3PL Logistics: The Engine Powering Global Supply Chain
In an increasingly globalised world, businesses, particularly e-commerce businesses, are under constant pressure to deliver products faster, cheaper, and more efficiently. This is where 3PL logistics steps in as a fundamental component of modern supply chains. The global 3PL logistics market size is estimated to reach USD 1.29 trillion in 2024. However, what exactly is 3PL logistics, and how does it differ from other models like 4PL? More importantly, how can it benefit your business? The blog explores all in detail.
What is 3PL Logistics? A Simple Breakdown of Third-Party Logistics
Third-party logistics, or simply 3PL, is the process of outsourcing the storage, logistics, and supply chain responsibilities to a specialised provider that works as a third party at the backend of your business. The key responsibilities of 3pL logistics include warehouses, transportation, inventory management, and order fulfilment of your manufactured products to the end customers.
In the 1970s and 1980s, the term “third-party logistics” first appeared in the US. With time, more businesses started relying on 3PL logistics during this time. With the rise of eCommerce and the huge variety of businesses that exist today, the need for specialised fulfilment services has grown.
The logistics partners help businesses streamline supply chain processes, optimize costs, and ensure seamless deliveries. Essentially, a 3PL logistics partner acts as an extension of your business, assisting you in handling the complexities of logistics, optimizing logistics and shipping costs, and ensuring seamless deliveries so that you can focus on core operations. This allows the retailer to scale its operations without investing in additional infrastructure or staff.
The Difference Between 3PL & 4PL Logistics—Which One is Better?
Both 3PL (Third-Party Logistics) and 4PL (Fourth-Party Logistics) help businesses manage supply chains, but they differ in scope and control. While 3PL focuses on executing logistics operations, 4PL (Fourth-Party Logistics) takes a more strategic approach. A 4PL provider acts as a single point of contact, managing multiple 3PLs and overseeing the entire supply chain.
| Feature | 3PL (Third-Party Logistics) | 4PL (Fourth-Party Logistics) |
| Scope of Service | Manages specific logistics tasks like warehousing, fulfilment, and transportation. | Designs and oversees the entire supply chain, including managing 3PLs and other partners. |
| Example | A farmer hires a 3PL to store vegetables in its warehouse, as well as to pack and ship them to multiple grocery stores. | A 4PL manages a network of 3PLs on behalf of the farmer to take vegetables to grocery stores. |
| Asset Ownership | Often owns physical assets like warehouses, trucks, and technology. | Primarily focuses on technology and expertise, rarely owning physical assets. |
| Cost Structure | Costs can vary based on the specific services used and volume. May offer fixed rate or pay-per-use options. | Generally more expensive due to the broader scope and strategic planning involved. |
| Focus | Operational efficiency in individual logistics areas. | Strategic optimization of the entire supply chain for improved performance and cost savings. |
| Client Relationship | Acts as a service provider for specific tasks. | Acts as a strategic partner, providing a single point of contact for the entire supply chain. |
Which one is better:3PL or 4PL
If a company wants hands-on control over logistics, 3PL is ideal. However, for businesses looking for end-to-end supply chain optimization, a 4PL provider might be more suitable. For instance, an e-commerce business might benefit from a 3PL provider’s hands-on approach, while a multinational corporation might require the strategic oversight of a 4PL provider.
How 3PL Logistics Providers Impact Delivery Speeds & Costs
Opting for the services of a 3PL provider means businesses can focus on their core competencies while leaving the intricacies of logistics to the experienced professionals at their chosen 3PL service, such as Kun Fulfilment which promises fast deliveries and reduced costs. The fact is the right 3PL logistics provider can significantly enhance delivery efficiency while cutting logistics expenses.
Key benefits include
- Outsourcing logistics to a third-party provider significantly reduces labor costs by eliminating the need for hiring, training, and maintaining logistics staff, infrastructure, and equipment.
- Additionally, it enhances efficiency through expert process optimization and advanced technology, leading to faster and more reliable deliveries while minimizing expenses related to transportation and storage.
- Moreover, companies benefit from improved inventory management, ensuring optimal stock levels to prevent overstocking or stockouts, and reducing storage and logistics costs.
- Furthermore, access to global markets becomes seamless as third-party providers navigate international logistics complexities, lowering transportation costs and expanding market reach.
- Finally, compared to freight forwarders or brokers, a comprehensive third-party logistics provider offers end-to-end solutions, streamlining operations for maximum cost savings and operational efficiency.
“By leveraging Kun Fulfilment Network, our shipping time and cost have been reduced significantly. Initially, it took more than seven business days to get our orders delivered to the customers. But with Kun, not only has the average delivery time been reduced by two days, but we have also benefited in the form of reduced storage and shipping costs.”
