Third Party Logistics: Should I Pick An Asset Or Non Asset Provider?

If you are not really certain of what a third party Logistics company is then allow me a moment to explain it simply. A third party logistics provider or 3pl as it are referred to is a service that serves as a mediator between a corporation that does a lot of shipping with the trucking carriers. Why would you entertain talking to them? It is as easy as this, the knowledge, improved pricing and service. A 3pl allows a medium sized company that usually would not get aggressive shipping discounts from the LTL carriers to all of a sudden be able to play on an even playing field with some of its large competitors. Here’s a simple analogy, think of it as "Sams Club" pricing for shipping and transportation costs.

Now that we understand what a third party Logistics Company is... should you work with an asset based or a non asset based 3pl? Let's talk about these in detail so that you feel comfortable moving forward.

Asset Based 3PL

An asset based service has much of its resources tied up into "assets". Their assets may include anything that is related with supply chain management, including technology systems, truck fleets, vehicles, airplanes, warehouses, packing and unpacking equipment, forklifts etc. As a result you would be restricted to using the assets that this third party logistics company offers. True their suggestions will save you money, but here is a question to meditate on: How will I really know I am getting the best value available out there?

This raises another problem because of a conflict of interests when it comes to handling claims resolution if they are using their own trucks and equipment. Pretend for a moment that if you had a claim on damaged freight, would you feel all comfy trusting that your claim would be handled in the shortest time and reimbursed for the highest value possible?

Non Asset Based 3PL

This 3PL handles all of the responsibilities of a third party logistics provider such as quoting freight, booking pickups and deliveries, routing, and auditing, but doesn't tie up all of its cash all of the transportation assets that an asset based 3PL would own. Instead, this type of 3PL usually possesses only desks, computers, and freight industry expertise. It is understandable to see why they are referred to as “transportation consultants”.

Now this is an important point to dwell on, since a non asset based 3pl is not restricted to using any particular warehouse or carrier and usually have no ties to carriers, they are now free to use their experience and knowledge of the transportation market to negotiate the best deal for their clients. Negotiations will be done with the best value oriented carriers that meet your criteria and then you get to select which carriers to team up with.

Since there is no conflict of interests here, there is also no anxiety about resolving any claims that you might have either. Now you can see why many business owners choose to team up with a non-asset based third party logisctics company. They appreciate that they now have the unlimited freedom to work with the any service providers that best meet their needs.

TSG is an Atlanta Freight Forwarder shipping.
Our clients reduce freight costs while maintaining quality and service. Free report on how to choose a logistics company: www.3pl-logistics-services.com

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