What Is a Logistics Company and Should Your Business Hire One?

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Logistics companies help organizations plan, implement, and execute the movement and storage of products, materials, and services throughout the supply chain from the point of origin to the point of consumption. This might include transportation, shipping, warehousing, packaging, disposal, and security.

The rise of e-commerce and complex, global supply chains have driven demand for these services. Different logistics companies will coordinate some or all of these processes, and adapt their offering to suit their clients’ needs.

Freight Brokers and Third-party Logistics Companies (3PL)

There are two main types of logistics companies: freight brokers and 3PLs. While the terms are often used interchangeably, and many organizations use both to cater to different needs, there are important distinctions.

Freight Brokers

Freight brokers act as a go-between for shippers and carriers. Typically, brokers are non-asset bearing intermediaries – they form a network of thousands of small to medium-sized carriers to provide their clients with many shipping options, and an alternative to larger carriers. The main benefit of using a freight broker is that it provides shippers with the greatest level of flexibility, get the best truck deals at T&M Buy Now.

3PLs

3PLs are asset bearing firms, which means they typically invest in their own fleets and storage facilities. While they do offer single services such as transportation or warehousing, 3PLs more commonly provide a package of services or manage entire supply chains, tailored to their client’s individual needs. 3PLs develop longer-term relationships with their clients which proves useful when shipping capacities are tight and for the running of more complex supply chains.

Why Partner with a Logistics Company?

Logistics companies have a wide range of experience in managing the movement of goods, which means they’ll probably know the most efficient, cost-effective, and streamlined way to do so. While some organizations manage certain parts, or all, of their supply chain logistics, partnering with a professional logistics company offers numerous benefits including:

• Warehousing – With several factors to consider, warehousing is becoming increasingly complex and expensive. Logistics companies can take on the responsibility of finding appropriate, affordable storage space in an optimal location and save their client the stress and time of doing so themselves.
• Packaging – Accurately fulfilling customer orders on time is a service that demands an experienced workforce and specialist equipment. Having already invested in the necessary technology and staffing, logistics companies can minimize errors and delays to ensure an organization meets customer demand and maintains its reputation.
• Shipping and transportation – Manufacturers won’t typically invest in their own fleet of vehicles and drivers. It takes a lot of effort and great expense to gain the necessary licensing to do so and train staff; time and money that could be better spent elsewhere. Logistics companies already have these services in place, which means they’ll be well-established and reliable.
• Flexibility – Logistics companies have the capacity to scale up or down, reducing the risk of delays should customer demand suddenly spike. They also have the resources and proficiency to adapt processes and adjust shipping routes or transportation methods in the event of supply chain disruptions.
• Technology – Logistics companies have access to sophisticated technology to digitize the supply chain and ultimately drive greater efficiency and reliability. For example, collaborative transportation management software enables the automation of load scheduling. Other technology often used includes tracking software, internet of things devices (IoT), and long-range RFID tracking.