3PL Logistics is the next game-changer in the logistics industry. With the One Belt One Road initiative in full swing, there are more and more companies looking to work with 3PL Logistics providers. However, the cost of 3PL Logistics is a common concern for many companies, especially small to medium-sized enterprises. This article provides a brief overview of how to estimate the cost of 3PL Logistics.
What is 3PL?
3PL is short for third-party logistics, referring to the companies that arrange transportation and delivery of products or materials for other companies. 3PL services can be provided by non-transportation companies — such as software developers that provide their own distribution platforms — but are typically outsourced to dedicated companies with expertise in these areas
The main difference between a 3PL company and a traditional logistics company is that 3PLs focus on providing outsourced transportation management and logistics services, including packaging, shipping, freight forwarding, import/export customs brokerage, warehousing and more. These companies are commonly referred to as “outsourcing partners.”
In contrast, traditional logistics companies may provide some of these services but tend to specialize in one aspect such as air freight or ocean freight.
For example, Go Freight Hub is a 3PL company provide that has proven expertise and decades of experience, they specialize in providing customized solutions for your shipping needs.
What is Fulfilment cost?
The Fulfilment cost is a percentage-based fee calculated as a percentage of the total value of your order. It’s not a fixed price, it just depends on how much you’re selling. The fulfillment cost will be calculated based on the total value of all items in your order (including shipping).
For example, if your order total was $100 and you had 1 item for $50 and 2 items for $30 each, then your Fulfilment cost would be 10% ($10).
How Much Does Third-Party Logistics Cost?
The cost of third-party logistics varies widely depending on the type of service you’re getting and where it’s being shipped from and to. A general rule of thumb is that the farther away your shipment is going, the more expensive it will be to ship through a third party than if you had sent it yourself.
The cost of 3PL services depends on your needs. Some companies may only need to outsource part of their logistics operations and others may choose to outsource all aspects of their logistics management.
The following are some of the factors that influence how many 3PL costs:
Size of your company: The larger your company is, the more 3PL providers will charge for their services. This is because large companies typically have more complex supply chains than small businesses, which require more resources and labour to manage.
The complexity of your supply chain: The more complicated your supply chain is, the more expensive it will be for 3PL providers to manage it. For example, if you ship products from multiple warehouses around the world or have a complicated supply chain with multiple steps between raw materials and finished goods, then your 3PL provider will charge more for its services.
Type of product: If you produce high-value products or have a short shelf life for them (for example pharmaceuticals), then your 3PL provider will probably charge more per shipment
Are There Any Other Costs Associated With 3PL?
One of the main benefits of using a 3PL is that you do not have to spend money on expensive equipment and tools. However, there are some other costs associated with using a 3PL. These include:
Shipping charges: The shipping charges will vary depending on the services offered by the 3PL and the size of your shipment.
Customs clearance fees: This cost depends on where your goods are coming from and where they are being delivered.
Duties and taxes: You may need to pay duties and taxes depending on what type of goods you are importing into your country.
Insurance: Most shippers require customers to buy insurance for their shipments because this protects them against losses caused by theft or damage during transit and also covers any expenses incurred during transit such as storage fees. Along with it, you can also read about the comparison between FBM & FBA in 2022.
In this article, we hope that you have understood all the essential points that are described in the above paragraphs. We have disclosed how to estimate the cost of 3PL logistics and what is 3PL. We have provided adequate information in this blog.