What is 3PL Logistics
A third-party logistics provider(3PL Logistics) , according to the Council of Supply Chain Management Professionals, 3PL is defined as “a firm that provides multiple logistics services for use by customers. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding.” Preferably, these services are integrated, or bundled together, by the provider.
Over years, logistics has developed from single-party logistics (self-managed) to multi-party, using e-logistics networks focusing on global operations.
• 1PL, which are the shipper or the consignee.
• 2PL, which are actual carriers such as Korean Air, Air France KLM, Maersk, MSC, CMA CGM.
• 3PL, which are provider of multiple logistics services such as DHL Express, Ceva Logistics, and Expeditors International.
• 4PL, which are consulting firms such as CPCS, SCMO, BMT, Deloitte, Arvato Bertelsmann and Accenture.
Four categories of 3PL services:
Within the 3PL Providers, Hertz and Alfredsson (2003) further describe four categories of 3PL services:
• 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.
• 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 Customer Developer: 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.
The business model utilized by Trinity CA Group is that Trinity Logistics Holdings (CA) LLC will act as an umbrella holdings company that owned and affiliated with separate entities that each specializes in one element of the 3PL by concentrating in warehousing, trucking, and freight forwarding (NVOCC), respectively.
Trinity Logistics Holdings (CA) LLC and all its subsidiaries or affiliates (hereinafter “Trinity CA Group”), are set up to be a comprehensive “one stop shop” 3PL logistic service provider; as detailed infra, it will not only be a Standard 3PL Provider but also a Service Developer and a Customer Adapter in meeting the myriads need of different 3 PL customers.
With the trend of economic globalization, enterprises must establish core competencies to enhance supply chain management, reducing logistics costs which do not belong to the core business by outsourcing of logistics activities. 3PL is through a partnership with first party or second party to offer its specialized logistics services to offer the advantages of:
- Cost and time savings
- Low capital commitment
3PL services include the most common design logistics systems, EDI, data management, freight consolidation, select carriers, forwarders, customs agents, warehousing, consulting, information management, payment of freight, freight negotiations.
Center for Logistics Research of United States University of Tennessee use the 3PL model to investigate several United States well-known logistics companies and their customers were surveyed that close to 100% customers using third-party logistics to reduce storage costs and management costs to improve operational efficiencies and enhance international competitiveness.
3PL – A Prospective Industry in USA
United States renowned economic analyst James Winchester points out that third-party logistics in the United States annual growth rate was 16.5%.
United States third party logistics has a potential market of about $ 700 billion a year, while the third-party logistics just now, that number is only 9.3%.