How dose 3PL work?

How dose 3PL work

Third-party logistics(3PL) providers typically specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers’ needs, based on market conditions, to meet the demands and delivery service requirements for their products. Services often extend beyond logistics to include value-added services related to the production or procurement of goods, such as services that integrate parts of the supply chain. A provider of such integrated services is referenced as a third-party supply chain management provider (3PSCM), or as a supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.

The global 3PL market reached $75 billion in 2014, and grew to $157 billion in the US; demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014. As of 2014, 80 percent of all Fortune 500 companies and 96 percent of Fortune 100 used some form of 3PL services.

Third-party logistics providers include freight forwarders, courier companies, and other companies integrating & offering subcontracted logistics and transportation services. Hertz and Alfredsson (2003) describe four categories of 3PL providers:

Standard 3PL Provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not quite their main activity.
Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
The Customer Adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically quite small.
The Customer Developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.[4]
Outsourcing may involve a subset of an operation’s logistics, leaving some products or operating steps untouched because the in-house logistics is able to do the work better or cheaper than an external provider.[5] Another important point is the customer orientation of the 3PL provider. The provider has to fit to the structures and the requirements of the company. This fit is more important than the pure cost savings, like a survey of 3PL providers shows clearly: The customer orientation in form of adaptability to changing customer needs, reliability and the flexibility of third-party logistics provider were mentioned as much more important than pure cost savings.

First party logistics providers (1PL) are single service providers in a specific geographic area that specialize in certain goods or shipping methods. Examples are: carrying companies, port operators, depot companies. The logistics department of a producing firm can also be a first party logistics provider if they have own transport assets and warehouses.[9]

Second-party logistics providers (2PL) are service providers which provide their specialized logistics services in a larger (national) geographical area than the 1PL do. Often there are frame contracts between the 2PL and the customer, which regulate the conditions for the transport duties that are mostly placed short term. 2PLs provide own and external logistics resources like trucks, forklifts, warehouses etc. for transport, handling of cargo or warehouse management activities.Second-party logistics arose in the course of the globalization and the uprising trend of lean management when the companies began to outsource their logistics activities to focus on their own core companies. Examples are courier, express and parcel services; ocean carriers, freight forwarders and transshipment providers.

The most significant difference between a second party logistics provider and a third-party logistics provider is the fact that a 3PL provider is always integrated into the customer’s system. The 2PL is not integrated; in contrast to the 3PL, it is only an outsourced logistics provider with no system integration. A 2PL works often on call (e.g. express parcel services) whereas a 3PL is almost every time informed about the workload of the near future. As technology progresses, the methodology for notifying a 3PL of inbound workload usually falls on API integrations that connect, for example, an E-commerce store with a fulfilment center. Another point that differs 2 and 3PL is the specification and customizing of services. A 2PL normally only provides standardized services, whereas 3PLs often provide services that are customized and specialized to the needs of their customer. This is possible due to long term contracts that are usual in the third-party logistics market. Cost-effectiveness of a third-party logistics provider is only given over long periods of time with stable contract and profits. In contrast to that second party logistics services can’t be customized, concerning to the fluctuating market with hard competition and a price battle on a low level. And there we have another distinguishing point between 2PL and 3PL: Durability of contracts. 3PL contracts are long term contracts, whereas 2PL contracts are of low durability so that the customer is flexible in responding to market and price changes.

With companies operating globally, the need to increase supply chain visibility and reduce risk, improve velocity and reduce costs – all at the same time – requires a common technological solution.[10] Non-asset based providers perform functions such as consultation on packaging and transportation, freight quoting, financial settlement, auditing, tracking, customer service and issue resolution.[11] However, they do not employ any truck drivers or warehouse personnel, and they don’t own any physical freight distribution assets of their own – no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers but maintain a significantly greater degree of “hands-on” involvement in the transportation of products. These providers are 4PL and 5PL services.

A fourth party logistics provider has no owned transport assets or warehouse capacity. They have an allocative and integration function within a supply chain with the aim of increasing the efficiency of it. The idea of a fourth-party logistics provider was born in the seventies by the consulting company Accenture. Firms are outsourcing their selection of third-party logistics provider and the optimization process of the integration of these to a PL as an intermediary. That reduces costs and the 4PL have to have an overview of the whole logistics market to choose the ideal 3PL for all operative logistic activities. For being able to provide such an ideal solution fourth-party logistics providers need a good knowledge of the logistics branch and a good IT infrastructure. A fourth party logistics provider selects the 3PL providers from the market which are most suitable for the logistical issues of their customer. Unlike the allocative function of a 4PL in the supply chain, the core competence of a 3PL provider is the operative logistics.[12]

Fifth party logistics providers (5PL) provide supply chain management and offer system-oriented consulting and supply chain management services to their customers. Advancements in technology and the associated increases in supply chain visibility and inter-company communications have given rise to a relatively new model for third-party logistics operations – the “non-asset based logistics provider.

Exporting E-commerce Should Be Considered as the Main Body of E-commerce

As we know, E-commerce contains importing e-commerce and exporting e-commerce, while recently people mainly talk about importing e-commerce, but seldom think about selling our products to the other countries. And also, the logistics service provider as well.(e-commerce business)
With the rapid development of e-commerce, supporting service is well developed as well. ChinaDivision gains great development under this background. (global shipping from China)

1, Exporting e-commerce market share is getting bigger.
According to the , first half year of 2017, China E-commerce trading scale reached to 3.6 trillion, with a 30.7% year-on-year growth rate, including exporting e-commerce 2.75 trillion(81.5%), and importing e-commerce 0.8624 billion.(18.5%). and it is believed that total e-commerce trading scale will reach to 6.8 trillion.
2, Made in China is not the same as it was before.(e-commerce business)
In many people’s eyes, the low-end image of domestic goods may be the biggest problem for exporting e-commerce.However, the rapid growth of export e-commerce has a lot to do with the quality change of products made in China.
3, Policy-driven is always the fundamental guarantee. (global shipping from China)
Beside the “Belt?and Road” Initiative and industrial structural transformation, exporting e-commerce also bears a mission of balancing the international trade and adjusting the foreign exchange reserves. Therefore, government also spare no effort to support the development of E-commerce.

