A Third party logistics provider is one who offers services in logistics that are outsourced. Such outsourcing involves any kind of management of various facets including procurement, as well as fulfillment operations. Within business terms, the term 3PL contains a broader context that applies to services or contracts involving the shipping as well as storing of items. People who operate 3PLs may be single providers or transportation or storage within the warehouse. They may also offer bundled services that are system-wide within the context of supplies and chain management. This paper analyses the relationship between 3PLs and motor carrier companies.
Here are ways that a good management of transportation creates a difference between a 3 PL and motor carrier body. First, the growth of global trade as well as international business operations has created an impact in more organizations becoming focused on working within the international markets. This kind of drive has made the presence of 3PL more influential in the global markets. According to Rushton (2018), transport as well as logistics has a tremendous role in supporting organization grow their business operations and create new partnerships both at a local and an international level. In fact, colossal businesses have a preference to establish their teams within having to handle the requirements in the supply chain as well as logistics.
Research also shows that approximately 80 percent of all companies that would be regarded as Fortune 500 and 100 have employed different forms of 3PL to manage their logistics chain operations. A great reason for this kind of benefit for 3PLs is because they have a greater network. The network often offers an edge of competition over the motor carrier firms or in-house channels sometimes happen. Outsourcing such logistics are a great way to save time as well as money that is involved in running and maintaining the local operations and logistics.
Secondly, 3PL is a part of a market that is highly competitive. Such markets often mean the providers go into a competition to gain clients. Such providers, who specialize in transportation, management of orders, warehousing as well as other services that are integrated choose to scale or offer customized details to meet the exact needs of the clients. This kind of 3PL means it differs greatly from motor carrier companies who offers services that are not customized as effectively as the previous operation departments (Blecker 2008).
On another note, one of the constraints of 3PLs is the time limitations. Effective time usage forms one of the major details that create the success of logistics providers anywhere in the world. 3PL suppliers and agents ought to have the ability to support clients through reducing the time spent in inbound operations. These includes, the reduction in the time spent when a client places the order gradually to the shipment process where the client receives the package. According to Zhang (2005), it takes the providers a considerable amount of effort to coordinate and communicate effectively between the agents who ship, the carriers who transport as well as the agents within the customs. All these must be done within proper timelines therefore, an efficient connection between the 3PLs and other motor carrier firms.
The lead providers of logistics often offer the services without any assets. They also have a specialized expertise within the industry as well as an experience to cut on overhead costs without burdening the clients. On the other hand, due to a lack of infrastructure that is available to the motor carrier companies, they have a minimal power to negotiate. The lower power to negotiate comes because they have fewer resources as compared to other providers in the market. In these circumstances, the win of 3PL agents depends on whether they collaborate with other independent service providers such as motor carrier companies. Their partnerships would therefore mean a connected means of providing resources and reaching clients without any hurdles in the process. These partnerships would also mean both firms trying to find competitive rates to offer the clients at all times (Blecker 2008).
It is also often very difficult for mini and medium sized 3PL agents to offer an effective way to track the information that are related to the shipment of each shipment. As a result, the information and documentation process becomes tedious and long. Different types of documents are required to facilitate trade transactions that are international. Some of the documents are invoices, insurance certificates, packing lists, notes of delivery, dock receipts, export licenses among others. According to Rushton & Walker (2007), managing transport documents has often become a challenge as a component of the administrative process that comes with it. Such administrative process involves large documentation, document transfers, as well as goods ownership from one client or party to the rest. Logistics agents and services providers must therefore ensure that the correct set of documents between the consignee, the shipper, the notify party as well as others are involved and complete.
