Managing a complex shipping network can be a challenge, especially if you are working off of tight scheduling and multiple carriers. To navigate these complexities, there are two services that operations typically rely on: freight forwarders and third-party logistics (3PLs). These two terms may seem interchangeable, but the individual services they provide are anything but. Before you make the decision on which one is right for your operation's specific needs, let's break down the differences between each.
What is a Freight Forwarder?
A freight forwarder is a broker that works for you and various other shippers to ensure your inventory gets delivered from Point A to Point B. A freight forwarder arranges transportation from the factory to the warehouse to the dock. However, a key component of a freight forwarder is that it is not a shipping company, and is not responsible for your shipments while they are in transit. Once your shipment has reached its final destination, its job has been completed.
One of the main reasons companies choose to use freight forwarders instead of working directly with carriers is the rates. Freight forwarders often use their relationships to negotiate lower prices for carrier movements.
Common services offered by freight forwarders are:
- Ocean freight
- Land freight
- Air freight
- Export and import documentation
What is a 3PL?
A 3PL specializes in overseeing your entire supply chain. As a full-service shipping company, a 3PL will take on picking, packing, inventory management, order management, processing, shipping, distribution, and returns.
Common services of 3PLs include:
- Direct-to-consumer fulfillment
- Retail fulfillment
- Kitting & Assembly
- Freight management
3PLs make it easier for companies to monitor their supply chain, and are there to offer expert advice and assistance with logistics decisions.
Advantages of working with a 3PL
Freight forwarders and 3PLs each have their own unique advantages, but working with a 3PL provides a few extra benefits that can help your company achieve long-term success. 3PLs are built for end-to-end support in supply chain management, meaning they expertly handle every detail of your fulfillment. A 3PL provides the same benefits as a freight forwarder, while also providing the following benefits:
Giving you shipping updates in real-time — With 24/7 visibility into your supply chain, you receive more accurate reports for the data you need the most. With the right warehouse management software, you can customize the key metrics you receive based on your individual operation.
Taking on full responsibility for decisions about carriers, packers, warehouses, and shipping methods — In contrast to the duties of a freight forwarder, a 3PL takes on picking, packing, delivery, and returns. It's a 3PL's responsibility to navigate finding the right carriers, routes, and to communicate any delays when applicable.
Holds and organizes your inventory — A 3PL conducts inventory management, and can sometimes even be available for you to store bulk inventory in their warehouse. This can be especially useful if your inventory follows strict climate control or food regulations.
Frees up your time — 3PLs can increase your order accuracy and free up more of your time to grow other areas of your business. Working with a trusted company to handle your freight frees up opportunities for you to focus on the core areas of your business, such as designing, manufacturing, and marketing.
Get started with Materialogic
Materialogic is more than just a 3PL provider. Our highly capable and experienced team serves as your partner in providing end-to-end fulfillment excellence. As an extension of your team, we aim to craft and deliver customized solutions that fit your specific operation. Reach out to start a conversation on how our team can begin managing your supply chain to promote business growth today.