A basic definition of logistics is “the detailed organization and implementation of a complex operation.” If you think of the many different steps in getting a product from its point of origin to its final destination, a process that may include multiple steps that tae in several different countries, then you can see that this is indeed a complex operation that requires experience and an eye for detail.
As a business owner, this complicated process is usually something you do not want to tackle alone. This is where you want a company experienced in logistics operations to ensure that your goods or raw materials get from you to their point of consumption or use.
What is the Difference Between a Freight Broker and a 3PL Company?
The easiest way to look at the difference between the two is to consider the function each carries out. A freight broker is usually the link between a supplier of goods who has shipping needs and the transportation companies who can fulfil those needs. A broker is a vital part of the supply chain as they act as the middleman in your shipping process.
3PL (third party logistics) is a company who handles all logistics management on your behalf. Their services can include transportation of your goods from point of origin, warehousing those products, picking & packing for order fulfillment if required, packaging, and all needed freight forwarding services. Whether you are a small business owner or the owner of a large factory, using a 3PL service can make a lot of sense.
- Helps reduce costs. Because 3PLs tend to have established and extensive networks of carriers, they can obtain better rates for your goods than a small shipper operating solo. They have more leverage with freight companies than individual shippers do. 3PLs know the benefits of working with multiple carriers and can use that to your advantage.
- Economy of scale. Every business owner knows that demand can fluctuate over the course of the year. A good 3PL company knows this and can help you adjust according to the demand you are experiencing.
- Expansion. A 3PL can help you expand into new markets without committing significant investment. As they – or their partner – will have existing warehousing space and staff in different locations, you can leave that side of distribution logistics and inventory management entirely to them.
- Risk. Delays are part of doing business that relies on transport. When you have a 3PL company acting on your behalf, they are responsible for looking at alternative arrangements to lower risk. And with the experience they usually have, they already have alternatives identified.
- New businesses. Outsourcing the majority – or all – of your logistics to a 3PL makes good business sense. It allows you and your team to focus on your core business and ensuring all products are ready for market.
- Stress reduction. If you are shipping goods, equipment, and supplies internationally, then the amount of different paperwork that may be required can be daunting. Having someone who has the experience and knowledge to make those processes smoother removes the stress from you.
- Customer service. With efficient logistics, warehouse management, and other services being provided by a 3PL, it guarantees fast shipping on your products which means your customers are happy.
- Savings. When a 3PL is providing all of your logistics needs such as warehousing and transportation, then you are making significant savings on staff and premises.
Why is Logistics Important to Your Company?
Any successful business will, at some point, owe much of that success to how well organized their supply chain is. In the long term, good production logistics and good overall business logistics are essential components of your overall business model.
Whether you are a small business or a larger one, part of your forward planning will include growth and expansion. That growth may be regional, national, international, or even global, but having an experienced logistics company as your partner will be something that can stimulate and support that growth by reducing your total costs and by ensuring prompt and timely delivery of your goods.
Having a smooth logistics chain in place means that you can concentrate on the production and supply side of things. Leaving experts to concentrate on the intricacies of getting the goods to markets means that you have more time to grow your company.
Different Types Of Logistics Companies
Within the logistics industry as a whole, there are different types of companies providing different services. There are also companies which may specialize in particular aspects of the industry such as cold chain management and transportation. But generally, we can break down the logistics sector into four main areas:
- Freight Companies. These are the people who actually move your goods from A to B. They may be small and only carry domestic freight, or they may be larger and offer international and global shipments. Companies may also specialize in particular transport modes such as sea or air freight or they may offer multiple transport mode solutions.
- Freight Forwarders. These companies do not actually have any means of freight transportation. Instead, they operate as a facilitator within the supply chain, working with their established networks to optimize transport solutions for you. As well as coordinating the transportation of your goods, they will also handle all the documentation side such as import and export forms. These companies will have a lot of experience and multiple carrier partners to work with so can save you both time and money in the short and long term.
- Carriers. These businesses will directly handle your shipments. They can include rail companies, air cargo companies and ocean freight companies.
- Third party logistics companies. Commonly known as 3PLs, these are companies that specialize in providing all or part of the logistics for the supply chain of your business. How much of that chain they supply is down to the needs of the customer. They may only supply your transportation and storage needs or they may be a fully integrated part of your overall business model and also supply warehousing, order picking, packaging, management ordering, and delivery services.
How Technology is Changing the Future of Logistics
As with society as a whole, advances in technology are a constant within the logistics industry. Amazon’s plans to use drones for short haul (15 miles) deliveries have been well publicized, but what other developments might we see? Some new technologies are already here while others are still in the research & development stages.
- Monitoring systems within the industry are constantly being updated. AI (artificial intelligence) and machine learning are integral and necessary to progress as the sheer volume of data increases on a daily basis. Being able to have real-time tracking of your goods from the moment you dispatch them to the moment the customer signs for them means that not only do you have that tracking ability, but you can also analyze data, identify issues, and optimize solutions.
- Robotics. While always futuristic sounding, robotics already plays a bit part in some aspects of logistics. It can especially be found within large warehouses for automatic order-picking systems or autonomous vehicles such as forklifts. As the AI and software improve in this area, we will see robotics used to an even greater extent than now.
- 3D printing. This is another area of technology that has seen great leaps forward in recent years. It may present some challenges to the logistics industry in the long-term. Why ship a product halfway around the world when you can just install 3D printers at the destination?
- Autonomous vehicles. There are already efficient autonomous – or semi-autonomous vehicles in many warehouses and cargo ports. And it is definitely an area where the possibilities for logistics are positive. Some testing, for mail deliveries, has already taken place, and with the American Trucking Association estimating a shortage of almost 200,000 truck drivers in the U.S. by 2024, quick development of these vehicles may soon become a necessity.
We will not see a science-fiction future overnight. Many of these technologies have been in development for decades, and for some there is a long way to go. But as an industry, there must be recognition of what technologies are needed and a readiness to embrace them.
If your business needs goods moved between locations at any point, then you need some form of logistics management involved in your supply chain. That involvement can range from minimal transportation of goods to having a 3PL company integrated into several aspects of your operations. What is indisputable is that having good logistics in place improves your business and saves time and money.
Asiana USA offers some of the best logistic solutions available. With highly trained and experienced staff as well as offices in several countries, we can help improve your supply chain no matter the size of your business. To request a quote or make an inquiry, why not call us today on 855-500-1808.