In several instances, the managers who are in the upper level and work within 3PLs agents as well as the motor carrier firms have a tendency to focus on the core operations of transport as well as logistics management. Such focus means that they have limited time to focus on the reporting and management systems that need to create the connections between them. Such actions lead to circumstances where they lack enough presence and visibility with the other functional departments and areas of the organization. Based on the size of the industry, Sanders notes that the firm may encounter poor management of the processes as no one is focusing on them anyway (2018). On another note, when 3PLs and motor carriers have not made a connected front, there could be a loss of several amounts of money each year. Therefore, the 3PL agents could utilize the management system of the motor carriers to refine their existing operations and improve efficiency in work and operations. Zhang notes that several ways exist to automate the logistics process and these include tracking, monitoring and delivery stages of the business ecosystem (2005).
Subsequently, management systems of the transport companies that is available by motor carriers’ cushion the operations of the logistics providers and help in integrating order management and completion. The modules of distribution both within motor carriers as well as 3PLs are similar in order management and modules of distribution. This adds immense value to the service providers whether motor carrier or 3PLs, especially in cases where both require coordinating and managing immense volumes of shipment as well as data from sources across the ecosystem. In both cases, clients manage to track the status of their orders and are able to gain peace of mind knowing their orders are safe and will reach their destination within the correct time agreed.
According to Blecker & Aldarrat (2008), this is the age of electronic data exchange, meaning that EDI has become a core part of any modern firm and business. This follows that most business documents follow an electronic exchange between trading partners. Service providers have the ability to communicate with each other and with their trading partners effectively. As noted by Blecker & Aldarrat (2008), this includes transfer of documents through electronic transfer which include invoices as well as purchase orders. The usage of EDI in this case is to help leverage between several transactions such as:
- 204: shipping information of the motor carrier: people and agents who ship use this to tender an offer requiring a shipment relating to a full load of one truck with motor carrier.
- 210: details and invoice of the motor carrier freight: this is sent from the carrier shipper, to the consignee who has a direct connection to the 3PL. in the process of processing payments, the freight charges are also included here. In this case, the 3PL as well as the motor carrier company liaise to provide an efficient delivery at both ends of the value chain.
- 214: status message of the motor carrier firm and shipment: in this case, most shipment such as companies dealing with the trucking use this to offer the status of their consignment to the clients. \as can be noticed here, both the 3PL and the motor carrier have a relationship that ensures that the clients receive real-time updates on the nature and status of the shipment at all times.
- 990: tender load response: motor carriers use this to note whether they are in a position to pick up a particular shipment that has been previously been offered by the shipper. In this case, the 3PL has a way of connecting both systems to offer a new way of checking the consignee and ensuring that they fall within the bandwidth of time required.
- 997: acknowledgement function: this becomes the receipt that acknowledges that an EDI business function is complete and has been received by the remote party. In most instances, both 3PLs and motor carriers have a special part to play in this process.
In conclusion, the rates of freight also make up a complex combination that includes the type of load, surcharges, and base rates, charges of the equipment as well as any other additional charges (Zhang 2005). Cargo in this case is often transported in different forms using various modes of transport. 3PLs and motor carriers have a crucial role to play in this angle for the connectivity in plays in offering these options. For example, some modes of transport could be an FCL or a LCL. Both terms refer to either a full container load or a less container load as with the case of sea shipments. The specific mode of transportation therefore has an implication on the number and rate of shipment whether it’s a motor carrier or a 3PL. further, the transport systems of management offers 3PLs and motor carriers an effective way to create rate sheets for each specific services regardless of whether they are vendor or client based. Shippers, whether for 3PLs or motor carriers can therefore access each system whenever they want to manage and review the rates applicable for each product before anyone places an order.
Blecker, T., & Aldarrat, H. (2008). Management in logistics networks and nodes: Concepts, technology and applications. Berlin: Erich Schmidt.
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Rushton, A., & Walker, S. (2007). International logistics and supply chain outsourcing: From local to global. London: Kogan Page.
Sanders, N. R. (2018). Supply chain management: A global perspective. London: Sage Publishers.
Zhang, C. (2005). Third party logistics management. Berlin: Logos.