As an professional B2B order fulfillment and logistics service provider.
You can trust us:
Store, Pack and Ship directly from China, to better extend your business. We are your ideal choice. (e-commerce business) ChinaDivision.com is a leading service provider of China drop shipping, warehouse fulfillment, supply chain management and global shipping from China. With FREE warehousing for 90 days, state of the art warehouse management system, FREE API & plugins, we are confident to expand your business to new territories. We also provide customized value-added services including assembly, customized package and business inserts. If your manufacturer is in China, why not partner with us, ship directly from China and cut your cost?

Guide on Shipping from China

The main purpose of any business is to make profit. Profit making can be achieved by reduction in costs input. Shipping is the most expensive part of orders so getting a great price is essential to reduction of inputs and in return maximizing profit.

Cheapest International Shipping
Cheapest International Shipping

In shipping various items have to be taken into consideration among them; China products sourcing, warehousing, picking, packing and the shipping

Steps to be followed during shipping 

Select the product you intend to import. (shipping from China) Choosing the right product is key to the business. Selecting the product to import does not only involve picking the cheapest product or one that gives the highest edge on the mark-up but more to these. Selecting a product will involve;

International freight forwarders
cheapest shipping rates

The passion or love you have for the product. 

The shipping costs in relation to the size of the product to be shipped. Products, which can be shipped in large quantities, can be far less expensive than those that cannot.

More to that the size of the product about to be shipped this will help evaluate how much you can fit into one shipment.

The uniqueness of the item is also to be put in consideration. A product that is less unique risks production locally hence beating the whole reason of importing.

Identify Chinese exporters, rather the suppliers who will meet your desire. List the suppliers, suppliers can easily be obtained from professional sourcing companies and online outsourcing directories.

Once you have identified and listed the suppliers it is now time to contact each supplier on your list. Ask questions relating to the product this will help narrow it down to the supplier who is most appropriate or best suited for you.

While communicating one will be required to obtain the following information;

Check to see the business licensing information. You want to be sure that any company you do business with is properly licensed and in compliance with all applicable trade laws in order to avoid future legal problems which may affect your business. (shipping from China)

Client testimonials. A reputable enough supplier will give reference where one is required to obtain credibility information.

Obtain information regarding manufacturing and staffing. Be sure you understand the exporter’s relationship to the manufacturer

The supplier should give the name and location of the factory producing the product failure to which indicates a non-reputable supplier.

Obtain information on the experience of the factory in producing your particular product. Cost is not the only the consideration when choosing a supplier, quality may be just as important, and the manufacturer’s experience can be a good indication of the quality of work.

Obtain samples of the product, the supplier should be able to provide you with samples of the product so that you can get a better idea of the product. However this depends on the product you intend to import.

After adequate communication with various suppliers and identification of the best supplier negotiate a deal with your favorite supplier. During negotiations it’s key to focus on relationships. Suppliers will mostly engage with people with whom they are familiar with.

Locating and listing resellers is also key when indulging in the import business. Locating resellers involves; contacting potential reseller, follow up within the next few days.

A suitable warehouse and good warehouse costs is also essential. While choosing a warehouse various factors should be put in consideration among them; the general cost of warehousing, the handling of the imports, availability of needed equipment to handle the products, security, order and after storage services. Some of the after storage services that might be offered by product handlers include brand strengthening customized packaging of your goods such as printing a logo on the shipping bag or placing a card in the customer’s package.

In shipping there are various parties involved which the client has to be aware of, though not all must be present the common parties will include

First and foremost is the shipper this is the person to whom the goods being shipped belong. It is the person doing the shipment.(shipping from China)

The shipping company is the company that oversees shipment. the shipping company signs contracts and sends bills relating to your shipment

The origin agent also known as a freight forwarder. The origin agent is the local company involved in visual survey. It sends a representative who sees the cargo being shipped just before quoting the move. this helps give an accurate quote. the freight forwarder will also do the packing and loading the shipment.

The Consolidating Warehouse the consolidating warehouse is the holding station where, incase yo never had an exclusive container the goods will be held into a container with other goods or rather cargo in order to fill the container. your goods are to be held in the consolidated warehouse waiting for more goods in order to be transported all together.

An export port. An export port is the port where the container is loaded into the ship this is most likely located in the country of the supplier.

A ship line this is the shipping or the company that owns the ship.

A container line. This is a company that owns containers the containers may be rent out to interested shippers. The container line may at times be the same or otherwise as the ship line.

Destination port. This is the location intended for reception of the goods. The goods are received here and offloaded from the ship, from the destination port the cargo can either be transited or be held in a warehouse.(shipping from China)

Custom bonded warehouse. goods are held by customs officers waiting for clearance in form of taxes or legal documents here the goods are inspected and held awaiting clearance

The destination agent. this is a trustee in form of a company. the trustee handles custom clearing activities, port dealings and also involved in delivery to your desired location.

The broker. This is a move manager he is involved in any other activities that involve shipping.

If you are looking for a logistics company which provides of Shipping from China service, just visit: http://www.chinadivision.com/