Logistics is essential to the success of any product-delivery organization. It is desirable for a company to deliver its goods as promptly and economically as possible. This is the role of a third-party logistics (3PL) brokerage.
A 3PL brokerage establishes connections between businesses and third-party logistics suppliers. Using these services allows businesses to save time and money. Essentially, a third-party logistics company assists businesses in identifying the best logistical supplier.
Comparatively, a third-party logistics (3PL) provider is very different from a freight broker, in more ways than one. A 3PL can provide a faster and more reliable solution to urgent shipping concerns than a broker, as well as access to a network of high-quality carriers. Knowing the distinction between 3PL brokerage services and freight brokers can help you make an informed decision when you require expedited shipping.
It can be a struggle to ensure goods are delivered on time through their regular shipment processes. It would be worthwhile to review the basics of a 3PL brokerage so you know where to turn to have more confidence in your logistics plan.
Let’s start by comparing the two and then discussing why a 3PL brokerage may be best for your business needs.
What is a Freight Broker
A freight broker functions as an intermediary between shippers and carriers. Instead of assuming ownership, the broker facilitates communication between the shipper and the carrier. They ensure that the handoff between carriers and shippers proceeds smoothly and that freight arrives safely and on time.
Freight brokers use their experience to shorten delivery times, prevent damage, and enhance the efficiency of your supply chain. Because they combine the freight volumes of all the shippers they work with, these brokers are able to negotiate reduced rates, which they pass on to their customers.
Freight brokers provide shippers with a single point of contact from point A to point B while their freight is transported to its final destination. Dealing with a broker eliminates the cumbersome task of negotiating with a carrier, establishing routes, and tracking freight. Carriers appreciate working with freight brokers to optimize their routes and reduce deadhead miles, so increasing their earnings in a shorter period of time.
For some businesses, a freight broker may be perfect. For others, the lack of hands-on involvement may be challenging and not fit their needs. This is a decision your team needs to make after fully understanding all of your options.
This leads us to the need to understand what a 3PL logistics company is and how they function as a 3PL brokerage.
What are Third-Party Logistics (3PL) Services
A third-party logistics company helps businesses manage transportation services. Their responsibilities include shipping and storing products properly.
In addition to vital freight brokerage services such as dispatch, loading, transit, unloading, delivery, and progress updates via phone or email, an experienced 3PL brokerage often provides access to a vast network of qualified and reputable carriers.
This requires that a 3PL brokerage be a one-stop shop for freight brokerage and dedicate an entire team to handling services and being on call for shippers. Working with a 3PL brokerage will allow you to devote more time to your business.
So, What is a 3PL Brokerage?
A 3PL brokerage is a third-party logistics provider with a dedicated in-house freight brokerage team.
A 3PL brokerage employs a large network of enduring business ties to secure carriers at lower prices than would be possible otherwise. In addition to matching your shipments with the most cost-effective and efficient shippers, they can reduce your shipping expenses by relieving you of responsibilities like billing, load tracking, training, technology, compliance, and all the moving parts that transportation requires.
During this process, 3PL brokers consider optimal routing, material handling, scheduling, cost, compliance, and all the other aspects that go into delivering a product to its destination in the safest, most cost-effective, and most efficient manner possible.
How a 3PL Brokerage Can Help
Dealing with a 3PL brokerage can result in significant savings on your business’s overhead costs. A 3PL has established partnerships with a large number of organizations in the logistics industry and typically deals in large quantities. This implies that 3PLs can frequently negotiate savings that your business would be unable to obtain on its own.
There are several specific benefits of using a 3PL brokerage, so it’s worth considering some of the most meaningful;
- A quick and receptive support staff that asks the proper questions and secures answers.
- Capability to support businesses of all sizes across a broad spectrum of industries
- Qualified network of reputable, high-quality, nationwide carriers
- Understanding of product-specific regulatory, safety, and security needs
- A history of dependable communication between carriers and customers
- Support for FTL, LTL, expedited, bulk, and other shipping modes
- Expert problem-solving and continual tracking, reporting, and updates
As you can see, there are many reasons to consider partnering with an established 3PL brokerage. While there are many great reasons to work with a third-party logistics company, it would be beneficial to explore some of the top benefits and challenges that can come with this partnership.
Top Benefits of Using a 3PL Brokerage
While there are many reasons to work with a 3PL, some reasons seem to be more beneficial than others. Here are some of the most important reasons.
Many businesses outsource their logistics simply to save money. When you consider the costs of equipment, manpower, coordination with other departments, insurance, and other surprise costs, it starts to make more sense why outsourcing logistics responsibilities is so common.
A 3PL brokerage acts as the expert in transportation, warehousing, and fleet management. Professional 3PL brokerages are required to remain abreast of the most recent logistics advancements and trends so you don’t have to.
Efficiency and Optimization
A 3PL brokerage works diligently to strengthen the supply chains of its customers. Their goal is for things to flow smoothly. 3PL companies search for ways to save money on incoming deliveries and streamline their processes by incorporating innovative capabilities into their last-mile delivery solutions.
Top Challenges of Using a 3PL Brokerage
Just as there are several reasons you should consider working with a 3PL brokerage, there are some reasons to consider not doing so. Here are a few worth discussing.
Using a third-party logistics provider can initially be expensive. Transitioning from your current logistics strategy to a 3PL brokerage requires time and steps that can include additional costs beyond your current spending. These costs are temporary, however, and once the change has been made you will generally begin seeing ongoing cost savings.
Dependence on the 3PL
After some time, many businesses are unable to complete tasks without the assistance of their 3PL. For example, businesses utilizing 3PLs are unable to control their carrier network. Several of them have no experience scheduling trucks. If you expect the time to come when you will want to go away from partnering with a 3PL brokerage, you may want to rethink this decision.
Getting Started with a 3PL Brokerage
Selecting a new logistics supplier is a crucial decision that can have a lasting impact on your company’s bottom line. While meeting with a 3PL brokerage, keeping in mind the points discussed in this article will help you make the proper choice.
What separates a decent 3PL from a fantastic one is how well they discuss with you your needs. The majority of 3PLs can connect you with dependable carriers at a reasonable cost. Yet, not all carriers are able to assist you in navigating supply chain hiccups caused by unanticipated challenges or continually seeking ways to enhance operations. Idealistically, your logistics partner will meet with you on a frequent basis, offer comments, and establish objectives for future enhancements.
Murphy Logistics has been trusted as a reliable 3PL brokerage for decades. In addition to our own fleet of trucks at Murphy Logistics, our 3PL brokerage services enable us to focus on your supply chain solutions and transportation service requirements throughout North America using a vast network of partners. We accomplish this by utilizing our ties with additional carriers. Via this partner arrangement, Murphy works as a 500-truck fleet, providing you with committed equipment at the greatest price whenever you require it. We maintain involvement with these shipments by continuously evaluating carrier performance and road safety.
To learn more about how Murphy Logistics can provide you with the best 3PL services, simply request a consultation with our team using one of the links below or by calling us directly.