While it isnt immediately clear exactly who coined the term 3pl, its beginnings can be

traced to the 70s and 80s as companies outsourced more and more logistics services
to 3rd parties. Over time these 3rdparty logistics service providers (3PLs) expanded their
services to cover specific geographies, commodities, modes of transport and integrated
their existing warehousing and transportation services, becoming what we now know
today as a 3PL
If there was any one moment that paved the way for the creation and growth of the 3PL
industry it was thetrucking deregulation of the 1980s. More specifically it was the Motor
Carrier Act of 1980 that limited the Interstate Commerce Commissions authority over
trucking which had previously heavily regulated rates and made it near impossible for
newcomers to start companies in the trucking industry. With the exception of a few
companies with degrees of integration, for the most part the industry was very
separated. There were trucking companies, the railroads and then there were storage
companies. With trucking deregulation, companies that had previously been in
warehousing were given more freedom to move into freight management, and increased
competition in trucking moved some trucking companies into warehousing as well.
Another important footnote in the evolution of the modern 3PL was the emergence of IT
into trucking and warehousing starting in the 1980s and into the 90s. Today technology
is among the core competitive advantages of third party logistics providers. Not only are
they integrated providers of warehousing and transportation services, but they leverage
sophisticated logistics software and inventory management technologies. Also incredibly
vital in the history of the 3PL was the move towards globalization. While companies
started out with one location and a small fleet of trucks, through both organic growth and
aggressive mergers and acquisitions the largest 3PLs were conceived with locations
across the globe.

Types of 3PL Providers

True third party logistics providers offer an fully integrated outsourced logistics solution.
Before approaching potential 3PL providers it is important to get an understanding of
your needs and what your current pain points are.
The term 3PL is one that has been used quite generously over the years and it is
important you have a clear understanding of who you are working with. All logistics

providers have their strengths, weaknesses, and origins. Many times in the North
American market logistics providers start with one specialty (like trucking or
warehousing) and then branch out into additional service offerings either by partnering
with other companies (especially in the case of trucking and rail) or using a mixed
approach. Also you will come across companies with trucking origins will dabble in
warehousing but not have the capabilities for more complex pick and pack, kitting, or
fulfillment tasks. That is not to say that there are not many companies with origins in
either trucking, rail, or warehousing that dont provide excellent integrated services. In
fact there are many.
Here are examples of typical types of 3PLs:

Trucking companies that have expanded into warehousing

Warehousing focused companies that also own their own private fleet

Warehousing companies who have strong relationships with LTL and Full
Truckload Carriers

Trucking companies focused on intermodal logistics solutions and Ocean Freight

Warehousing companies that specialize in partnering with Rail Freight

Companies

Companies that refer to themselves as 3PLs but are actually Logistics

Software companies
There certainly are many other hybrids and variations of third party logistics providers
you will encounter in the industry like freight forwarders for instance, but these are a few
of the typical types you will likely encounter.

Need for 3PL originated

Globalization
Manufacturing revolution

JIT/ Lean sigma / TPS

Reengineering- BPR
Technological growth
Third Party Logistics An Overview
Third-party Logistics is simply the use of an outside company to perform all or part of
the firms materials management and product distribution function.
-Simchi-Levi ( 2000
)
A relationship between a shipper and third party which, compared with the basic
services, has more customized offerings, encompasses a broad number of service
functions and is characterized by a long-term, more mutually beneficial relationship
-Murphy & Poist ( 1998 )

Introduction to 3PL

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Why Use 3PL?

1.To Save Time

2.To Share Responsibility

3.To Re-Engineer Distribution Networks

4.Someone Else Can do it Better

What are the Selection criteria for 3PL
Parameters

Cost
On time delivery
Level of customer service
Flexibility demand fluctuation
Past experience and client reference

 Infrastructure capabilities