What Is a 3PL Company? Third-Party Logistics Explained
A 3PL company, short for third-party logistics, handles supply chain operations on behalf of other businesses: receiving inventory, storing it, and picking, packing, and shipping orders to customers. Companies outsource this work to a 3PL instead of running their own warehouses and shipping teams. You may also see these providers called fulfillment companies or logistics companies, though those labels describe different scopes of service.
Logistics is the coordination of moving and storing goods across a supply chain. For a 3PL, that means managing commercial goods as they arrive at a warehouse, tracking them as inventory, and shipping orders out to customers.
What a 3PL Company Does
A 3PL company receives your products, stores them as part of a larger inventory, keeps track of stock, then picks items from that inventory to pack and ship to customers. The goal is to handle your inventory storage and customer shipping reliably and efficiently.
The core duties of a 3PL include:
- Receiving inventory into the warehouse
- Inventory storage, tracking, and management
- Picking items to fill orders
- Packing items for those orders
- Shipping packed orders to customers
Depending on the provider, a 3PL may also offer:
- Returns processing (reverse logistics)
- Kitting, such as assembling gift sets or bundles
- Full-truckload (FTL) and less-than-truckload (LTL) freight shipping
- Freight forwarding
The difference between a 3PL and a basic fulfillment company is scope. Fulfillment companies focus on the essentials: receiving product, storing it, and shipping it to customers, which works well for many crowdfunded campaigns and smaller businesses. A 3PL handles those basics plus the added services above, and often serves B2B needs, whereas fulfillment services usually stick to B2C.
How to Choose a 3PL Company
As with any service you hire, start by researching the track record of established providers. Check their reputation with other business clients, and weigh the type of products they handle and the scale of their operations against your own.
Larger 3PLs are often more selective about the clients they take on, because they manage the widest range of services, including inbound and outbound freight. Whether a provider runs in-house freight operations or works with non-asset-based third-party carriers, ask specifically about less-than-truckload (LTL) and full-truckload (FTL) shipping.
Know your inventory requirements before you talk to a provider so you can cover the details. This matters most if you handle goods that are hazardous, temperature-sensitive, apparel-based, fragile, or high-SKU-count. Depending on your product, you may need a specialized 3PL.
Benefits of Using a 3PL
Building logistics in-house is expensive. It requires staff, equipment, storage space, and insurance, and the scale grows quickly, which costs both money and time.
Outsourcing shipping and inventory to a 3PL turns much of that into a predictable line item and frees up time. Businesses that use 3PLs often gain better supply chain visibility, efficiency, and customer satisfaction, because the provider handles carrier communication, insurance tracking, global shipping, customs, consolidations, and the supporting technology.
Who Uses 3PL Companies
Businesses of every size rely on 3PLs, from small mom-and-pop shops to larger department stores and e-commerce sellers. The advantage is that a company does not have to spend its own resources on every step from procurement to delivery. Handing that to a 3PL reduces the risk tied to product transportation and storage and lets the business focus its time and energy elsewhere.