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How to Select a Third Party Logistics Provider (3PL) – Get Started with These 5 Steps

Posted on 07-20-2016 by Lucia Garza

On-going changes in the transportation and logistics industry, such as the recent SOLAS Verified Gross Mass (VGM) requirements, make selecting the right 3PL for your business more challenging than it once was. In fact, most organizations now require multiple Freight Forwarders to meet their international cargo shipping needs, as logistics providers continue to create new niches and areas of specialization.


So, how can a Shipper know which 3PL can best meet its overall needs and requirements?

The 5 points below provide the fundamental requirements Shippers should consider when evaluating Freight Forwarding companies:

1.  Can the 3PL meet your logistics needs?

Because of the variety of 3PL types available in the marketplace, ensuring that you select a broker that can meet all of your needs is critical. Questions to ask may include:

  • Is a warehouse available?
  • Can you handle Less than Truckload (LTL)?
  • Can you handle my VGM requirements for me?
  • Do you provide in-house customs brokerage services?
  • Do you have offices or affiliations in the countries where I need service?
  • Do you have transportation management software to follow the progress of my shipment throughout its lifecycle?
  • Can you ensure the safety of my shipment?
  • How do you ensure the quality of the Carriers you work with?
  • Do you assist with claims management?


2.  Is the 3PL’s pricing reasonable and competitive?

Freight Forwarders encourage customers not to select a 3PL based on price alone, and for good reason: you get what you pay for, and in the very competitive international logistics industry, you can always find great service at the right price – if you’re willing to look.

Make sure you understand everything the freight quote includes. For example, the service level, type of service, Incoterms® , etc. Even the type of billing can affect the competitive nature of the pricing. And, here again, can you do everything for the shipment with one 3PL (shipping, warehousing, customs)? As, the time savings and convenience of a single-point-of-contact contributes to cost savings.


3. Can the 3PL ensure on-time arrival of your shipment?

Be sure to check-out the freight forwarder’s online ratings and reviews as a first step, but also make sure you know the internal staff and processes. Can you have confidence in the account manager you’re working with? If a shipment isn’t delivered on time, what are the 3PL’s obligations to you, and who will be handling their customer service?

Today, many 3PL’s also offer guaranteed delivery (read the fine print!). Expedited and guaranteed services may be worth the extra cost in certain circumstances.

4. Can shipments be tracked?

Logistics management software should be a tool in every freight forwarder’s belt these days. Not only does logistics technology assist the 3PL to manage and monitor every step of your shipment’s trip as it travels to its final destination, but you should also have the ability to login and see your shipment’s progress. A 3PL that hasn’t made this technology investment probably isn’t worth your time.

5. Is the 3PL easy to work with?

This question harkens back to #3. Does the logistics provider have a good reputation, especially when it comes to efficiently dealing with any problems that may arrive with your shipment? Can you easily get in touch with your account manager, and do they keep you apprised of the status of your shipment through frequent communication? How quickly are carrier claims resolved, and what is the 3PL’s process for claim resolution? Beyond service, does the freight company offer additional services in-house that may streamline your shipping experience, such as custom’s brokerage, warehouse and storage space, ability to assist with cargo weighing in accordance with the new SOLAS Verified Gross Mass requirements?

Conclusion 

Selecting a 3PL to work with is an important decision, as ideally you’ll want to form a long-term relationship with a forwarder you can count on for future shipments as well. The 5 steps above are a good place to begin with your vetting process. If a Freight Forwarder and logistics provider offers the fundamentals above, the discussion of your specific cargo and shipping requirements becomes much easier.