Whether switching warehouses or shipping orders to customers, moving things between places is always challenging. It becomes much more confusing when you want assistance and discover that various firms with different names promise to provide the solution you require at this time.

Freight forwarding and third-party logistics providers are two of the most frequent types of companies that assist you in getting your goods to customers. Each has its price concerns, capabilities, and integration points with your supply chain.

We still hear these two phrases used interchangeably. To minimize misunderstandings and confusion, it’s vital to notice the distinctions. Importing and exporting are critical to your company’s success. Knowing how to distinguish between third-party logistics (3PL) and freight forwarding companies can be the difference between good and bad decisions.

At its basic level, freight forwarding is a service that transports your products from point A to point B. Freight forwarding companies are the service providers who make this possible by coordinating the entire process. The freight forwarder will handle the transportation of your goods across many modes, such as from ships to trucks or trains.

A freight forwarder may provide limited storage or warehousing services specific to the transit of goods in some cases. This isn’t long-term storage but any short-term stop or prep work required to move your items.

Frequently, a freight forwarder will act as a broker and mediator between you and the shipping service providers. They’ll be the point of contact for everything that happens along the way. Your freight forwarder will often negotiate special rates with carriers and shipping lines on your behalf, allowing you to save money. They may also advise your company on other aspects of a shipment, such as whether or not insurance is required or how to increase safety.

When products are traveling, freight forwarders are in charge of the process, and handling nearly all paperwork helps prevent customer headaches. The documentation can be highly difficult and continuously changing when exporting domestically or internationally. This alone can persuade consumers that using a freight forwarder is well worth the money. Preparing customs documentation, letter of invoice, bill of lading, shippers’ export declarations, and insurance forms are the most essential things that freight forwarders usually do. 

3PLs, on the other hand, are firms that help with logistics outsourcing. This usually refers to warehouse tasks, including storing items, selecting, packaging, and fulfilling orders. They handle your goods before they’re shipped, ensuring they reach the appropriate buyer at the right time.

Consider a 3PL as someone that manages your company’s warehouse, fulfillment, and shipping requirements.

Because they collect orders from your sales channels and then prepare items to be dispatched to your customers, the 3PL firm is often integrated into more areas of your business. A 3PL would frequently transport products directly with carriers, depending on their high-volume warehouses, to achieve discounted rates.

A 3PL company can hire a freight forwarder to manage cargo when order is complex or in case they are busy. The opposite is rarely true, as freight forwarders rarely require package-related services that a 3PL offers.

It’s a good idea to think of your 3PL partner as a logistical jack-of-all-trades. They’re usually professionals in applying logistical solutions to company issues and can handle various requirements. Order and inventory management, labor cost control, and even company strategy support to decrease returned products are among the services they offer.

When people wonder what the difference is between a freight forwarder and a third-party logistics provider, they usually seek someone who can meet their demands. Freight forwarders specialize in transporting products between two places. A third-party logistics provider (or 3PL) is an expert in managing your logistics needs, which generally entails moving the same products.

Freight forwarders often offer fewer services than third-party logistics companies. The 3PL will protect and support goods from storage through order fulfillment to carrier delivery and lastly to the end-user, with the possibility of repeating the process if the customer returns the product.

A 3PL is more closely linked to your company and plays an important part in customer service and satisfaction. When someone buys from you, a good 3PL will assist you in preparing your warehouse and items before an order is placed, get you the best shipping rates and complete orders, and ensure that the correct package will arrive to the right person.