The Role of Third-Party Logistics Providers

May 29 , 2023 | CATEGORY : SERVICES

Improved products, better customer relationships, including brand visibility are factors that bolster businesses.  But partnering with a third-party logistics provider can change a business in terms of the efficiency of supply chains and increase profitability. It allows businesses to channel their focus toward growth without dealing with the hassle of shipping-related issues.

And a third-party logistics provider offers services such as product storage in their warehouses, packing, and shipping to the e-commerce company's clients.

What is a third-party logistics provider? 

A third-party logistics provider is a specialized business that provides end-to-end services to support the supply chain of a company. These companies offer services like distribution, storage, transport, and order fulfillment to their customers. It is due to these factors that third-party logistics is in high demand in the industries that require regular shipping of their products. It helps these companies manage their supply chain efficiently and tackle rising issues.

Major services provided by a third-party logistics provider

Depending on their area of expertise, third-party logistics companies offer a variety of services. Below are a few, key third-party logistics services:

  • Getting items from different locations for managing the supply to support the operations of a company
  • Keeping track of the customers' orders, sorting and packing the product to deliver them to their respective destinations
  • Renting their goods storage facilities to companies that do not maintain such spaces
  •  Managing the shipment of inventory from the company to the customer. 

Certain third-party logistics companies also provide a return service. They pick up return orders from customers and deliver them to the respective companies.  

Third-party logistics fulfillment process


A typical third-party logistics fulfillment process is as follows:

  • Once the logistics company receives the stock from the client, it organizes and stores it in its warehouse
  • All the orders received by the seller are forwarded for fulfillment to the logistics company
  • After picking the orders from the respective stock-keeping units, the orders are packed and made ready for delivery with the purchase receipt
  • The logistics company will then choose the appropriate delivery partner for the packages to be shipped to their destinations
  • It is then the responsibility of the shipping partner to pick up the package from the distribution center of the logistics company and deliver the product to the customer
  • All the information related to tracking orders is updated on the system and forwarded to the customers as well

Advantages of using third-party logistics (3PL) services

  • It allows companies to take care of other crucial business-related activities while experts take care of the logistics
  • It allows companies to expand their reach to domestic and global with greater ease and tap into new markets
  • Companies do not require to invest in their warehouses
  • All the deliveries get taken care of by the third-party logistics company

Some additional services offered by third-party logistics

Freight forwarding

A third-party logistics provider and freight forwarders may work together for cargo space scheduling, managing relationships between clients and the service providers, and drafting reports on updates.

A freight forwarding company transports goods from point A to point B. The service providers essentially achieve this by planning the complete service. The freight forwarder manages any air, sea, or land transportation of goods. Freight forwarders also provide consolidated freight services and insurance options as well for cargo. 

Reverse logistics

Reverse logistics services manage the return of products from customers to the company and initiate the refund process.

The products that customers do not find to be fit or of any use are returned by them. They take care of delivering the replacement products as well. Cleaning up the goods that are not required anymore is also undertaken by third-party logistics companies.

Customized environment freights

Certain categories of products require a particular environment to stay in a usable condition. The logistics companies customize these special freights in which the required environments can be maintained by controlling the temperature, lights, humidity, or other factors as well. This helps in delivering environmentally sensitive products safely to their destinations in usable conditions. 

Consolidation and deconsolidation

Consolidation is the process of combining multiple small shipments or parcels into one larger shipment. Shippers benefit from consolidation since it lowers the cost of delivering freight and speeds up delivery. The quantity of freight or packages in a consolidated shipment, the shippers, and the freight's destination all affect the handling requirements and touchpoints. Consolidation has proven to be successful and effective when done properly. 

When the consolidated freight shipment reaches the destination, it is then de-consolidated into smaller packages to deliver to the customers. Deconsolidation is simply the process of dividing larger shipments into smaller packages that can be further shipped or transported to other warehouses, stores, or end users.