Contract Logistics Vs 3PL: 6 Key Differences and How to Choose The Right Outsourcing Option for Your Online Business in 2024

Due to the expansion of on-demand logistics, contract logistics have quickly developed. However, they are frequently mistaken for 3PLs, which provide a different range of services that focus on multiple aspects of eCommerce. Despite the fact that some people use these words interchangeably, they mean very distinct things in practice. A contract logistics firm could be an excellent option for your eCommerce store if you’re seeking someone to manage a certain area of your supply chain while you handle the rest.

On the other hand, you should take another alternative i.e., 3PLs into consideration, if you want to outsource a significantly larger portion of your shipping and fulfillment operations. In this blog, we will look at the differences between contract logistics vs 3PL and what suits your business the best.

What is Contract Logistics?

Contract logistics firms, also referred to as consultants or freight forwarding companies, have areas of expertise ranging from the manufacturing line to delivery management. The term “contract logistics company” is typically used to refer to a freight forwarder. They are just experts in transporting cargo. They will be in charge of things like shipping, finishing up the necessary paperwork and customs clearance.

Contract logistics often assist with the administration of domestic and international transportation rather than shipping, inventory management, or fulfillment. For instance, they serve as a middleman between shipping firms and online retailers and guarantee that products are delivered to the appropriate locations across the supply chain.

Contract Logistics in Today’s eCommerce Market

Contract logistics is mainly used by big market players who already have a vast supply chain network serving hundreds of people in the eCommerce ecosystem. They use it mainly for bulk product transportation from one warehouse to another.

In today’s eCommerce environment, contract logistics companies operate by organizing, managing, and planning transportation requirements. Since they maintain tight relationships with significant freight carriers, they are able to bargain for lower transportation costs which benefit merchants. Additionally, they assist in route planning that is optimized for better shipping speed at a lower cost.

According to Verified Market Research, the Contract Logistics Market was valued at USD 203.40 billion in 2018 and is anticipated to increase at a CAGR of 4.80 percent from 2019 to 2026 to reach USD 296.52 billion.

6 Key Differences Between Contract Logistics vs 3PL

A 3PL company handles much more than just transportation; 3PLs offer a full range of ecommerce logistics services from warehousing and order fulfillment to inventory management and automated shipping. While contract logistics companies typically help arrange transportation and routes, a 3PL company handles much more than just transportation management. Since many 3PLs run numerous distribution centers, sellers can:

• View current inventory levels in real-time
• Distribute inventory among distribution facilities
• Distribute stock in accordance with demand

In order to enable an end-to-end eCommerce solution, 3PLs offer flexibility, visibility into the eCommerce supply chain, and technology connections with eCommerce solutions from inventory planning to freight delivery. While a 3PL normally provides transportation for orders after they are fulfilled through the carriers directly, a contract logistics business may help manage the transportation to get bulk inventory to a 3PL from a manufacturer. The comparison between contract logistics vs 3PL is shown in the table below:

Contract Logistics vs 3PL: How to Choose the Right Outsourcing Option for Your Business in 2024?

Contract Logistics

A contract logistics agreement may be utilized for one-off services or for the precise step of the supply chain you need assistance with, depending on the specific services required, the size of your organization and your budget. If you are willing to handle everything else yourself, including picking and packaging orders, tracking them, keeping track of your own inventory, and managing warehouse procedures, it can be beneficial to work with a contract logistics firm. A contract logistics company is the best option for you if you have the time to market your company and manage other processes involved with order fulfillment.

3PL

You should use a 3PL company’s order fulfillment services if you discover that managing your business and marketing takes up the majority of your time and you are not able to handle everything together. You don’t have to worry as much about logistics operations which enables you to save time while growing your supply chain because 3PLs provide a wide range of solutions to help with supply chain efficiency. Additionally, 3PLs offer the infrastructure, technology, experience, and support you need to maintain your position in the market and satisfy customer demand for quick and low-cost delivery, all of which contribute to your bottom line.

Conclusion: Why Should You Choose WareIQ as Your 3PL Partner?

Your capacity to handle logistics and provide excellent customer service varies depending on the choice of contract logistics vs 3PL. Giving someone access to critical data like sales, inventory and other statistics carries a big risk. Startups in the fields of on-demand and cloud-based warehousing are becoming more and more well-known as eCommerce takes off. Instead of signing long-term leases for a set location, businesses can use the storage space according to seasonal demand. For retailers that require more assistance in other parts of their eCommerce operations, they are better suited in partnering with a 3PL company like WareIQ. 

WareIQ gives you many more facilities than contract logistics companies including order fulfillment, last-mile delivery, a custom WMS to manage orders and integrate with multiple eCommerce platforms, a nationwide network of fulfillment centers, choice of multiple shipping partners, ultra-fast delivery and much more.

Online firms have a lot of space to expand with WareIQ since they get access to a strong fulfillment infrastructure, a team of logistics professionals, and a dedicated customer support team. We also make it simple for you to get onboarded. Once you make use of our services, online orders are automatically dispatched to the closest fulfillment center to be picked up, packed, and shipped as soon as they are placed which saves you time, resources, and extra delivery changes.

Contract Logistics vs 3PL: FAQs

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