If you are new to logistics, you might be confused by all of the different terms. We are here to help! 3PL, or 3rd party logistics, and freight forwarding are two terms that you might have heard used interchangeably, but they are actually two totally different concepts.
This post will tell you all about the difference between 3rd party logistics and freight forwarding, and which might work better for your needs.
What are 3PL Services?
3PL stands for 3rd party logistics. Here’s how it works: in normal shipping scenarios, an individual or company works directly with a shipping service. 3rd party logistics services, like the name suggests, acts as a 3rd party mediator.
In other words, 3PL is meant to take your company’s logistics out of your hands. They can provide several services, including domestic and international shipping coordination, warehousing and storage, supply chain and marketing managing. Working with a 3PL company can help your company to save manpower, money, and resources that are wasted in an individual logistics department, allowing you to focus on production and growth instead.
3PL generally refers to an independent company that works with other companies to streamline logistics and supply chain issues.
What is Freight Forwarding?
The difference between freight forwarding and 3PL can seem a little complicated because they are so similar. In fact, a lot of 3PL services can also be considered freight forwarding services, but not the other way around.
To put it simply, freight forwarding refers to a very specific type of 3PL. Freight forwarding services manage specifically the freight and shipping portion of a company’s logistics. Their job is to help products or supplies get from point A to point B, and nothing else. Whereas 3PL companies can manage the full supply chain of a company, freight forwarding services will only manage freight matters.
That said, working with a freight forwarding service can have a lot of the same benefits for your company as working with a 3PL service. It can take a lot of stress and resource waste off your hands, allowing you to focus on the more important things.
3PL and Freight Forwarding – Which is Better?
Now that you have a better idea of what 3PL and freight forwarding are, the natural next question is: which is better?
The answer depends on your company’s unique needs. 3PL services can be really helpful for managing your entire supply chain. For a larger company with a complex supply chain, 3PL might even be considered a necessity. That said, working with a 3PL service on such a large scale can get fairly expensive.
If you have a smaller company, and just need a little help handling your shipping logistics, a freight forwarding service may be just the right amount of help. You will save your company some money, and still, get all the benefits of working with a third party to manage the most complex part of your supply chain. In the end, neither is really better – it all comes down to choosing the right service for your needs.