Business

Contract Logistics Vs 3PL (third-party logistics)

The pandemic covid-19 has impacted human civilization socially and economically. Covid-19 pandemic has changed the way the business was done previously. During the pandemic Covid-19, the people preferred to stay safe at home, while shopping online. E-commerce businesses are one of the few businesses that showed growth even during the pandemic. However, there had been a lot of supply chain distortion during this period. Supply chain distortion like port congestion, container shortages, and raw material rate fluctuations. E-commerce businesses have been taking steps to overcome these supply chain and logistics issues to compete in the market. 

E-commerce businesses have been trying to overcome the issues related to the supply chain, developed during the pandemic. There are multiple options to overcome the issues in the supply chain related to logistics. Many companies use the options of Contract logistics and 3pl contract to overcome these challenges. Although contract logistics and third party logistics contracts are different but have a common objective to overcome supply chain distortion. E-commerce businesses prefer outsourcing transportation and logistic contract to 3PL and focusing on their sales.

Outsourcing transportation to contract logistics vs 3PL, E-commerce businesses need to understand the difference between both options. In today’s blog, we will discuss in detail contract logistics, the difference between contract logistics vs 3PL third-party logistics. It will also discuss, logistics vs transportation, freight forwarder vs 3pl. This blog is particularly very beneficial for new companies entering E-commerce businesses.

Contract Logistics:

Contract logistics definition explains that is mostly related to facilitating the management of the local as well as the international transportation. Instead of this most of the companies and individuals get confused that contract logistics is related to the shipping and fulfillment of orders. The contract logistics fundamentally acts as the intermediary between the shipping lines and online stores.

The contract logistics are fundamentally planning and organizing the transportation requirement of any company. The benefit of using contract logistics is saving in transportation rates, since they can better negotiate rates, taking the advantage of a better relationship with the shipping lines.

Contract Logistics vs 3PL 

Although contract logistics and third party logistics are different, they have one factor of delivery management in common. Contract logistics is limited to make facilitation in managing the transportation of local as well as international transportation. On the other hand, the third party logistics contract is related to the complete logistics such as product warehousing, order fulfillment, inventory management. 

Difference between Contract Logistics vs 3PL 

There are a lot of differences between contract logistics and 3pl. Some of the major differences between contract logistics and third party logistics contract are as follows:

Managing the inventory:

Inventory management is a special characteristic of third-party logistics. The inventory management aspect is missing in the CL, as it does not cover this factor.

Third-party logistics have when compared with CL usually offer its customer software that does real-time tracking of the inventory. This option of 3pl makes inventory management easier for the company to handle. Better control over the inventory helps the E-commerce businesses in maintaining the optimal level of inventory. The optimal level of inventory will enable the E-commerce business to increase its profitability.

Better management of company warehouse.

Third-party logistics offers its customer the facility of warehouse management. On the other hand warehouse management is not covered under the contract logistics. Most of the 3pl company offers their customer proper software and management systems for warehouse management. Proper warehouse management will ensure the company performs the storage, packaging, fulfillment of orders in the most efficient way. 

The 3pl services offered will help the e-commerce businesses in better visibility of the supply chain process. Their improve visibility will always ensure less blockage of funds in the idle stock of the company. This will in return ensure better profitability and growth of the company.

Fulfillment of orders.

Contract logistics does not cover the order fulfillment of the company. Third-party logistics offer their customer the services for order fulfillment. 3PL provider enables their services user efficient fulfillment of orders to the customer. 3PL sometimes also manages the sales return of the customer.

Better visibility systems of the 3pl provider enable the E-commerce companies to efficiently manage their order fulfilments with minimum lead time.

Technology and software:

Third-party logistics offer the latest technology and software on their management systems to ensure better services to their customers. By use of technology and software like warehouse management systems enables the company to have offered better and speedy services to its customers.

Real-time data:

3PL providers offer their customers real-time data for order fulfillment, warehouse management, delivery management, and inventory management. All this data helps the company in better planning and forecasting of demand for their product.

Real-time data enables the customers to see online the order status of their product. Real-time tracking of orders makes the customer more satisfied. A satisfied customer will lead to better profitability of the company.

Some important terms explanation regarding the supply chain are as follows:

Difference between logistics vs transportation:

Logistics of the goods involves the inward movement of goods from the manufacturer to the end consumer. Whereas transportation mean the movement of goods in any direction. 

Difference between freight forwarder vs 3pl

A freight forwarder is responsible for the movement of goods of the company from one point to another point. On the other hand, the 3pl third-party logistics provider is a company facilitating the logistics and warehouse management of its customer.

CONCLUSION:

The concept of E-commerce businesses has flourished a lot during the pandemic covid-19. This increase in demand for E-commerce businesses has created challenges for the businesses. . It offers only delivery management to its customer while the 3pl providers offer multiple services to its customer such as warehouse management, inventory management, fulfillment of orders to its customer. 3pl are technology-based and provide real-time data facility to its customer.

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