Many companies start small and only deliver their goods locally for a number of years. But when a company grows to the point that it becomes interested in shipping its goods to remote locations, it must find a way to ship goods in a timely, cost effective manner. In some cases, growing companies try to negotiate their own truckload (TL) transportation management solutions. But in order to arrive at the most favorable truckload transportation management solutions, companies usually require the aid of transportation logistics in the form of either full truckload logistics software-also known as freight transportation software-or by contracting with a third party logistics (3PL) provider. In either case, companies can expect to realize logistics solutions that are superior to solutions that they would arrive at on their own. However, when saving on shipping costs without compromising delivery time is the ultimate goal, many companies decide to implement full truckload logistics software.
To understand the superiority of truckload logistics software to 3PL, it helps to understand how 3PL providers conduct business. A management based 3PL provider essentially functions as a middleman between a shipping company and a carrier company. In order to profit from their arrangement, 3PL providers search for carrier companies that offer discounted freight shipping in return for 3PL providers delivering a constant stream of business. With the discount in place, third party logistics providers then charge shipping companies a service rate that is above the discounted rate, profiting from the price differential. In addition to resulting in unnecessary expense, this arrangement also narrows the TL shipping solutions that companies can pursue. Because 3PL providers only work with carriers that offer a preferred discount, their clients could miss out on shipping solutions that would be the best overall fit for their shipping needs.
When companies choose logistics-software over 3PL, they remove a 3PL provider’s business interest form the logistics process, allowing them to arrive at TL shipping solutions that make the most sense for their company and not a 3PL provider’s profit margins. Although the financial benefits that come with implementing logistics-software versus contracting with a 3PL provider are well known, some companies retain the misconception that implementing logistics software involves hiring logistics professionals to operate it. On the contrary, logistics software features a user friendly interface that is customized to reflect a company’s shipping needs. Available as either an online application or as an internal application, full truckload logistics software allows growing companies to go from relying on 3PL to being their own logistics provider. According to recent research, companies that implement logistics software can reduce their total annual shipping costs by 10 percent after only one year.