Martin Kutin, COO of PSx
Other Advantages: Is 3PL Logistics Outsourcing Right for Your Business?
Along with cost reduction and shrunken delivery times, businesses that partner with knowledgeable 3PL logistics experience several benefits from this supply chain relationship. Let’s dive a little deeper into these relationship perks.
Expertise and Knowledge
By partnering with 3PL logistics providers, 3PL becomes the extension of your company with all its expertise and resources and manages the process through to delivery. Moreover, while shipping internationally, 3pls take the headaches of all documentation, duties, and regulations,
Saving Time and Money
Of course, when you hand over the maximum of your management and supply burden to 3pl Logistics, you will have that time to focus on your core competencies, resulting in bringing them more competitive in their market. Likewise, 3PLs save companies money with their services by eliminating the need to invest in warehouse space, transportation, technology, and additional manpower to operate their business.
Supply Chain Optimization
Utilizing a 3PL service provider means businesses get an all-in-one solution provider. From assembly, packaging, and warehousing to transportation, a well-rounded 3PL can cover it all, allowing your business to maximize profits and optimize your supply chain.
Finding the Right Shoe that Fits
As a strategic partner, 3PL Logistics matches your logistics needs with the right carriers to handle your truckloads at the most affordable price possible. Efficient 3PL logistics operate in environments that demand rapid changes and require continuous improvement. Kun Fulfilment provides its customers with flexibility that should apply to all aspects of your 3PL provider because they know that one solution does not fit all.
How 3PL Healthcare Logistics & E-commerce Logistics Are Evolving
Although 3PL logistics works for countless industries including sports, beauty, cosmetics, organic goods, and whatnot, the healthcare and e-commerce industries are witnessing significant advancements
3PL Healthcare Logistics
In the healthcare sector, logistics is a matter of life and death. From transporting medical supplies to delivering temperature-sensitive vaccines, 3PL providers play a critical role in ensuring the safe and timely delivery of healthcare products. For instance, during the COVID-19 pandemic, 3PL logistics were instrumental in distributing vaccines globally. According to DHL, a multinational logistics brand, the logistics giant delivered over 1 billion vaccine doses in 2021 alone, showcasing the importance of 3PL in healthcare logistics.
Key benefits of healthcare companies partnering with 3PL logistics include
- Cold chain logistics maintain temperature-controlled conditions to prevent spoilage and ensure the integrity of sensitive products like vaccines and biologics
- Real-time tracking further enhances supply chain security, allowing for continuous monitoring of shipments to prevent delays or temperature fluctuations.
- Additionally, strict compliance with health regulations guarantees that all deliveries meet industry standards, ensuring patient safety and regulatory adherence.
3PL E-commerce Logistics
Likewise, the e-commerce boom has transformed the logistics landscape, with 3PL providers stepping up to meet the demands of online shoppers. From same-day delivery to hassle-free returns, 3PL logistics is helping e-commerce businesses stay competitive.
In sum, in e-commerce, 3PL logistics act as a silver bullet for business due to the following benefits
- 3PL logistics enhances operational efficiency by leveraging AI-powered inventory forecasting, which accurately predicts demand to prevent stockouts and overstocking, optimizing storage costs and product availability.
- Additionally, same-day and next-day delivery services align with consumer expectations for speed and convenience, ensuring a competitive edge in the fast-paced e-commerce landscape.
- Streamlined return management systems further simplify reverse logistics, making the returns, exchanges, and refunds process seamless for both businesses and customers
Kun Fulfilment: Your Trusted 3PL Logistics
Kun Fulfilment crafts logistics solutions tailored to businesses at every stage of growth. Whether you’re a budding start-up, a fast-scaling e-commerce brand, or a well-established industry leader, we serve as your trusted partner in optimizing logistics. Leveraging cutting-edge technology, we enhance transparency and efficiency, ensuring seamless order processing while delivering real-time data and analytics for smarter business decisions and an improved customer experience. Strategically positioned in UK, we provide convenient access to major cities and ports, reducing transportation costs. With a strong focus on efficiency in design, operations, and technology, we keep expenses optimized—helping you save while scaling seamlessly.
Final Thoughts
In today’s fast-paced business environment, 3PL logistics is more than just a service—it’s a strategic advantage. By outsourcing logistics to a trusted provider, businesses can reduce costs, improve delivery speeds, and focus on what they do best.
Choosing the right 3PL logistics provider is crucial for businesses looking to scale efficiently, reduce logistics costs, and improve delivery speeds. At Kun Fulfilment, we specialise in delivering tailored 3PL solutions that meet the unique needs of your business. Whether you’re in healthcare, e-commerce, or retail, our logistics services are designed to help you stay ahead of the competition.
Read More: is starting with 3PL over Dropshipping practical?
