!#7# 3PL's - Should I Select an Asset Or Non Asset Company?

!±8± 3PL's - Should I Select an Asset Or Non Asset Company?

If you are not sure of what a 3PL provider is then give me a minute to clarify it simply. A third party logistics servive or 3pl as they are referred to is a business that serves as a go-between between a corporation that does plenty of freight with the trucking carriers. Why would you even think about doing this? It is as straight forward as this, experience, cheaper pricing and service. A 3pl permits a medium sized company that usually would not get decent shipping discounts from the LTL providers to now be in a position to play on an even playing field with some of its large competitors. I guess you can describe it as "Sams Club" pricing for shipping and transportation costs.

Now that we have explained what a third party Logistics Company is... should you use an asset based or a non asset based 3pl? Let's explain these one by one so that you can make an educated decision.

Asset Based 3PL

An asset based service holds many supply chain management "assets". These assets may include anything that is pertaining with supply chain management, including technology systems, truck fleets, vehicles, aircraft, warehouses, warehousing equipment, forklifts etc. As you can see you would be restricted to using the assets that this third party logistics company suggests. There is no doubt you will be better off then before, but here is the real question to ask yourself: How do I ultimately know I am getting the best value available out there?

Can you also see how this conflict of interests could pose a problem when it comes to handling claims resolution if they are using their own trucks and equipment. Pretend for a moment that if you had a claim on damaged freight, would you feel at ease with the idea that your claim would be handled in the shortest time and reimbursed for the highest value possible?

Non Asset Based 3PL

This 3PL performs all of the services of a third party logistics service such as quoting freight, scheduling pickups and deliveries, routing, and auditing, but doesn't need to own all of the transportation assets that an asset based 3PL would own. Instead, this type of 3PL usually possesses only desks, computers, and freight industry expertise. Now you can see why they are referred to as "transportation consultants".

Now this is an important point to dwell on, since a non asset based 3pl is not restricted to using any particular warehouse or carrier and generally have no ties to carriers, they are now able to use their ability to negotiate the best deal for you. Negotiations will be done with the recognized value oriented carriers that meet your criteria and then you get to decide which carriers to work with.

Since there is no conflict of interests here, there is also no anxiety about resolving any claims that you might have either. Now you can see why many companies choose to team up with a non-asset based provider. They appreciate that they now have the unlimited freedom to partner with the service providers that best meet their needs.