If you are not really certain of what a 3PL company is then listen closely as I elucidate it simply. A third party logistics provider or 3pl as it are referred to is a organization that acts as a negotiator between a business that does plenty of shipping with the trucking carriers. Why would you entertain talking to them? It is as straight forward as this, the know-how, improved pricing and service. A 3pl allows the little guy that normally would not get decent shipping discounts from the LTL providers to all of a sudden be in a position to go up against with some of its bigger competitors. Another way to look at it is, its like "Sams Club" pricing for shipping and transportation costs.

Now that we understand what a third party Logistics Company is... should you work with an asset based or a non asset based 3pl? Let's talk about these in detail so that you make the best decision possible.

Asset Based 3PL

An asset based 3pl has much of its resources tied up into "assets". Their assets may include anything that is involved with supply chain management, including technology systems, truck fleets, vehicles, aircraft, warehouses, warehousing equipment, forklifts etc. As a consequence of this you would be limited to sticking with the assets that this third party logistics service offers. I agree that you will see some savings here but here is ultimate question to contemplate: How do I truly know I am getting the best value available out there?

This conflict of interests raises another issue when it comes to handling claims resolution if they are using their own trucks and equipment. What would you do if you had a claim on damaged freight, would you feel comfortable 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 team 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 invest in. Instead, this type of 3PL usually possesses only desks, computers, and freight industry expertise. It is understandable to see why they are referred to as "transportation consultants". I want you think about this for a moment, since a non asset based 3pl is not forced 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 top value oriented carriers that meet your criteria and then you get to select which carriers to team up with.

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