Why Shippers Should Combine Brokerage And 3PL Services


Have you ever wondered why shippers should combine brokerage and 3PL services? Worry no more. This piece will discuss why they are a healthy mix for shippers.

Is 3PL the same as brokerage?

Third-party logistics firms and brokers are mediators between the shipper and the carrier. They focus on meeting shippers’ specific goals. Also, they anticipate clients’ needs and complete the supply chain. But there is a difference in their operation mode. This is why shippers should combine brokerage and 3PL services.

Though their jobs description is similar and sometimes used interchangeably, they are not the same thing. Hence, a shipper should combine brokerage and 3PL services for the best result.

A 3PL manages your entire supply chain. But a freight broker is a middleman between your business and a freight partner.

The 3PL industry controls the transportation and warehouse of products within a supply chain. It plans and executes delivery between the point of production and the final destination.

On the other hand, brokerage firms match shippers with cargoes. They ensure they transport the exact goods.

Subsequently, the 3PL manages most of these supply chain functions and tends to customers’ logistics needs. Therefore, a shipper should combine brokerage and 3PL services.

Brief History of Logistics

The logistics origin is entrenched in the military. During wartime, logistics is employed to provide battalions with equipment and associated merchandise in a prompt fashion. But with the increase of consumerism in the mid- 90s, it was adopted to serve more intricate supply chains growing locally.

What does A 3PL do?

If you’ve ever inquired what a 3PL does, we’ve got the answer you need. A 3PL is a bridge between production and consumption. They complete the supply chain cycle. Also, it offers a wide range of services to its customers. They include;  

  • Transportation 
  • Receiving 
  • Storage 
  • Shipping 
  • Handling and management of all or one of these duties 

Also, logistics operations can be used to supply; 

  • Information 
  • Transportation 
  • Stock 
  • Storage 
  • Material handling 
  • Packaging 
  • Disposal

What is the difference between a 3PL and a freight broker?

While they offer similar services, they are widely different. This begs the question; why should a shipper should combine brokerage and 3PL services. The significant difference is that 3PL possesses a broader range of tools and services while freight broker services are limited. For better understanding, let’s make a comparison between both service providers.

What are the roles of a freight broker?

A freight broker concentrates on solving specific cost and service objectives associated with a single carrier. It acts as a non-asset-bearing mediator between a shipper and carrier. The shipper who wants to convey its products and a page whose duty is to move the freight need a broker.

Therefore, a freight broker works directly with the business owner to organize the shipment. Nowadays, freight brokers handle a substantial amount of motor carrier transport in North America.

In terms of operations, freight brokers offer an extensive network of carrier options. It adjoins hundreds or thousands of freight shipments. This help shipper cut cost because brokers can get cargoes for them at a subsidized rate. 

How do brokers connect with shippers?

A broker connects shippers to transportation who will convey them. But how do they find the shippers? There are several ways to do this. Here are some of the ways that brokers and shippers meet.

Load Boards

This is an old and typical way brokers find shippers. They observe load boards and then select the shippers with losses. They then cover the losses and bid for them. The shipper will likely accept their offer if their proposal and service sound more promising than other brokers who want the load.

Referrals And Reviews 

As in any business, referrals are the best acknowledgment a broker can receive. Brokers usually reach out to past and existing clients to seek referrals and reviews. A current client may have connections within another firm, which may be willing to try the broker service if they have already heard reviews that their services are top-notch.

Actively Looking For Shippers

Brokers can look for new shippers with loads through various methods. Most of which swirl around basic sales tactics.

1. Cold pitching 

It entails emailing delegates at a firm and showing them why they need your services. While it has a tiny success rate, brokers use it.

2. Warm pitching 

It is pretty similar to cold pitching, except broker sources for shippers who need their services. Then, they reach out with specialized solutions.

What is the role of a 3PL?

A 3PL provider works to fix a giant puzzle. By planning, it predicts and perceives the needs of a customer. It solves the supply chain process. Ranging from pickup and movement until inventory reaches its final destination. So, why should shippers combine brokerage and 3PL?

A 3PL firm may specialize in a single service, e.g., warehouse, or focus on several distribution networks. It also offers an extensive mix of several services and management of customers’ supply chain.

Ultimately, an established third-party logistics company is an asset-bearing firm that stabilizes relationships with shippers on a widespread scale. Compared to brokerage alone, a 3PL firm invests heavily in physical and human capital. Such as brick and mortar locations and wheels on the ground.

Why Combining 3rd Party Logistics Services And Brokerage is A Match Made In Heaven

3PL and brokerage firms both exist to solve customer needs. 3PL fits every business’s needs. However, freight brokers also play a pivotal role in shippers with solidified cargoes.

For instance, if a shipper needs more flexibility in transporting their products, they will contract with a brokerage firm to augment their shipping needs.
This is pivotal because a brokerage firm usually possesses a formidable relationship with transporters.

It is more than choosing between a 3rd logistics party or a freight broker for your business. It is about establishing relationships with both service providers. To ensure you get the best service.

You will frequently handle stock management, distribution networks, and storage of bulk orders yourself. You may already perform most of these functions in-house. But as a business expands, 3rd party logistics providers are the systematic solution to more intricate procedures.

Conclusion 

Shippers combine brokerage firms and 3rd party logistics companies to get the best service. They can coexist peacefully. While they offer specific and specialized services, they can also work hand-in-hand. Therefore, a shipper should combine brokerage and 3PL services.

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