The Ultimate Guide to 3PL vs. Freight Broker

The consistent pace of growth also increases the burden of scalability on a business. When you have more clients and expand your business into broader geographical locations, you will likely have mismatched priorities in handling packages. In such cases, the 3PL vs. freight forwarder debate becomes quite critical for businesses. Why? You don't have to worry about finding reliable carrier companies as freight forwarders or brokers, and 3PL service providers can solve your problems. Let us find out how. 

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What is a 3PL, and What Does it Do for Businesses?

One of the promising solutions for avoiding shipping problems is a 3PL broker or a third-party logistics broker. The third-party logistics providers offer a complete package of logistics services, including freight forwarding and freight brokerage. The answer to "what is a 3PL broker" would emphasize the involvement of 3PL service providers in the supply chain management of a business. Most importantly, the 3PL service providers have ownership of logistics infrastructure and ensure in-house services. The 3PL services are also significant for companies as they can tailor their approaches to addressing client needs.

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The most striking highlight of third-party logistic brokers is the focus on driving long-term relationships with clients. In comparison to individual freight brokers, 3PLs could offer the services of experts for tailoring solutions to your supply chain need. Furthermore, 3PL services use advanced technology, such as cloud-based management, for seamless communication across the supply chain. In addition, third-party logistics service providers also rely on optimized IT solutions across different areas, such as courier services, freight, and warehousing.     

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Related: 13 Important Questions to Ask 3PL Providers

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Pros and Cons of Using a 3PL

The comparison between third-party freight brokers and 3PL service providers can find more clarity with an overview of the pros and cons. For third-party logistics service providers, you can explore opportunities for adding more capabilities to your business. The advantages of 3PL service providers also enable clients to focus on their core business activities rather than logistics. In addition, 3PLs can ensure better safety for your inventory. 

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On the other hand, you must also look for the setbacks associated with the services of third-party logistics providers. First, businesses might lose control over their supply chain decisions. At the same time, 3PLs also offer many services, some of which you don't need.   

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Pros of Working with a 3PL

You Can Focus On Your Core Business

When you outsource your logistics operations to a 3PL, you can focus on your core business and leave the logistics to the experts. This can free up time and resources that can be better spent elsewhere.

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Increased Efficiency

A good 3PL will have the experience and expertise to streamline your logistics operations, making them more efficient and cost-effective. They will also have access to the latest technology and resources, which can further improve efficiency.

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Cost Savings

One of the main reasons companies choose to work with a 3PL is the cost savings they can provide. 3PLs can often get discounts from carriers due to their volume of business, which can lead to lower shipping costs for their clients. In addition, 3PLs can help you optimize your supply chain to reduce overall logistics costs.

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 Flexibility

3PLs can provide the flexibility you need to adapt to changes in your business. For example, if you experience a spike in demand, a 3PL can quickly ramp up capacity to meet your needs. Conversely, if demand decreases, they can adjust accordingly. This flexibility can be vital for businesses that experience fluctuating demand.

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 Risk Reduction

When you outsource your logistics operations to a 3PL, you transfer the risk of those operations to them. This can free up time and resources that can be better spent elsewhere.

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 Improved Customer Service

A good 3PL will be focused on providing excellent customer service. They will work to ensure that your shipments are delivered on time and as promised. In addition, they can provide detailed tracking information to keep your customers updated on the status of their shipments.

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Peace of Mind

When you partner with a 3PL, you can have peace of mind knowing that your logistics operations are in good hands. Knowing that experts are handling your shipments can allow you to focus on other aspects of your business.

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Cons Of Working With A 3pl

 Loss of Control

When you outsource your logistics operations to a 3PL, you lose control over those operations. This can be a concern for some companies, mainly if they are not comfortable relinquishing control to someone else.

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Difficult To Change Providers

Once you have outsourced your logistics operations to a 3PL, switching to a different provider can be difficult and costly. It would help if you considered this before signing a contract with a 3PL.

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Hidden Costs

 Some 3PLs may charge hidden fees, such as fuel surcharges or accessorial charges, which can increase the overall cost of using their services. Be sure to ask about all potential fees upfront, so there are no surprises down the road.

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 Lower Quality Service

While many reputable and reliable 3PLs exist, some also provide lower-quality service. This is why it's essential to do your research and choose a 3PL that you can trust.

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Less Personalized Service

When you work with a 3PL, you may not get the same level of personalization and attention that you would if you handled your logistics operations in-house. This is something to keep in mind if you value a close working relationship with your logistics provider.

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What is a Freight Broker and What Does it Do for Businesses?

The second player in this comparison, i.e., 3rd party freight brokers, are transportation intermediaries. They work for moving products from the customer to a carrier. Freight brokers generally work on a case-by-case basis for moving a shipper's products. The freight brokers serve as promising solutions for businesses that use shipping services for one-off deliveries. Freight brokers do not own any shipping infrastructure, such as warehouses or trucks, and do not take responsibility for product delivery. On the other hand, the network of carriers with freight brokers serves as a crucial value advantage for businesses. 

