Making the case for shippers to use a 3PL

There are many services that shippers can outsource, including warehouse operations, and doing so can provide added value to the shipper through expertise that 3PLs can provide. ( Photo: Shutterstock )

While many shippers operate their own fleet or brokerage operations, there is a growing trend to outsourcing those services to experts. The same can be said for many other operations, from technology, to freight management, to parcel management, said speakers on the “Outsourcing: Dealing with Contractors and Intermediaries” panel at the 44th annual Transportation & Logistics Council meeting in Charleston, SC, on Monday.

Steve Broussard, CTL, CTB of Broussard Logistics, identified 8 areas that shippers should consider outsourcing. “You want to look at what it is costing you [to do these tasks now] in your transportation network, benchmark it, and then compare it to [outside sources],” he said.

Lower costs and obtaining needed subject-matter expertise are among the reasons to consider outsourcing tasks to a 3PL. It also allows you to focus on your core competencies, he said, and potentially save money.

“If you are looking at fleet management outsourcing, it can reduce headcount and you can have routing and compliance [competency],” he said, by allowing those who are experts at this do the job. The result can be a reduction in overall costs, especially as routing is fine-tuned.

So, which areas should a shipper consider outsourcing? Broussard identified the following 8:

  1. Brokerage operations
  2. Freight bill audit and payment.
  3. Freight management sourcing
  4. Logistics technology
  5. Parcel shipment management
  6. Cargo claims management
  7. Warehousing
  8. Dedicated fleet services

Freight bill audit and payment processing is an area ripe for outsourcing, he said, especially in the less-than-truckload shipping space where the dynamics of pricing are changing rapidly to dimensional pricing and accessorial charges. “Carrier rules have just gotten crazy; there are now rules for everything,” he explained. Having an expert who is familiar with these changes can save a shipper money the long run. “Being able to manage these rules and accessorials are critical to [profitability] of your operation.”

Freight management sourcing can assist with legal issues and ensure you have acquired the proper equipment. Going hand-in-hand with both is parcel shipment management. “You may have an $8 linehaul rate but have $30 of accessorials because they have an accessorial for everything,” Broussard said. Having someone managing your parcel shipments can improve visibility into these charges and lead to more favorable contracts.

Broussard also suggested looking at outsourcing logistics technology as specialized companies can collect data that is useful throughout the organization and not siloed in the shipping department. “Typically, the logistics department doesn’t get a lot of support because everyone is focused on the sales side, but getting the right 3PL can help with that,” he said.

When looking for a 3PL partner, Broussard suggested reviewing several data points. These are:

  1. Their menu of services
  2. Experience
  3. References
  4. Technology and tech support
  5. Types of reports they generate and are they in a nature/form that you can customize?
  6. Bonding
  7. Data integration with your current ERP systems
  8. Data security

“If you are going to work with a 3PL, you need to have a contract,” Broussard says. He also advices regularly reviewing that contract and ensuring that the data you are getting is made available to those who will benefit from it.

Broussard Logistics provides TMS solutions, freight bill and auditing services and more as part of its solutions.

Stay up-to-date with the latest commentary and insights on FreightTech and the impact to the markets by subscribing.

Show More

Brian Straight

Brian Straight covers general transportation news and leads the editorial team as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler.