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.