If you are a small to midsize company that tries to ship your goods without the aid of transportation logistics, you’ll likely end paying significantly more for shipping than you would if your hired a third party logistics (3PL) provider or implemented online transportation and logistics software. Without the aid of freight logistics, the cost of the shipping process can prohibitive for small to midsize companies for two main reasons: they either pay full truckload FTL shipping (full truck load) rates to ship partial loads or, realizing the economic disadvantage of FTL shipping for partial loads, they use parcel shipping, which is also a disadvantage when shipping multiple parcels on a regular basis. In response to these situations, 3PL and transportation and logistics software can revolutionize a company’s sipping costs by providing them with options such as LTL shipping (less than truckload), integrated transportation methods based on competitive pricing and shorter shipping routes based on route analytics.
But while 3PL and logistics software function in the same capacity, the latter has two basic advantages over the former, beginning with price differential.
Although 3PL and logistics software companies serve the same purpose, they are principally different in their corporate make up. Third party logistics providers are freight logistics experts that act as middlemen between manufacturers and shipping companies, while logistics-software providers are freight logistics experts that specialize in creating freight logistics software, which they offer as an online software application for an affordable monthly fee. In other words, when you opt for 3PL, you end up paying more because you pay for an expert to manage your account, whereas logistics software lets you manage your own freight logistics through an easy to use interface. Essentially, 3PL providers make their money by charging you for a logistics service that you could easily perform on your own with the aid of logistics software. It’s as simple as that.
Level of Control
When you outsource a service that isn’t one of your company’s core competencies, you’re naturally at the mercy of the company that you outsource to. This is not to say to that 3PL providers are out to profit on their clients’ lack of logistics expertise in an ulterior way. But it does mean that 3PL providers are always looking for LTL shipping rates and other shipping options that offer the greatest price differential between what the options actually cost and what they charge their clients to secure those options. In some cases, the greatest price differential might result from shipping your goods with a company that doesn’t have the best reputation; a situation that you could easily avoid if you opt for logistics software. In addition to allowing more control over what companies you ship with, logistics software also allows each of your company departments to participate in the shipping decision process by accessing the software online, which can prove extremely valuable from an accounting and management perspective.