Third Party Logistics
Third party logistics is the use of an outside company to outsource elements of a company’s distribution process. Outsourcing warehouse, and shipping services can be cost effective, and improve efficiency for a company. Third party logistics is a large industry worldwide and is used commonly among the top businesses. 80 percent of all Fortune 500 companies use a form of third party logistics. Companies that offer third party logistics services specialize in storage, shipping and other aspects of the distribution process.
Third party logistics makes it simple for business owners to satisfy their distribution needs. Instead of needing to learn the ins and outs of distribution, a company can outsource the whole process and focus on their product, and attaining as much sales as possible. Most consumer complaints are related to the shipping process. People receive their products damaged, late, or never at all. These can be reputation killers for any company. By outsourcing to a third party logistics company, businesses can allow professionals to handle all their distribution needs. Companies that specialize in third party logistics already have the process in place to efficiently operate a warehouse and deliver orders on time, and handled properly.
Outsourcing distribution can be cost effective for any company. Eliminating costs for warehouse space and additional employees makes it easier for companies to reach their bottom line.
Generally, third party logistics companies charge four different fees. There is a receiving fee, which can be charged per shipment, or per pallet. Prices are usually around 30-40 dollars per shipment, and vary if they charge per pallet. Next is a storage fee. The company can either charge this fee per pallet, or per individual unit. Some companies charge a small fee per order as a pick and pack fee. Last is the shipping cost. The fulfillment centers pay much lower shipping fees than any average person because of the amount of volume they ship, but that fee is passed onto the company using the third party logistics firm. Even though it is four separate fees, the overall cost is significantly lower than renting a warehouse space and hiring employees.