3PL Frustrations?
December 10, 2005 by Splatty
Filed under 3PL, Misc Logistics
Your shipment is late, damaged, held up in customs, lost, etc…any one of these issues would most likely have you pulling your hair out wondering why your favorite 3PL continues to have these types of issues. Actually the majority of shipments most likely move from point A to B with little fanfare, however when something does go wrong it seems like it happens to every shipment.
I was once posed the question why 3PL’s seem to to have limited quality control over their services. The answer lies in the fact that most 3PL’s are non-asset based entities, for the most part they do not own their own aircraft, steamship lines, trucks, etc. and therefore rely heavily on the success of other entities to manage different components of the supply chain.
Take for instance an ocean shipment moving from Denver to Hong Kong DDP (delivered duty paid) on a door to door basis. This shipment will most likely change hands between 8 or 9 different entities before it arrives in your consignee’s hands. First, the shipper contacts the 3PL (1) for a booking/pickup. The 3PL then contacts a local cartage company (2) to drop a container at the shipper’s facility. After the product is loaded, the cartage company delivers the container to the rail ramp (3) where it will be booked for transport to the LAX/LGB port. At the port (4) the container will be loaded on the appropriate ocean vessel (5) where it will make it’s journey across the Pacific Ocean. Once the vessel arrives at destination your 3PL’s local office (6) will make arrangements to clear the container through customs (7) or make documents available to the consignee’s designated broker (8). The cargo will then be tendered to a local drayage company (9) who will make the final mile delivery to the consignee’s door.
On this particular example there are at least eight different potential areas for a shipment to go awry. Obviously, the 3PL is the face of the shipment and holds ultimate responsibility for the shipment, however in terms of quality control the 3PL is limited in it’s ability to exert complete control over all of the shipment events.
Overall, 3PL’s tend to do an excellent job providing transportation services, however there is still much that can be done to improve customer service and provide pro-active communication in terms of shipment status in order to alleviate the stresses faced by today’s shippers.
Gustavo on Fri, 13th Jan 2006 9:35 am
As a client of one of these 3PLs, should I be concerned with the number
of times the shipment changes hands? Or should I just be concerned with the
on-time arrival at the final destination?
3plwire on Fri, 13th Jan 2006 8:59 pm
As a client of a 3PL I would not be overly concerned with the number of times that a shipment changes hands. Most 3PL’s choose their vendors very carefully with many selecting their vendors through an RFQ process. If a 3PL has repeated issues with late shipments or damaged cargo, they will most likely make a change. Keep in mind that the majority of 3PL’s are non-asset based so the values they provide to a shipper are service, reliability, price, and timeliness in shipment processing and delivery.
If you are having repeated issues with your 3PL in terms of late shipments or damaged/lost cargo it may be time to look at other options.
jim on Fri, 20th Jan 2006 3:04 pm
As a shipper, I think that all 3pl’s suck. I have not found one who takes responsibility for any
messups; this includes Freightquote.com, Myfreightworld, Diversified Transportation to name a
few. They eithe screwup the shipment or they quote one price and charge another. Anyone know of a good decent 3pl?
3plwire on Sun, 22nd Jan 2006 10:57 am
I am sure there are quite a few people out there who can empathize with you, Jim. However, there
are also quite a few people who, after a LOT of searching, are quite satisfied with their 3PL.
These days, especially as the big players keep getting bigger, there is a desire among 3PLs to be
everything to everybody. Many customers are finding out that putting all their eggs in one 3PL basket,
so to speak, turns into a scrambled mess.
The other thing you should do is take a good look at your business and try to find a 3PL that fits
your business. And, regardless of the size of your business, try taking a look at some of the smaller
3PLs out there. Having worked for both large and small 3PLs, I can tell you there are distinct
advantages to both. Generally, smaller, localized 3PLs tend to have better and closer customer
service than their much larger cousins. They also tend to be more decisive and fast-acting. Another myth
about the small 3PL is that they can’t compete on price. Complete fantasy. One of the companies
I worked for consistently took business away from some of the biggest names in the business:
Panalpina, Kuehne & Nagel, BAX Global, etc, and these were accounts that we competed with on price, all
the customers we took away from them moved to us because we were cheaper.
Another thing to look at is where and how you do business. Some 3PLs excel in certain geographic areas
while others excel in certain kinds of product or even in certain types of transportation. For example,
another company I worked for claimed they had a full nationwide domestic transportation service. But, in actuality,
they were simply sub-contracting the work to another local, small domestic provider, and marking
up the cost. After numerous service problems and delays, they finally dropped the service,
realizing that what they were really good at was international transportation, not domestic services. By
focusing on their core service, they were able to better satisfy their clients and make good money.
In an effort to remain neutral and unbiased, I would not want to steer you one way or the other.
Suggest you stay away from the so called “dot-com” logistics companies as you apparently have not
had any success with them. Try looking at some of the more traditional 3PLs out there. Talk to
friends in the industry and take the time to do the research on a new company before choosing to go
with them. Decide if you want to go with a larger company, who tend to have great networks and a
far reach, or a smaller company, who tend to have more personalized, close customer service. Perhaps
you do most of your business in a specific geographical location. If so, then try to find a 3PL
that specializes in serving that area. Also look at the kinds of clients they already have and
what kind of product they handle. Most 3PLs will tell you they can do it all, but usually are very
good at handling only a small handful of product types. If you ran a gourmet food distribution
business you would not want to give your business to a 3PL who handled mostly electronics and heavy
industrial equipment.
And last, but not least, decide which is most important to you: service or price. Too often customers
tell me they want the best service, only to find out that they are really just a price conscious customer
who would switch for a penny. The old adage “you get what you pay for” is ESPECIALLY true in the
logistics business. That’s not to say you can’t get both good service and a great price, just that
you have to strike the right balance between the 2.