People frequently use the terms 3PL and freight broker interchangeably, which causes confusion about the nuances of either service. Although both 3PLs and Freight Brokers act as intermediaries between the shipper and the carrier, their roles are distinct. A broker is primarily concerned with the execution of a single shipment while striving to meet specific cost and service objectives. The 3PL provider considers the big picture and thinks strategically. They plan earlier in the supply chain and anticipate a client’s needs at every stage of the supply chain, transportation, and delivery process.
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WHAT IS A FREIGHT BROKER?
A freight broker will frequently concentrate on a single shipment and act as a non-asset-bearing intermediary between a shipper with goods to transport and a carrier who transports the freight. A freight broker, in essence, works directly with owner-operators across the country to coordinate individual shipments. In North America, freight brokers currently handle a significant amount of truck transport.
In the grand scheme of things, freight brokers frequently collaborate with hundreds, if not thousands, of small to medium-sized freight carriers to provide a vast network of shipment options. This provides shippers with alternatives to larger freight carrier providers. Because larger carriers frequently have long-standing relationships with 3PL companies, smaller carrier operations frequently rely on brokers for the business.
WHAT IS A THIRD-PARTY LOGISTICS COMPANY?
A third-party logistics company is typically an asset-bearing firm that develops long-term relationships with shippers. Third-party logistics companies typically invest in physical and human capital, such as physical locations and wheels on the ground.
WHY SHIPPERS NEED A HEALTHY MIX OF BROKERAGE AND 3PL SERVICES
Shippers seeking to participate in a collaborative transportation network will find that a 3PL meets their requirements. However, freight brokers have a role to play in relation to shippers who already have established 3PL relationships. If a shipper needs more flexibility in their shipping needs, they can supplement their shipping needs with the help of a brokerage firm. When shipping capacity is limited, 3PLs’ long-standing relationships can be advantageous. When it comes to your own business, you don’t have to choose between a 3PL and a freight broker. Shippers form relationships with third-party logistics (3PL) companies and freight brokerages in order to reduce shipping costs.
Many businesses have to deal with finding suppliers in some way. There is no doubt that you are involved in distribution logistics, inventory management, and warehousing on some level as a small business owner. Most of these functions may already be handled internally by you. Third-party logistics providers, on the other hand, are frequently the solution for more complicated procedures. If you decide to export your products, for example, you may hire a person or organization to assist with distribution logistics.
