What is 3PL?

A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part, or sometimes all of their supply chain management function. Third party logistics providers typically specialize in integrated warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

A bit broad, but the elements that make up the modern logistics industry continue to evolve as the breadth of value added services warehouse logistics providers offer does. This expansion has been accelerated by three vital trends in the new economy:

• The general trend toward outsourcing,
• The previously unprecedented growth of e-commerce and
• The importance of the partnership aspect of the manufacturer/marketer-logistics provider relationship.

A recent study found that 95 percent of the U.S.’s chief executives believe they should have some form of logistics strategy, and nearly 50 percent of the nation’s CEOs are currently incorporating supply chain planning into their overall business strategies.

One thing is certain: no matter how logistics is defined, the function accounts for 8.7 percent of the total U.S. Gross Domestic Product ($910 billion in 2002). It is growing dramatically in terms not just of services provided and outsourced but in terms of volume. The industry’s 3PL provider element alone counts for more than $78 billion and is estimated to be growing by 15-20 percent per year. Its benefits include:

• Reduced need for personnel
• Reduced transportation and distribution cost
• Improved customer service
• Improved cycle time
• Free-up capital in manufacturers’ and marketers’ non-core areas


(Some statistical information provided by: The International Warehouse Logistics Association)