Freight Logistics Software Vs Third Party Logistics: Which Is Better?

Today, two types of freight solutions appeal to shippers that rely on carriers: logistics software (a.k.a. TMS software) and third party logistics (3PL). Logistics software allows shippers to become their own logistics provider by using a software program, while 3PL providers negotiate arrangements between shippers and carriers. Frequently compared and contrasted, logistics software and 3PL each offer unique benefits. However, the former has the following important advantages:

Less Expensive

Standard 3PL providers and service developers, which offer particular services and not comprehensive solutions, are usually quite affordable. When you hire a provider that offers innovative management of the shipping process – namely, a customer developer – the cost can compare to hiring an in-house logistics department. Logistics software provides logistics through a software as a service (SaaS) platform. It can also be implemented as an in house solution. Instead of relying on a costly customer developer, you can save money and realize more control by using a software solution.

More Control

A top complaint of 3PL customers is they feel distanced from their shipping process and the entity that manages it. Different 3PL providers have different approaches, but few of them integrate the shipper in the shipping process in a formal capacity. For some shippers, having the shipping process fully managed by another entity is appealing. Due to its expense and vendor issues it involves, most shippers wish to be involved in the process. Freight logistics software does more than “involve” shippers in their own shipping process; it puts them in control of it.

Better Options

3PL providers make freight arrangements by listing an available load in an electronic posting system, where it can be matched with an available carrier, or by negotiating with carriers that don’t use a posting system. Because the former method is usually the easiest, many 3PL providers use it to arrange the largest percentage of shipments – a scenario that limits shippers to carriers who use a posting system. Logistics software removes this barrier and exposes you to more carrier options. In some instances, a shipper misses the best carrier option because the carrier who could provide it will not work with the shipper’s 3PL.

Greater Security

No shipping process is as secure as one that the shipper handles on its own. When outsourcing to a 3PL, shippers naturally lose the capacity to scrutinize the carriers with which their loads are placed. Although 3PL providers select carriers with the customer in mind, they also select them with themselves in mind – a dichotomy that can jeopardize the interests of shippers. Freight logistics software alleviates security concerns by putting you in control of the shipping process.

Conclusion

Logistics software is a viable replacement for 3PL, particularly for shippers who wish to control their own shipping process. Next to payroll, shipping is the second largest operating expense for most shippers. This means that rejuvenating a stale shipping process with better carrier options can have a significant impact on a company’s bottom line – an impact that logistics software allows you to achieve.

LTL Logistics Software Among Other Logistical Resources

Businesses shipping small loads through second party carriers often have difficulty finding affordable shipping arrangements. Truck Load (TL) shipping is unaffordable because a partial load would be shipped at the price of a full load, while parcel shipping can become unaffordable when a large number of parcels are shipped. When low volume shippers can afford neither TL shipping nor parcel shipping, they turn to Less than Truck Load (LTL) shipping – an arrangement where two or more partial loads fill a full semi trailer, and the shippers split the cost of the load.

For most small and midsize shippers, LTL shipping is the most affordable transportation arrangement, but maximizing its benefits requires a strong logistics function-a requirement satisfied by one of three resources-an in house logistics department, a Third Party Logistics (3PL) provider, or logistics software.

Evaluating the Resources

Traditionally, shippers keep the logistics function in-house by staffing logistics experts. When this option is unaffordable, they consider 3PL and logistics software.

The value of 3PL depends on the type of provider one uses:

  • A standard 3PL provider who provides basic logistical services
  • A service developer who provides specialized logistical services
  • A customer adapter who manages the shipping process
  • A customer developer who manages and innovates the shipping process

If you need a specific service, such as cross docking, or tracking and tracing, 3PL can be remarkably affordable, but when full shipping management is the goal, 3PL can be expensive. It can also create a feeling of disconnection from the shipping process. Compared to high-level 3PL, TMS software or LTL logistics software offer two distinct advantages:

  • It is less expensive than using a customer adapter or customer developer
  • It allows you to have full control of the shipping process

Available on a web-based model or an in-house model, the software can be implemented according to your company’s needs and policies. Additionally, the implementation process is designed for efficiency. The provider analyzes your transportation process, creates a program with the right features and functions, and delivers the final version of the program in 30-45 days.

Savings Start Immediately

Financially, the most attractive aspect of the software is its ability to deliver savings in the short term. In the first year, many shippers experience a ten percent reduction in shipping cost, with savings increasing in the years following. In an economy where recessionary spending is still common, a ten percent reduction in shipping cost can bring a welcome increase to a shipper’s bottom line. For many shippers, the savings generated by the software easily reach the six-figure mark.

If your business has a moderate shipping volume, TL shipping and parcel shipping may be unaffordable, and paying a 3PL provider to manage the shipping process may be unaffordable as well. If so, TMS software or LTL logistics software can provide an affordable resource for identifying the best shipping arrangements.

To learn which type of logistics software is right for your transportation process, contact a provider of web-based logistical solutions today.

Truckload Logistics Software – A Better Solution During Tough Economical Times

Companies that use large semi-trailers to haul their products need a little extra support to get the most out of their shipments. Truckload logistics software works best for companies that produce enough freight to use full truckload shipping. There are alternative software choices that are just as helpful for smaller to mid-sized companies that must use less than truckload shipping for cost effectiveness. This shipping alternative takes the freight of many companies and fills a truck. The cost is split between the companies using the service. Both types of software can be used to perform better management of freight. This work can also be contracted to third party logistics experts. What most companies find is that the software gives them better control and is a much smaller, reliable investment. The struggling economy has left many companies trying to determine how to decrease budget costs so they can continue to be profitable. Logistics is one way to lower shipping costs and manage company freight. By being able to maximize the load capacity and pick the best routes, costs are drastically decreased making the software very useful.

Truckload Logistics Software: How Does It Save Companies Money?

Companies that do not rely on truckload logistics software often result to hiring third party providers. There are many reasons why this does not produce the desired cost savings. Third party providers are in the business to make money as everyone else. They choose routes and carriers that in turn make them a profit. By using managing your own shipping choices, every carrier and route chosen benefit the company and making someone else profitable is completely taken out of the picture. The weakened economy has also caused many third party logistics companies to increase rates. Discounts given by carriers have almost diminished and they must make up for the price difference. These discounts are a main source for their profit. A higher price is charged to your company over the discounted price. Third party providers also only deal with carriers that offer favorable discounts. This reduces the amount of choices available when using these services. Software meant for logistics management removes this entire scenario and puts shipping back in company hands.

Truckload Logistics Software Does Not Have Expensive or Difficult To Implement

Truckload logistics software is not this huge project that will take years to put in place. The software is easy to set up and is done so by professionals. Companies that provide this software make it simple to integrate into existing systems. What should you look for when evaluating software requirements? First, look for a company that uses non-proprietary tools. This reduces dependency on the software provider when something changes with your business or the technology being used. Software that operates with common operating systems and has non-dependent tools and utilities will work better in the existing technological environment. It will also be easier to use, more familiar, and cost much less. With the right company and software, implementation can be very simple. The upfront cost of purchase and set up is fractional compared to the amount of money saved on shipping.

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