The freight industry has seen many changes in the past 25 years with many companies now choosing to outsource their freight logistics to third-party logistics providers rather than handle all of their freight and warehousing needs in-house. Third-party logistics companies offer integrated or “bundled” services that can be customized to a client’s needs to provide any or all of a company’s supply chain management function. These services may include transportation, inventory management, storage, warehousing, cross-docking, order fulfillment, and freight forwarding allowing businesses to better concentrate on their core business. Freight forwarder
Outsourcing logistics to a third-party logistics provider makes sense in today’s increasingly competitive marketplace in which companies need to become leaner, reducing costs and assets. Labor and associated costs are among the highest for a company, making outsourcing of freight management and employees very cost-efficient. Warehousing costs can be significantly reduced by outsourcing, reducing also asset liability. Efficiency of scale allows asset third-party logistics companies to provide competitive pricing for the small and medium-sized businesses on a competitive level with Fortune 500 companies.
Logistics companies provide the experience, expertise, and networks that are otherwise unavailable to many businesses with in-house logistics departments. Because they have relationships with transport carriers with whom they do a significant amount of repeat business, they are able to negotiate much lower freight costs than individual companies can typically warrant. Additional savings are possible by taking advantage of a centrally-located third-party logistics company in a major hub city with warehousing and order-fulfilling services. Outsourcing costly, extraneous tasks necessary to business but not a part of the core business allows small and medium businesses compete and succeed in a global marketplace.