Freight forwarders vs third-party logistics: What’s best for business?

The choice between freight forwarder vs 3PL (third-party logistics) mainly depends on your business needs. While a freight forwarder offers a narrow portfolio of services related to the transportation of goods, 3PLs allow you to outsource a wide range of logistics services, such as warehousing or inventory management. Find out the difference between 3PL and freight forwarder and which solution suits best for your business needs.

What’s the difference between 3PL and freight forwarder?

The main difference between 3PL and freight forwarder lies in their scope of services. A freight forwarder primarily focuses on arranging the transportation of goods, whereas 3PL provides a wider range of logistics services, including transportation, warehousing and supply chain management.

In terms of customisation, 3PL providers have a broader scope and can offer a higher degree of tailored solutions. They go beyond transportation and take over various parts of the supply chain, including warehousing, inventory management, order fulfilment, packaging and sometimes even value-added services such as assembly.

In order to achieve the desired results, 3PL providers work closely with clients to design and implement tailored solutions that meet specific logistical needs. They have the ability to offer flexible solutions for the specific needs of their partners. This is the reason why many businesses outsource their logistics to specialised 3PL partners.

Specialised 3PL for different industries

As third-party logistics providers offer custom-made solutions to fulfil specific needs and requirements, the 3PL industry has become very specialised.

Specialised 3PLs for retail focus on omnichannel distribution, inventory management and order fulfilment, ensuring seamless product delivery to end customers through various channels, while 3PL providers serving the automotive industry manage complex supply chains, including just-in-time (JIT) deliveries, assembly line support and parts distribution to various production facilities.

Therefore, when choosing the right 3PL provider, it is crucial to determine that the expertise, track record and specialisation is in accordance with your own needs and requirements. Additionally, streamlining your B2B payment processes can enhance collaboration and efficiency, ensuring seamless transactions with your logistics partners.

Why should you integrate 3PL and freight forwarders into your processes?

Process optimisation goes hand in hand with outsourcing. The synergy between process optimisation and outsourcing lies in their mutual benefits. Optimised processes provide a strong foundation for outsourcing, ensuring that efficient workflows are transferred to external partners. In turn, outsourcing to specialised providers can further optimise operations by tapping into their expertise.

In order to streamline certain processes that require expertise and resources, which fall outside the core competencies of your organisation, it might therefore be a smarter solution to outsource these tasks to 3PL or freight forwarders providers. Specialised 3PL and freight forwarders have the necessary economies of scale to conduct the tasks not only to higher quality standards, but also at lower price points.

Freight forwarder vs 3PL

The following section shows the difference between 3PL and freight forwarders by listing the pros and cons of each logistics provider.

Freight forwarder: Pros and cons

Freight forwarders offer specialised expertise in managing the logistics and transportation of goods. They navigate the complexities of international shipping while handling documentation and customs paperwork. Their established relationships with carriers enable them to negotiate competitive rates and find optimal shipping solutions. Additionally, they provide end-to-end services, overseeing the entire shipping process from origin to destination.

However, when deciding between 3PL and freight forwarders, it’s important to consider that the latter has limitations in offering broader supply chain solutions beyond transportation logistics. Their dependency on third-party carriers may lead to issues beyond their control, such as delays or disruptions. While they negotiate rates, their services might add an extra layer of cost to the shipping process.

Pros of using a freight forwarder

• Expertise in the transportation process
• Handling customs and documentation
• End-to-end services

Cons of using a freight forwarder

• Limited service scope
• Dependency on third parties
• Increased costs

3PL: Pros and cons

3PL providers offer a wide range of logistics services beyond transportation, including warehousing, inventory management, order fulfilment and further services. Their integrated solutions and expertise can optimise the entire supply chain. They also provide flexibility and scalability, allowing businesses to adapt resources according to changing demands without incurring fixed overhead costs.

However, outsourcing to 3PL providers involves entrusting crucial functions to external partners, which makes a careful selection and ongoing monitoring even more important. Additionally, reliance on external providers could potentially limit direct control over certain aspects of the supply chain, requiring strong communication and management strategies for a successful collaboration.

Pros of using a 3PL provider

• Expertise and specialisation
• Scalability
• Focus on core competencies

Cons of using a 3PL provider

• Loss of control
• Increased reliance
• Constant alignment needed

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