What is 3PL Logistics And How it Can Benefit Your Business

Third-party logistics or 3PL is a service where companies outsource the management and execute their supply chain and logistics operations to an external 3PL logistics provider.

3PL services encompass a wide range of activities, including inventory management, order processing, transportation, warehousing, and distribution. 3PL logistics providers can help businesses streamline their supply chain process, improve efficiency and reduce costs.

In 2019, the global third-party logistics (3PL) market was estimated at an astonishing $1,027.71 billion and is expected to soar to a whopping $1,789.94 billion by 2027 and that's a staggering 7.1% CAGR from 2020 to 2027. Furthermore, it has been reported that Asia Pacific had the highest portion of its market share in 2019.

Given the rapid growth in 3PL services, it should come as no surprise that more and more businesses are turning to 3PL providers to handle their logistics needs.

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• What is 3PL logistics and how does it work?
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3PL logistics is the process of outsourcing all or part of a company’s supply chain and logistics operations to an outside 3PL provider. 3PL logistics providers are typically third-party companies that specialize in handling logistic activities such as warehousing, transportation, inventory management, order fulfillment, and more.

When a 3PL logistics provider takes on your business's logistics operations, they become responsible for managing and executing the entire supply chain process from start to finish which means that you no longer have to worry about dealing with any of the day-to-day tasks associated with this process.

3PL logistics providers manage everything from ordering materials and supplies to packaging products for shipment to delivering orders directly to customers' doorsteps. This can help reduce costs, free up valuable resources, and allow companies to focus on their core competencies.

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• How 3PL logistics can benefit your business?
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Companies of all sizes – from small local stores to international corporations are increasingly seeking external aid and knowledge to optimize their supply chain, grow their customer base, explore new markets, or deliver exceptional consumer experiences. This is where a third-party logistics provider (3PL) comes into play. With the expertise they bring on board, 3PLs offer the perfect solution for businesses looking to gain an edge over competitors while managing their supply chain more efficiently.

Here are some major benefits that 3PL logistics can offer your business:

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• Get Access to Expertise and Experience
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3PL logistics providers specialize in supply chain and logistics operations.3PLs can provide businesses with tailored solutions to their specific needs, ensuring optimal efficiency and cost savings. For example, 3PLs can offer access to infrastructure, resources, and technology that boost businesses.

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• Improved efficiency
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3PL logistics providers can help streamline your supply chain operations by creating a more efficient system for moving products from the manufacturer to customers. 3PLs use advanced software and technology to analyze data and how different parts of the supply chain are connected. This enables them to anticipate problems, adjust processes accordingly, and ensure that all orders are delivered quickly and efficiently.

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• Reduce costs
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Outsourcing your supply chain and logistics activities to 3PLs eliminates the need for you to invest in additional staff, infrastructure, and resources – all of which require capital expenditure. 3PLs also offer discounts on transportation and warehousing services, as well as access to a larger pool of carriers and service providers who may be able to offer better deals than what individual companies could negotiate on their own.

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• Focus on core competencies
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3PLs can free up businesses from tedious and time-consuming processes, such as managing inventory or packing orders. This allows them to focus their efforts on core competencies, such as marketing and product development. 3PLs also help companies reduce their risk by taking responsibility for certain parts of the supply chain that they may not have the expertise to handle – such as cross-border trade compliance or freight forwarding.

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• Access to new markets
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3PL logistics providers are often well-connected with carriers and service providers in different regions, which means they can offer businesses access to new markets quickly and easily. 3PLs can provide valuable insights into local cultures and customs, helping you gain a better understanding of varying customers’ needs.

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• Improve customer satisfaction
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3PLs can use their expertise to build custom solutions that meet customer needs, such as offering flexible delivery options or creating an efficient returns process. 3PLs have access to advanced tracking technologies and reporting tools, which allow them to provide customers with real-time updates on their orders.

3PL logistics can offer a wide range of benefits to businesses, from improved efficiency and cost savings to access to new markets and better customer satisfaction.

As a reputed 3PL logistics provider, Allcargo Logistics understands the unique needs of your business and offers tailor-made solutions to help you streamline your supply chain operations. The market is constantly changing, and 3PLs can provide valuable insights into the varying changes of the customers’ needs.