How A 3PL Can Reduce Both Hard & Soft Dollar Transportation CostsWritten by Paul Forand
It's no secret that shipping expenses are becoming one of the most painful parts of budgets these days. Costs are rising, and sometimes there’s very little a business can do on its own to fix the situation.
The boom in global manufacturing means that many carriers are at capacity, and government regulations and the driver shortage are making the situation worse. This translates directly into higher shipping costs for everyone.
For this reason, more companies that had previously handled shipping internally are starting to look towards Third-Party Logistics (3PL) providers. By outsourcing your freight to a 3PL, you can find considerable savings in both raw freight costs, as well as on your own back-end processes.
Four Ways A 3PL Creates Big Savings For Smaller Companies
1 - Price leverage.
Right now, the freight rate climate is the best that it has been in about 20 years, and purchasing power is a key component to landing favorable deals with carriers. However, most smaller companies lack the needed leverage in transportation spend to negotiate favorable deals.
However, a good 3PL can bring that buying power to the table, by acting as a single buyer on behalf of all their clients. By bundling freight purchases in this way, a 3PL in most cases, is able to achieve optimal rates.
2 – Strategic carrier relationships
A good 3PL who has been in business for years, has forged solid relationships with their carrier counterparts that can’t be replaced. From customer service to “C” level executives, a respectable 3PL has relationships with the carriers that go way back and simply can’t be developed by anyone else, even over the course of a few years.
This is the best LTL environment in 20+ years. Collaboration between carriers, 3PLs and shippers is going to be crucial in order to keep costs down in the future. Carriers want to work strategically with 3PLs to help shippers keep costs low.
3 - Paperless processes.
3PLs have long known the value of paperless electronic processes for dealing with bureaucracy. It reduces waste, ensures more accurate auditing, and can streamline the process.
A small investment in technology can create immediate and permanent cost savings on your back end, while simultaneously bringing better service to your customers as well. Given that most or all of your departments are touched by shipping procedures in some way, this a true business-wide benefit.
4 - Systems integration.
The other reason the technology investment is so valuable is that a good 3PL can integrate many of their computer systems into your own. For example, their rating engines can be made accessible to every member of your sales staff, at every POS. They could be giving instant and accurate shipping costs at the same time as the sale.
Or, as another example, these systems can be highly automated. Orders a customer places on the website could call upon the same systems to obtain instant rates at checkout. Or post-sale services, like replacement parts fulfillment, can be handled with a few clicks directly through a web interface.
3PLs Bring Real Savings Across All Shipping Operations
Your company should be focusing on your core business today and looking for new ways to keep your customers happy. You shouldn't be wasting time or money dealing with shipping internally, especially when there are options which can take most of those burdens entirely off your shoulders.
Due to the experience, price leverage, and superior technology a 3PL brings to the table, partnering with one is a great option that can often cut your transportation costs by 10% or more.
Want to learn more? Contact ReTrans Freight today for a free consultation!