Logistics companies plan, implement, and control the movement and storage of goods, services, or information within a supply chain and between the points of origin and consumption. Various logistics companies handle some or all of these supply chain functions, depending on a client’s logistical needs.
Logistics is a term synonymous with the military. In times of war supplying troops with the proper equipment and supplies was a logistics function. Logistics has evolved since the 1950s with the rise of consumerism and the subsequent growth of more complex supply chains.
Coordinating the movement of supplies and materials is now a globalized process. Today, the business sector uses logistics as a term to describe the efficient flow and storage of goods from point of origin to the point of consumption. The supply chain is a vital part of this process. A proper supply chain may include transportation, shipping, receiving, storage, and management of all or one of these functions. Logistics may also apply to information, transportation, inventory, warehousing, material handling, packaging, disposal, and security within the business sector.
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The Difference between a 3PL Company and a Freight Brokerage Firm (3PL vs. Freight Broker)
People often use the terms 3PL and freight broker interchangeably, however, this creates confusion regarding the nuances of either service. 3PLs and Freight Brokers are both intermediaries between the shipper and the carrier, yet their roles differ. A broker focuses primarily on executing a singular shipment and works to meet specific cost and service goals. The 3PL provider thinks about the bigger picture and more strategically. They plan earlier in the supply chain and anticipate the needs of a client through every step of the supply chain, transport, and delivery process.
What is a Freight Broker?
A freight broker will often focus on one single shipment and act as a non-asset bearing intermediary between a shipper with goods to transport and a carrier who actually moves the freight. Essentially, a Freight broker works directly with owner-operators nationwide to coordinate individual shipments. Freight brokers currently handle significant amounts of truck transport in North America.
In the grand scheme of things, freight brokers often connect with hundreds or even thousands of small to medium-sized freight carriers to provide a large network of shipment options. This then affords shippers alternatives to larger freight carrier providers. Smaller carrier operations often rely more on brokers for business than larger carrier providers, because these larger carriers often have long standing relationships with 3PL companies.
What is a Third Party Logistics Company?
In another post, we detail what a third party logistics company is, but in its broadest form, 3PL applies to any service contract that involves the storing or shipping of a commodity. A 3rd party logistics company may only offer a single service, like transportation, warehouses in Reno NV, or inventory management. However, it may also offer a system-wide bundling of services and management of a client’s entire supply chain. Many 3rd party logistics companies integrate operations. Warehousing and transportation services are all tailored to a client’s needs.
A third-party logistics company is typically an asset-bearing firm that establishes relationships with shippers on a broader scale. Third-party logistics companies typically make an investment in physical and human capital including brick-and-mortar locations and wheels on the ground.
Why Shippers Need a Healthy Mix of Brokerage and 3PL Services
Shippers looking for involvement with a collaborative transportation network will find that a 3PL fits their needs. However, there is a role for freight brokers in relation to shippers with already established 3PL relationships. If a shipper requires greater flexibility in their shipping needs, they may add a brokerage firm to supplement their shipping needs. Long-standing relationships developed by 3PL’s can pose an advantage when shipping capacity is tight. When it comes to your own company, it’s not about choosing between a 3PL or a freight broker. Shippers establish relationships with 3PL companies and freight brokerages in the interest of reducing shipping costs.
Many businesses deal in some way with finding suppliers. As a small business owner, there is no doubt that you engage in distribution logistics, inventory management, and warehousing at some level. You may already handle most of these functions internally. But for more complicated procedures, third-party logistics providers are frequently the solution. As an example, if you decide to export your products, you may hire a person or organization to help with distribution logistics.
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Streamlining, consolidating, and outsourcing your logistics processes can result in huge long term financial savings and better overall client service. Connect with Full Tilt Logistics to learn more about what is a logistics company and what does a logistics company do. We’re here to help you achieve your overall shipping needs as they arise across the United States. We are always happy to answer any and all shipping and logistics related questions. It’s our goal to provide you with the best customer service possible!
