In shipping and logistics, regardless of the niche, you sometimes need to outsource to a 4PL or 3PL brokerage. Not because you’re incapable of getting it done, but it frees up time, space, and responsibilities within the company. That’s where third- and fourth-party logistics come in, or in other words, 3PL and 4PLs. How do you know which one to use though? Let’s find out.
Why use a non-asset brokerage at all
First off, you’re probably wondering, “what’s the point of using a non-asset brokerage in the first place?” They don’t have a fleet of trucks or warehouses for you to store product in, so why use one? While they don’t have physical assets, they do have a vast network of carriers, lanes, and partners. This allows them to work as expert consultants on your behalf. 3PL’s have the knowledge, expertise, technology. They provide increased efficiency with your shipments and negotiate pricing to save you money.
What is a 3PL Brokerage?
Now you have to ask yourself, how do I know if a 3PL brokerage is right for me? Well, a 3PL brokerage is basically the intermediary between you and the carriers that ship your items. Additionally, Sometimes they add packaging as a service to add value to the deal. For example, a farmer might hire a 3PL brokerage to pack the eggs and then have them shipped. The 3PL brokerage essentially oversees the management process of shipments through outsourced transportation and logistics services.
Working with a 3PL brokerage can help you focus on other areas in your company and making those more efficient as well as being more cost-effective. You save on putting in the investment in growing your own fleet of trucks and hiring drivers and because the 3PL brokerage will already have a logistics infrastructure in place, you will really be getting the most out of your money.
What is a 4PL Brokerage?
A 4PL brokerage is a provider that outsources the MANAGEMENT of logistics activities, including the supply chain responsibilities and tasks. So, a 3PL gets hired to pack the eggs in cartons and transports them from the farm to the grocery store. However, a 4PL might manage communication with the farmer to increase egg production if the grocery store’s inventory declines. There’s an extra responsibility within a 4PL to pretty much act like an advisor or manager for the company as well as the tasks of a 3PL.
A 4PL brokerage is able to take care of management, communication, consulting, and integrating new technologies if need be as well as taking care of the transportation and logistical aspects of the company. Because they can offer so much, your operational costs reduce significantly. However, one of the biggest disadvantages of using a 4PL is how much a company ends up depending on them in the long term. Another disadvantage is that they can be quite expensive for small companies.
When to use a 3PL Brokerage vs a 4PL Brokerage
If you are running a company and don’t want to take care of the logistics transportation and the cost of having your own trucks, a 3PL brokerage is probably the best bet for you. However, if you want assistance in communication, planning, management, and the 3PL brokerage tasks, then a 4PL is the one to go to. However, don’t forget, with more services offered, a 4PL brokerage will be much more costly. So, if your company isn’t large, you might not be able to comfortably afford one.
In conclusion, outsourcing a company to undertake certain responsibilities at your company is becoming more and more popular over the years. You just need to take a look at what areas you need help in and what you are able to afford. If you have a great operation within all areas except the transportation aspect and don’t want to interfere, then a 3PL brokerage is the way to go. However, if you need help with both transportation, management, consulting, and more then maybe you should look into a 4PL.
If you are in the marketing for a new shipping partner then check out Becker Logistics. We are able to offer 3PL and 4PL services, depending on what is needed. We have a team that is ready to go out and start shipping for YOU. You can reach out directly to Becker Logistics by clicking here. Additionally, you can request a freight quote to get started today.