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You must also doubt "what freight brokers do for businesses." The working of freight brokers is similar to that of a matchmaker of a supply chain. Freight brokers offer businesses access to service-specific carriers and more business for carriers and work by purchasing services from famous and reliable logistics service providers and carriers.  

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Related: Importance of Freight Forwarding in your Business

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Pros and Cons of Using a Freight Broker

The advantages of freight brokers can provide more inputs for the 3PL vs. freight forwarder or freight broker comparison. The most evident benefit of freight brokers is the opportunity to save time and money on shipping costs. Freight brokers remove the unnecessary trouble of selecting a reliable carrier for your shipments. At the same time, you don't have to worry about shipping technology costs while accessing the benefits of more effortless scalability. 

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Like 3PL service providers, freight brokers also have their fair share of disadvantages. Choosing a freight broker for shipping your one-off deliveries can be difficult, especially with the assurance of responsibility. Freight brokers do not take possession of shippers' goods, thereby risking them. In addition, you have to invest time and effort in finding a reliable freight broker suited to your needs.   

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Pros of Using a Freight Broker

Access To More Carriers

When you work with a freight broker, you'll have access to a broader network of carriers than you would if you worked with a 3PL. This can give you more options and allow you to find the best possible shipping solution for your needs.

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Greater Flexibility

 Freight brokers are typically much smaller and more agile than 3PLs, which means they can be more flexible in their approach. This can be beneficial if you need a customized solution or have unique shipping requirements.

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Lower Costs

Because freight brokers don't own trucks or other shipping assets, so they don't have the exact overhead costs as 3PLs. This allows them to pass on those savings to their customers through lower shipping rates.

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Personalized Service

Freight brokers typically provide a more personalized level of service than 3PLs. This can be beneficial if you prefer a closer working relationship with your logistics provider.

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More Options

 You'll have access to a broader range of carriers and shipping options when you work with a freight broker. This can give you the flexibility you need to find the best possible solution for your needs.

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Cons of Using a Freight Broker

 Less Control

When you work with a freight broker, you'll have less control over your shipments than you would if you worked with a 3PL. This can be a concern for some companies, mainly if they are not comfortable relinquishing control to someone else.

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 Difficult To Change Providers

Once you have outsourced your logistics operations to a freight broker, switching to a different provider can be difficult and costly. This should be considered before signing a contract with a broker.

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Hidden Costs

 Some freight brokers may charge hidden fees, such as fuel surcharges or accessorial charges, which can increase the overall cost of using their services. Be sure to ask about all potential fees upfront, so there are no surprises down the road.

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Lower Quality Service

 While many reputable and reliable freight brokers out there, some also provide lower-quality service. This is why it's essential to do your research and choose a broker that you can trust.

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How to Decide Which Option is best for Your Business?

The different implications of third-party logistics service providers and freight brokers suggest that they serve different transportation needs. Depending on the shipping use case, businesses can identify the ideal choice from these two options. On the other hand, you must also look at the difference between freight forwarders and brokers before making your choice. 

Choosing between working with a 3PL and a freight broker depends on several factors, including the specific needs of your business. If you're not sure which option is best for you, consider the following:

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1. Cost: 3PLs typically charge higher rates than freight brokers, so cost may be a deciding factor if you're on a tight budget.

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2. Level of service: 3PLs typically provide a higher level of service than freight brokers, so if you value personalization and attention, working with a 3PL may be the best option.

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3. Flexibility: Working with a freight broker may be more advantageous if you need a customized solution or have unique shipping requirements.

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4. Control: 3PLs typically offer more control over shipments than freight brokers, so if you prefer to have more control over your logistics operations, working with a 3PL may be the best option.

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5. Shipping volume: 3PLs typically work with companies that ship large volumes of product, so if you don't ship a lot of product, working with a freight broker may be a better option.

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The best option for your business depends on your specific needs and preferences. There is no one-size-fits-all solution, so it's essential to evaluate all of your options before making a decision.

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Related: Warehouse Service Provider Comparison: Internal vs. 3PL

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How Simpl Fulfillment can Help

If you're still not sure whether working with a 3PL or freight broker is right for your business, Simpl Fulfillment can help. We offer several logistics services you can customize to fit your needs. We also have a team of experts who can help you choose the best solution for your business. We offer flat, transparent pricing, powerful tools, and an excellent team focused on delivering the best experience to your customers. Contact us today to learn more about our services and how we can help you streamline your logistics operations.

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Conclusion 

So, what's the verdict? 3PLs or freight brokers? The answer is: it depends. Both options have their unique set of pros and cons, so you'll need to weigh your needs and preferences to decide. If you need help sorting through all the information, don't hesitate to contact us. We can help you decide which service is right for your business and handle all the logistics.

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Recommended: eCommerce 3PL: Difference Between The Pros And The Posers