It’s often easy to see how a third-party transportation provider (3PL) can help fill in for route guide failures and unexpected last-minute shipments, but there are more ways to extract value from a 3PL partnership. When enlisting the services of a 3PL for last minute shipments only, pricing can vary considerably making it extremely difficult to anticipate costs and accurately forecast your budget. Partnering with a 3PL on deliberate shipments that do not marry well with an asset provider can lead to better service and consistent pricing.
First, it’s important to understand where asset providers and/or private fleets provide the greatest value. If you include asset, non-asset, and private fleets in your plan, you typically want your most consistent lanes on private fleet, highest volume on asset, and variable volume with a 3PL. Asset carriers can build consistent, high volume lanes into their network to ensure they have capacity, often at the lowest cost. However, these costs can vary widely when your volumes unexpectedly rise or fall, or when you need to pull inventory from an unplanned facility. Private fleets tend to have less range, often cannot reach unpredicted locations, and there are only so many trucks available when volumes increase in certain lanes. Asset based carriers are also tethered to their equipment and drivers’ locations so being able to add capacity at a moment’s notice can be a challenge to their model. With these restraints in mind, here are three ways a 3PL can be worked into your logistics strategy to achieve your objectives:
- Lanes that have shown a tendency to surge 10+% or decline 20+% of forecast
- Lanes that have volumes forecasting 20 shipments or less annually
- Projects and inventory moves
Lanes that have shown a tendency to surge 10+% or decline 20+% from forecast
Lanes that have volumes forecasting 20 shipments or less annually
Even if historical data and forecasting provide guidance on most of your shipping needs, product launches, shifts in inventory, or unexpected issues up stream in your supply chain can create unexpected fluctuations or changes in shipping lanes. Often these are managed through “mini bids” or if completely unexpected, they could wind up on the spot market. The flexible model of 3PLs are a natural fit to short term changes in your shipping patterns. When bundled and presented to a 3PL provider, often the outcome is a balance of cost and service that minimizes disruption to both your customers and to your overall anticipated transportation spend.
Mary Murphy, Vice President of Strategy