yellow forklift in warehouse for 3pl services
Logistics

What are 3PL Services and How are They Classified?

Kathy Monroy

December 9, 2020

In the past few years, in almost every industry, services have become more specific to satisfy customers’ needs. Logistics and Transporation is no exception. The ever-growing requisites of companies have fragmented service providers, which has led to confusion and lack of knowledge in the market.  

Knowing your company’s needs and finding the best alternative for success are essential aspects that will help meet your operational goals.  

The definition of 3PL  

3PL or Third-Party Logistics Companies provide a holistic service within the Transportation and Logistics Industry by taking care of the entire supply chain process. From transportation to warehousing, picking and packing, inventory, order fulfillment, custom packaging, and freight forwarding, all the way to delivery.  

One of the biggest benefits of collaborating with a 3PL company is that you can focus on your core business. You’ll have more time and resources to develop your product and make it attractive to your customers or optimize your sales processes to generate more revenue.  

But this is not a one size fits all process; every company has specific needs that can be assessed by different 3PL companies.  

Types of 3PL companies

1. Standard 3PL Services  

They perform basic logistics tasks, which are packaging, warehousing, and distribution.  

2. Service Developer

These 3PLs offer additional and more specific services like enhanced packaging (custom to their client’s product), tracking packages, cross-docking, and a security system for their shipping.  

3. Customer Adapter

Through this type of 3PL, their employees become one or adapt to their client’s current team, working as part of the company instead of creating a completely new team.  

4. Customer Developer

This type of 3PLs takes over the entire process and have complete control over the client’s logistics functions. They implement their style of work and add value to the whole process.  

 

Asset-based – Non-asset-based – Hybrids  

As mentioned before, these companies have diversified, considering the customer’s specific needs. Another kind of classification for 3PL companies is asset, non-asset-based, and hybrid 3PL companies.  

Asset-based

In this model, the 3PL company owns and operates the assets and equipment (trucks, trailers, and warehouse), and they charge their clients for the use of their assets.  

  • They have complete control over their specific amount of assets. This allows them to handle their scheduling and estimate your timeline accurately.  
  • Because everything is handled in one place, building trust becomes easier, which will lead to an understanding of your products and better services.  

Non-asset-based

Non-asset-based 3PLs, do not have their own equipment. They have to create an entire network of logistics providers to complete their services.  

  • Relying on their established network allows them to have as many trucks as their customers’ need.  
  • This model allows more flexibility in the process. These companies will search within their network for other companies that fit perfectly with their needs.  
  • Finding the right partner for their customers is fundamental for non-asset-based companies. A partner who delivers the best services and at the right price leads their client to reduce their overall costs.    

Hybrid 3PLs

Staying up to date within the industry is fundamental for any company to succeed. This is why, in recent years, asset-based 3PL companies have included some non-asset-based components to their business model.  

They leverage the assets that they currently have but, if required, they search within their network for other additional assets that help them expand their capabilities and meet their client’s expectations.  

Nowadays, deciding to work with a 3PL company has become a difficult task because there are many options and aspects to consider. But knowing exactly what your company needs to be productive and achieve its goals will become pivotal for this decision to be made correctly.

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