3PL Management - Should I Choose An Asset Or Non-Asset Business?

A 3PL (3rd party logistics) management company fulfills the role of a go-between for companies that deal with a high volume of freight using trucking carriers, warehouses, and air shipments. The advantages of using a 3PL company are their expertise in shipping and warehousing, and less expensive pricing and services compared to an in-house operation. A 3PL management company allows a medium sized business that generally wouldn't have the resources to manage its own warehouse and shipping operation to be able to perform on the same level as bigger suppliers. Now that we've explained what a 3rd party logistics business is, we will now discuss the difference between an asset-based or non-asset based 3PL management organization in order to give you the necessary information for an educated choice.

Asset-Based 3PL Management

An asset-based 3PL management company retains numerous supply chain "assets." These assets usually consist of truck fleets, aircraft, warehouses, warehousing gear, and so on. While you can see you'd be limited to utilizing the specific assts that this 3rd party logistics business has on hand, there's little doubt you'll be far better off than before you began using their services. It's still important to ask yourself, though: How do I know if I'm getting the very best 3PL services available?

3PL Management Resolves Supply Chain Problems

One critical aspect of using an asset-based 3PL management company is the conflict of interests that can stem from the company using its own trucks, loading gear, warehouse, etc. This can pose a problem when dealing with problem resolution. For example, in the event you have to declare damaged freight, complications can arise when reporting the problem and getting reimbursed in a timely manner. This can become a big problem over time.

Non-Asset Based 3PL Management

A non-asset based 3PL management company performs all of the same services as an asset-based 3PL company, such as quoting freight prices, scheduling pickups and deliveries, routing, and auditing, but does not have to manage all of the transportation trappings and warehouses. Rather, this kind of 3PL management generally possesses only the bare minimum, such as a computer system and extensive freight business experience. Actually, they can be more accurately viewed as "transportation consultants."

3PL Management Assets

It's important to note that a non-asset based 3PL management company isn't limited to utilizing a specific warehouse or carrier, and usually do not have ties to particular carriers. Because of that, they are in a position to negotiate the very best fees for your organization. Negotiations will most likely be carried out with the carriers that meet your requirements after you determine which carriers have a track record of excellent service. Because there's no conflict of interests in that scenario, the process of problem resolution and reimbursements are far less complex. It is clear, then, why most organizations choose non-asset based 3PL management companies to meet their shipping and warehousing needs.