Third Party Logistics: Should I Pick An Asset Or Non Asset Service?

If you are a little confused about what a third party Logistics company is then listen closely as I elucidate it simply. A third party logistics company or 3pl as they are referred to is a organization that acts as a negotiator between a manufacturer that does a lot of LTL with the trucking carriers. Why would you entertain talking to them? It is as uncomplicated as this, experience, better pricing and service. A 3pl gives the opportunity to the little guy that ordinarily would not get very good shipping discounts from the LTL shippers to now be able to go up against with some of its bigger competitors. Here’s a simple analogy, think of it as "Sams Club" pricing for shipping and transportation costs.

Now that we comprehend what a 3PL is... should your business partner with an asset based or a non asset based 3pl? Let's talk about these one at a time so that you feel comfortable moving forward.

Asset Based 3PL

An asset based service owns many transportation management “assets”. Its assets may include anything that is pertaining with supply chain management, including technology systems, fleets of trucks, vehicles, aircraft, warehouses, warehousing equipment, forklifts etc. As you can see a client would be limited to using the assets that this third party logistics company suggests. True their suggestions will save you money, but here is ultimate question to meditate on: How will I really know I am getting the best value available out there?

This conflict of interests raises another issue when it comes to handling claims resolution if they are using their own trucks and equipment. Can you imagine if you had a claim on damaged freight, would you feel all comfy knowing that your claim would be fixed in the shortest time and reimbursed for the highest value possible?

Non Asset Based 3PL

This 3PL handles all of the services of a third party logistics team such as quoting freight, scheduling pickups and deliveries, routing, and auditing, but doesn't tie up all of its cash 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”.

I want you think about this for a moment, since a non asset based 3pl is not limited to using any particular warehouse or carrier and usually have no ties to carriers, they are now in the best position to use their experience to negotiate the best deal for their clients. Negotiations will be done with the best value oriented carriers that meet your expectations and then you get to choose which carriers to partner with.

Since there is no conflict of interests here, there is also no concern about handling any claims that you might have either. Now you can see why many companies resolve to team up with a non-asset based 3pl. They value that they now have the unlimited freedom to partner with the service providers that best meet their needs.

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