3PL's: Should I Select An Asset Or Non Asset Service?

If you are not sure of what a 3PL company is then listen closely as I clarify it simply. A third party logistics company or 3pl as they are referred to is a service that serves as a mediator between a business that does plenty of shipping with the trucking carriers. Why would you even think about doing this? It is as easy as this, the know-how, cheaper pricing and service. A 3pl gives the opportunity to the little guy that ordinarily would not get decent shipping discounts from the LTL providers to all of a sudden be in a position to compete 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 have explained what a third party Logistics Company is... should your organization work with an asset based or a non asset based 3pl? Let's explain these in detail so that you make the best decision possible.

Asset Based 3PL

An asset based service holds many supply chain management “assets”. These assets may include anything that is related with supply chain management, including technology systems, truck fleets, vehicles, airplanes, warehousing facilities, packing and unpacking equipment, forklifts etc. As a result you would be limited to sticking with the assets that this third party logistics company provides. True their suggestions will save you money, but here is the most important question to meditate on: How will I really know I am getting the best value available out there?

Can you also see how this conflict of interests could pose a problem 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 at ease with the idea that your claim would be resolved in the shortest time and reimbursed for the highest value possible?

Non Asset Based 3PL

This 3PL handles all of the services 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. Now you can see why they are referred to as “transportation consultants”. Here is something to think about, since a non asset based 3pl is not restricted to using any particular warehouse or transportation company and usually have no ties to carriers, they are now in the best position to use their experience to negotiate the best deal for their clients. Negotiations will be done with the best value oriented carriers that meet your needs and then you get to decide which carriers to work with.

Since there is no conflict of interests here, there is also no concern about resolving any claims that you might have either. Now you can see why many businesses choose to team up with a non-asset based provider. They value that they now have the unlimited freedom to partner with the service providers that best meet their needs.

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