TL Logistics Software – Is Logistics Software Or 3PL More Helpful?

For small to midsize companies that have full truckload shipping needs, full truckload logistics software-also referred to as TL logistics software-is quickly becoming the preferred method of transportation logistics. Traditionally, small to midsize companies that don’t employ logistics professionals have turned to third party logistics (3PL) providers to realize the optimal TL shipping solutions. But when companies learn how using TL logistics software can reduce the cost of the shipping process and offer more shipping options, they quickly see 3PL providers for what they are: logistics companies that act as middlemen in the shipping process. In other words, 3PL providers profit from charging their clients more for shipping options than they would pay if they chose the same shipping options through the use of TL logistics software.

While full truckload logistics software can cut the cost of the shipping process (research shows that companies cut their shipping costs by roughly 10 percent after the first year of using the software), the first issue of deciding whether logistics software is more helpful than 3PL is whether or not your company wishes to have more control over its shipping process. While the idea of having more choice and financial freedom in the shipping process is an appealing notion, some companies would gladly pay more for 3PL TL shipping solutions for never having to be involved in the logistics process; a point that logistics-software producers choose not to grasp as they tout how their software can revolutionize the shipping process. But for small to midsize companies that don’t have large shipping budgets, the prospect of having more control in the shipping process and therefore cutting shipping costs usually leads them to favor logistics software over 3PL providers.

In addition to logistics-software allowing companies to pay less for shipping and realize more control in the shipping process, another significant difference between logistics-software and 3PL providers is that the former never suffers service interruption due to trucking industry trends. In recent years, numerous 3PL providers have gone out of business due the economy’s negative effect on the trucking industry, placing their clients in the unenviable position of having to start from scratch with a new provider that may or may not be able to offer them shipping solutions with their former carrier. Because 3PL firms make their money on the cost differential between the discount that they receive from carriers and what they end up charging their clients, a carrier that doesn’t offer a preferred discount is a carrier that a 3PL firm won’t work with. Unlike 3PL firms that work directly with carriers, software logistics firms are software companies that specialize in transportation logistics-software, their unique selling point being that you can go from outsourcing to a 3PL provider to being your own logistics provider.

The Benefits of Implementing Freight Logistics Software

More Control

Freight logistics software-also known as truckload logistics software-lets companies supreme control over the economy and timeliness of their shipping process by allowing them choose their own shipping options. When companies outsource to a third party logistics (3PL) provider, the provider develops shipping solutions that are in its best business interest, meaning that shipping companies can miss out on shipping options that would benefit them the most. Because logistics software is tailored to apply to a company’s unique shipping process and offers an easy to use interface, it does not require logistics expertise of its users. In addition, because logistics-software is offered on a SaaS model, it can easily be re-adapted to a company’s shipping needs as they change over time.

Lower Cost

Logistics-software costs less than 3PL for a simple reason: it is priced as a software solution and not as a logistics consultancy service. The cost of logistics software is based on a company’s shipping requirements, allowing companies to pay for only as many services as they need. For example, if a small company’s shipping needs consist only of less than truckload (LTL) shipping arrangements, the options offered through logistics-software will reflect these needs only. In addition to saving companies money on the logistics function, logistics software also allows companies to save on shipping solutions. Whereas some 3PL providers (e.g. non-asset based providers) charge shipping companies over and above the cost of a shipping solution in order to profit from a carrier discount, logistics-software insures that companies never pay hidden fees.

Integrated Shipping Solutions

When shipping companies outsource their logistics to asset-based logistics providers, they only realize shipping solutions that can be accommodated by the asset-based provider’s transportation assets (e.g. trucks, boats planes, etc.). But with logistics software, companies can realize shipping solutions that involve various modes of transportation to a certain location. For example, logistics-software may reveal that shipments to a certain location would be cheaper to transport by air for the majority of the trip due to warehouse fees that would result from ground shipping. Considering the cost of the shipping process, realizing integrated shipping solutions on a daily basis can dramatically impact a company’s bottom line.

Significantly Improved Bottom Line

Logistics-software can improve a company’s bottom line by presenting the most economical shipping options for a company’s shipping needs. But it can also save companies money by removing the need to hire in house logistics professionals when they grow large enough to purchase their own shipping fleet. Although logistics-software is often presented as an ideal solution for small to midsized companies that can’t hire their own logistics experts; it is also used by companies whose annual shipping costs exceed six figures, allowing them operate without the cost of logistics professionals. Research shows that companies can reduce their overall shipping costs by 10 percent after only one year of using logistics software.

Logistics Software is the Ideal Solution For Shipping Optimization

When a shipping company invests in logistics solutions, its main goal is to achieve shipping optimization, which focuses on expediting the shipping process while driving down its cost. But it’s important to realize that the cost of a logistics solution is also part of the cost of the shipping process. To achieve freight optimization, shipping companies have three choices: they can hire their own logistics experts; outsource their logistics needs to third party logistics (3PL) providers; or implement logistics software, which allows them to serve as their own logistics provider. For most companies, hiring their own logistics experts is the preferred solution, but not for the reasons that one might suspect. Compared to 3PL, which shippers regularly complain makes them feel distanced from their shipping process, an in house logistics department results in what every shipping company wants: total control over the shipping process. Yet, this is exactly what logistics software offers, and at a fraction of the price.

Traditionally, companies that can’t afford their own logistics department turn to 3PL. But the type of 3PL provider that offers the comprehensive, innovative approach offered by a logistics department can be as expensive as hiring a logistics expert, which means that small to midsized companies often turn to lower level 3PL providers (standard 3PL providers and service developers) that don’t offer comprehensive, innovative approaches to shipping optimization. Gradually, however, this trend is changing, especially as companies learn that you don’t need logistics expertise to operate logistics software. Developed by logistics experts, the software does the work of a logistics expert, presenting shippers with optimized solutions that they can choose from by using a user-friendly interface.

Using logistics software is essentially like having your own logistics department, but without the salary and other headaches that come with personnel. As a result, even companies that grow large enough to afford their own logistics team are instead opting for logistics software. In terms of shipping optimization, the software offers the same route planning and optimization and load optimization solutions that a logistics department would. Concerning route planning and optimization, the software offers the following benefits, among others: reduction of distribution costs and miles, decrease in routing time and contingency planning. Concerning load optimization, the software allows shippers to complete accurate and quick load design for different route types, employ multiple loading strategies, pre-build orders and select load designs that reduce product breakage.

Whether your company needs logistics solutions in the first place or its partnership with a 3PL provider isn’t offering the desired level of freight optimization, implementing logistics software can dramatically improve the quality and decrease the price of its shipping process. Research shows that shippers who implement logistics software can reduce their shipping costs by 10 percent after only one year.