Third-Party Logistics (3PL)

Third-Party Logistics (3PL) is an organization's outsourcing of its distribution services to third-party logistics businesses that specialize in integrated operations of warehousing and transportation services. A 3PL manages supply chain operations on behalf of businesses across different sectors, handling functions that include freight brokerage, warehousing, inventory management, order fulfillment, and customs clearance. In air cargo operations, transportation-based 3PLs specialize in managing air freight functions and oversee the booking and coordination of air cargo, while they handle customs paperwork and clearances, reducing delays. 3PL providers typically have a large network of carriers (air, ground, and ocean) which are located all throughout the state, country, or region of the globe.

DHL Supply Chain operates as a 3PL for electronics manufacturer Samsung, managing inventory at distribution centers near LAX airport and coordinating air shipments using DHL Express flights with AWB numbers starting with 057. When FedEx Trade Networks acts as a 3PL for automotive parts supplier Magna International, they handle warehousing at Memphis hub facilities and book air cargo space on FedEx Express flights carrying AWB numbers beginning with 023-12345678, managing the entire supply chain from inbound freight to final delivery.

• 3PL
• logistics outsourcing
• outsourced logistics

What's the difference between a 3PL and a freight forwarder in air cargo operations?

3PLs provide end-to-end logistics management, including warehousing, inventory, picking/packing, and returns, while freight forwarders focus specifically on coordinating transport between two points, typically across borders. 3PLs are typically asset-based, owning/renting warehouses, tools, and infrastructure, while freight forwarders rarely own significant logistics assets and act mainly as intermediaries. Some 3PLs offer international shipping, but most partner with freight forwarders for the ocean and air legs, with a 3PL's strength kicking in once the cargo reaches its warehouse.

Can a 3PL handle both air cargo booking and ground distribution for the same shipment?

Yes, full-service 3PLs can handle domestic services covering air freight, truck brokerage, LTL, and FTL, receiving inbound containers at facilities and managing everything through pick, pack, and final delivery. 3PL providers use various operational strategies to enhance air freight services, focusing on optimizing route planning, effective inventory management, cargo consolidation, and efficient customs clearance processes. 3PLs can offer a portfolio of logistics solutions like transportation, order fulfillment, inventory management, warehouse storage, returns services, managing and storing inventories, distributing products to retail or other locations, and fulfilling customers' online orders.