find a suitable contractor, it can submit a request on the WareTeka platform and get offers from different logistics providers.
Prices for 3PL logistics services
The cost of 3PL logistics services depends on the type of business and the volume of goods. Thus, the cost calculation is based on:
- Weight and dimensions of goods. Transportation of heavy goods to a warehouse is much more difficult, and storage of oversized products requires proper planning of warehouse space. These factors influence the final cost of warehousing services.
- Necessary conditions for freight storage. Product categories such as foodstuffs or pharmaceuticals require clear temperature regimes during storage.
- Type of warehouse service and several operations. Logistics companies offer different services — storage and warehousing, fulfillment, cross-docking, flow-through, etc. Each of them is charged according to the provider’s prices. However, the cost of the service can change if a customer needs or does not need separate operations within the service. For example, he operates loading and unloading on his own and therefore does not pay for it.
- The purpose of a warehouse. If the product is to be stored in a warehouse at a certain temperature, the service cost is higher.
- Providing additional services. A customer can ask for additional services, such as packaging, sorting, stickering, labeling, etc. As a rule, a provider meets the customer’s needs and provides them with an additional fee.
Find a logistics provider (3PL) on WareTeka
If a company decided to outsource its logistics processes, it should choose a responsible 3PL provider. There are a large number of offers from different companies in the logistics market. Finding a suitable partner for logistics outsourcing may take time, especially if a company looks for a contractor in small cities in Ukraine. There is a risk to apply to an unfair service supplier. To avoid time-wasting and risks, a company should select a responsible logistics partner.
The WareTeka platform provides the database of the popular 3PL providers of Ukraine. On our site, you can get information about each of them, learn more about their activities and services. If you are interested in a particular logistics provider, fill in the “Contact Us” form at the bottom of the company description page.