3PL's: Should I Select An Asset Or Non Asset Service?

Published: 09th September 2008
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If you are not sure of what a 3PL service is then give me a minute to explain it simply. A third party logistics provider or 3pl as they are referred to is a business that acts as a go-between between a manufacturer that does a lot of LTL with the trucking carriers. Why would you even think about doing this? It is as easy as this, experience, cheaper pricing and service. A 3pl gives the opportunity to the little guy that normally would not get very good shipping discounts from the LTL providers to now be in a position to compete with some of its large competitors. Here's a simple analogy, think of it as "Sams Club" pricing for shipping and transportation costs.

Now that we comprehend what a 3PL is... should you partner with an asset based or a non asset based 3pl? Let's discuss these one at a time so that you can make an educated decision.

Asset Based 3PL

An asset based service has much of its resources tied up into "assets". These assets may include anything that is related with supply chain management, including technology systems, truck fleets, vehicles, airplanes, warehouses, warehousing equipment, forklifts etc. As you can see a customer would be limited to sticking with the assets that this third party logistics company provides. True their suggestions will save you money, but here is the real question to ponder: How will I truly know I am getting the best value available out there?

This raises another problem because of a conflict of interests when it comes to handling claims resolution if they are using their own trucks and equipment. What would you do if you had a claim on damaged freight, would you feel at ease trusting that your claim would be fixed in the shortest time and reimbursed for the highest value possible?

Non Asset Based 3PL

This 3PL handles all of the responsibilities of a third party logistics service such as quoting freight, booking pickups and deliveries, routing, and auditing, but doesn't tie up all of its cash all of the transportation assets that an asset based 3PL would own. Instead, this type of 3PL usually possesses only desks, computers, and freight industry expertise. It is understandable to see why they are referred to as "transportation consultants".

I want you think about this for a moment, since a non asset based 3pl is not restricted to using any particular warehouse or transportation company and generally have no ties to carriers, they are now able to use their ability to negotiate the best deal for your business. Negotiations will be done with the recognized value oriented carriers that meet your expectations and then you get to select which carriers to work with.

Since there is no conflict of interests here, there is also no fear about resolving any claims that you might have either. Now you can see why many businesses resolve to team up with a non-asset based provider. They value that they now have the unlimited freedom to choose the service providers that best meet their needs.

TSG is an Atlanta third party logistics provider. shipping.

Our clients reduce freight costs while maintaining quality and service.

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