Third-party Logistics is simply the use of an outside company to perform all or part of the firm’s materials management and product distribution function. 3PL arrangements involve long term commitments and often multiple functions, as opposed to transaction based and single-function specific

A relationship between a shipper and third party which, compared with the basic services, has more customized offerings, encompasses a broad number of service functions and is characterized by a long-term, more mutually beneficial relationship

Characteristics of 3PL

  • Perform outsourced logistics activities
  • Process management / Multiple activities
  • More customized services
  • Mutually beneficial and risk-sharing relationship
  • Long-term commitments (1~ 3 years)

    Why is it needed?

  • Advantages - Cost reduction, Focus on core competency , Improved efficiency, service and flexibility, Industry-specific application – “build-to-order” systems and e-merchants

  • Disadvantages - Loss of control, Impact on in-house workforce
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