Third party logistics companies, commonly known as 3PLs, have grown popular in the last few years. More and more companies are seeing the importance of hiring 3PLs in improving their bottom line. By having trucking, warehousing and shipping tasks taken care of by a third party service, businesses are able to focus more on their main competence.
The Launch in Logistics Carriers
3PLs started in the 1980s. Then, warehousing, shipping, trucking and IT services were offered separately. In the 1980s, the trucking industry was deregulated through reductions in entry and price controls and collective vendor price setting.
This saw an increase in the number of tracking carriers from about 20,000 to about 1.2 million today. This created a fragmented market that has enabled third party logistics companies to offer value-added services in a multifaceted setting.
Integrated Global Logistics
Global logistics gained root in the 1990s. Most companies were moving their production overseas as they rapidly developed global markets. The developments were facilitated by the economic developments in the east. Third-party logistics companies were thus adapted to offering integrated services locally and internationally. Today, third party logistics providers have been accustomed to managing intricate global supply chains.
For the last fifteen years, some of the greatest technological advancements have taken place. The internet, for instance, has opened more doors for 3PLs and enabled them to bring their services closer to the people.
With technological advancements, third party logistics companies have been able to offer fast and solid solutions and connect different aspects of a business such as inventory, transportation and logistics among others. The efficiency brought by technology in the logistics industry continue to expand as the logistics companies continue to adapt to the forever changing demands in the global marketplace.
Role of Third Party Logistics Companies Today
Nowadays, more than 86 percent Fortune 500 companies in the US use 3PLs to handle logistics and supply chain functions. A logistics company of great repute is able to leverage partnerships throughout the world and access needed infrastructure to deliver premium rate services.
The litmus of a great logistics company is in its ability to offer supply chain solutions to businesses of all sizes. The realization that 3PLs help businesses focus more on their core competencies has made many emerging and established businesses seek their services. To this end, the number of third party logistics companies is growing by day.
There are a number of supply chain challenges that businesses are facing today. First off, a company may only need vehicles and a warehouse for short term peak demands. 3PLs offer flexibility to businesses by handling warehousing and transportation.
Most businesses lack the expertise required to handle a global supply chain. In place of training a whole team to take care of your supply chain, you can just hire a 3PL to offer the services just when you need them. Lastly, third party logistics companies have the technology needed to carry out every task in a supply chain. You do not have to spend a fortune buying equipment.
The beauty about 3PLs today is that they handle comprehensively all your supply chain activities, they offer domestic as well as international services and they serve small as well as Fortune 500 companies.