What A Third-Party Logistics (3PL) Company Does A third-party logistics or ‘3PL’ company is a logistics provider that supplies outsourced logistic services to other companies. There are several reasons why a company might want to outsource their logistic requirements. If they are a small company and want to only ship a relatively small amount of freight, a third-party provider can make use of consolidation, available warehouse space and other resources in order to deliver economies of scale to the client. Alternatively, if the company has special packaging or freight transport requirements they can make use of the expertise and physical assets of a third-party logistics provider in ensuring security and resource optimization. Even small companies sometimes need to find freight providers that cater for specialist needs, and the infrequency of the specialist requirements can lead to it being uneconomical to have and use in-house resources – particularly in the case of outbound freight which requires long-distance motor trucking. 3PL providers usually take advantage of a wide client base to provide resources which would not otherwise be economical – for example specialized equipment such as climate-controlled freight storage and reefers, or large-scale distributed warehousing. 3PL providers are also in a position to provide special services such as large-scale ‘pick and pack’, extremely urgent expedited freight delivery, pallet exchange systems, and dock work. Of course a company may also use a third-party logistics firm for many of the same reasons that they might use a freight agent or broker – although of course it is not uncommon for businesses to employ both. Freight logistics companies can on the simplest level act as a sort of matchmaking service, allowing small businesses to make use of their connections to find trucks, and allowing owner-operators or smaller motor freight trucking firms to find freight that requires distribution. However the extent of the 3PL provider’s relationship with both parties varies; sometimes the provider will only interface with the client in a peripheral way, providing advice and brokering services for smaller independent freight providers, and sometimes the provider takes over, manages and runs the entire logistic portion of the client’s supply chain. Recent years have seen the role of 3PL providers expand somewhat. One-time on-demand urgent transportation of freight is a growth area, and many 3PL firms pride themselves on having rapid response and sufficient flexibility to react to quickly changing circumstances. There is also a rise in the number of Non-Asset-Based logistics providers: firms which have no facilities, warehouses or trucks but which operate entirely out of offices and provide expertise and booking, routing and other administrative services. This approach is one-stage removed even from third-party logistics and so is sometimes called fourth-party logistics or 4PL.