In today’s challenging economy cost control plays a critical role in the continuity of any business. Shippers from manufacturing, retailing and other industries are recognizing the benefits that Third Party Logistics services can deliver. Here are seven benefits ranging from savings in infrastructure to reduction in liability exposure.
Fixed Costs – Utilizing the services of a 3PL can reduce the investment in equipment, buildings and computer systems.
Variable Costs – A shipper can take advantage of the buying power of the 3PL. The 3PL’s position in the market generates rate reduction from volume discounts. Shippers also save from the ability of the 3PL to co-load with other shippers and schedule round-trip shipments, thus sparing the extra cost of an empty truck return trip.
Outsource labor issues – In a marketplace increasingly faced with economic, regulatory and technological change, a shipper may encounter slowdowns or increased demand. In downturns, the shipper deals with layoffs. As the market recovers, there is a need to recruit and train drivers in a wage competitive environment. New Hours-of-Service rules and CSA requirements further complicate the labor situation. With outsourcing, the shipper can avail itself of the professional experience and extensive network of the 3PL.
Administrative and technological cost-saving – Rate negotiations and setting up shipments consumes valuable employee hours. A 3PL will assume these tasks, conduct due diligence of carriers, coordinate and keep track of carrier travel and location. When these duties are out-sourced, previously required computer equipment is no longer necessary.
A 3PL can leverage its technology and focus employee capital on identifying, strategizing and implementing areas of opportunity.
Reduced exposure to liability –The position of the 3PL as the middleman reduces the liability exposure of the shipper by providing an additional layer of insulation in the logistics chain. Additionally the Freight Broker can often add their shipper clients as additional assured’s on their Freight Broker Auto Liability Policy. This allows the shipper to be covered in case their cargo is ever involved in an accident injuring or killing a 3rd party.
Strategic consultants and partners – In addition to their management of outsourced operations, the 3PL will further enhance their value as they cross-sell their services and add to their capabilities in other areas of an ever-evolving value chain. Their continuous investment in expanding and improving procurement logistics, strategic initiatives and execution pays off in savings and efficiencies for their customers.