Logistics Software Vs 3rd Party Logistics Companies

Whether you are a small company that transports your products through a shipping provider or a large company that has your own shipping fleet, saving the most money and time on your shipping arrangements typically requires the implementation of transportation logistics. However, while the efficacy of transportation logistics is inarguable, there continues to be a debate about whether it is better for companies to hire 3rd party logistics companies or to purchase logistics management software and handle logistical issues on their own. While purchasing logistics software is far and away more cost effective than hiring out 3rd party logistics companies, some companies question whether logistics management software is as effective at revolutionizing the shipping process as a logistics company. Yet, once companies implement logistics software, they soon see that the only difference between the software and a logistics company is price. For those who are still on the fence about logistics software, below we list a few of the helpful services that it can provide at the same level of quality as a logistics company.

Freight Shipping Analysis

On the surface, freight shipping can seem like a cut and dried affair. However, when you analyze the various cost factors involved in freight shipping, it becomes anything but a simple process of shipping your products from one location to another. For example, fuel surcharges, warehouse fees and load style can play a large role in determining whether your shipping process is cost effective or cost prohibitive. Without the aid of logistics, companies are basically at the mercy of shipping companies to apprise them of what shipping options make the most sense, and you can count on the fact that shipping companies aren’t in the business of saving you money at the expense of cutting into their profits. By implementing logistics software, you can examine your shipping needs according to various criteria and engage shipping companies in a bidding process until you receive the best deal.

Shipping Route Analysis

Even companies who own their own shipping fleet or deliver goods locally can benefit from logistics software. In addition to removing unnecessary costs from the shipping process, logistics software can also reduce shipping costs and improve delivery time by identifying the shortest shipping routes according to various criteria. For example, while a route that is shorter in length than another route may seem to be the timeliest transportation route, logistics software can point out that a shorter route will take more time than a slightly longer route due to such factors as road construction, traffic patterns and traffic signals.

Integrated Shipping Analysis

In addition to pointing out the best freight shipping options and the best shipping routes, logistics software may also reveal that a company could save time and money on their shipping process by integrating different means of product transportation. For example, while air shipping is often a second consideration to ground shipping due to air shipping rates, logistics software can reveal that shipping by air alone or combining air shipping with ground shipping is the most cost effective means of transporting goods. While ground shipping might offer lower rates, such factors as warehouse stops and fees and the variety of fees that can rack up from your products moving from one ground shipping company to the next can sometimes make ground shipping cost prohibitive. By analyzing the time and cost benefits of integrated shipping arrangements, logistics software can create shipping solutions that you could never create on your own.

Full Truck Load Logistics Software is Essential to Cutting Shipping Costs

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.