Third-Party Logistics (3PL)

A third-party logistics provider is a company that performs logistics services that a shipper either can't or chooses not to handle in-house. The most common 3PL arrangement involves outsourced warehousing and distribution: the 3PL operates the facility, manages the inventory, picks and packs orders, and coordinates outbound shipments. Some 3PLs also manage inbound freight, carrier procurement, and reverse logistics. The shipper retains ownership of the goods while the 3PL manages the physical movement and storage.

3PL relationships range from simple storage agreements – where the provider essentially rents space and labor – to fully integrated partnerships where the 3PL manages the shipper's entire supply chain execution. In practice, most mid-market shippers work with multiple 3PLs: a cold storage provider for frozen or refrigerated products, a regional fulfillment partner for direct-to-consumer orders, and perhaps a national distributor for retail replenishment. Each 3PL operates its own systems, processes, and communication preferences, which creates a coordination challenge for the shipper's logistics team.

The biggest operational pain point with 3PLs is visibility. When freight is inside a 3PL's four walls, the shipper often loses real-time insight into inventory levels, order status, and appointment scheduling. This information gap leads to reactive decision-making – finding out about shortages, delays, or receiving discrepancies after they've already caused problems. Shippers who connect their TMS directly to their 3PL partners' systems recover that visibility and can plan transportation around actual warehouse conditions rather than assumptions.

For food and beverage shippers especially, choosing a 3PL with the right cold chain certifications and temperature monitoring capabilities isn't optional – it's a compliance and food safety requirement.