Truckload Logistics Management – Why You Shouldn’t Choose Management Based Third Party Logistics

In order for your company to make as much money as possible, it has to save as much as possible; and if your company has shipping needs, how you handle your shipping process can have a significant impact on your bottom line. In order to save the most money on the shipping process, companies that don’t employ fulltime logistics professionals pursue one of two logistics management options: hiring a third party logistics provider or implementing truck load logistics software. Traditionally, companies outsource their transportation logistics. But with the technological truckload logistics management solutions that are now available through truck load logistics software, more and more companies are deciding to take control of their own shipping process through logistics software.

If you currently use management based 3PL and are satisfied with the results, you may not be aware of how management based 3PL really works. Although 3PL providers offer their clients truckload (TL) shipping solutions, the paramount goal of 3PL is not to provide shipping companies with the best logistics operations for their shipping process; the primary is to make money for 3PL companies. Management based 3PL companies earn their money by seeking out discounted shipping arrangements with carrier companies. The carrier companies offer the discounts because 3PL-providers supply a steady stream of business that more than offsets the discounts. But once management based 3PL providers receive the discounts, they don’t pass the savings on to their customers.

Calling management based 3PL providers middlemen might sound hyperbolic, but that’s essentially what they are. They know that companies that don’t employ fulltime logistics professionals have to look for logistics elsewhere, and they supply logistics at a price that defeats the purpose of pursuing truckload logistics management in the first place: to save as much money as possible. Because 3PL providers have to realize a meaningful price differential between the price discounts offered by carriers and the price that they charge shipping companies, 3PL providers only work with carriers that offer preferred discounts, meaning that a company’s range of TL shipping solutions is ultimately contingent on the 3PL provider’s needs and its clients’ needs. By implementing truckload logistics management software, companies can increase their range of shipping options and realize the same shipping discounts that 3PL providers realize, the difference being that the discount increases only a shipping company’s bottom line and not a 3PL provider’s.