Logistics services are a step beyond third-party logistics (3PL). They are considered 4PL or 7PL, which combines 4PL with 3PL eCommerce fulfillment. Logistics are an essential part of your supply chain management. Fourth-party logistics can move the needle on your ability to meet demand, deliver products to your customers, and grow your profit margins.
Logistics services are the value chain that links the manufacturer to the consumer. Here’s an overview of logistics services.
Definition of logistics services
Logistics services are all the elements of your supply chain, from the factory to the end customer. They include transportation from manufacturer to warehouse, warehousing and order fulfillment, and delivery to the end customer.
Logistics services include:
- Transport from the factory to the fulfillment warehouse.
- Warehousing and order fulfillment.
- Outbound shipping and order delivery to customers.
That is a simplified overview of logistics services. When you drill down, there are different options, choices, and dynamics at each of these stages in the supply chain. You can choose different types of logistics services to meet the needs of your eCommerce company.
Types of logistics services
Here are some of the most common types of 4PL services used by eCommerce companies.
When you place a purchase order with your manufacturer, a wholesale supplier, or a distributor, logistics are involved in getting the freight from the point of origin to your fulfillment warehouse. Freight forwarding is the process of shepherding a shipment from the manufacturer to the fulfillment center.
Domestic freight forwarding includes arranging for trucking, rail shipment, or air transport. Transport for full truckload (FTL) or less than truckload (LTL) shipments of bulky or heavy items is almost always by rail or truck. Freight forwarders might use air freight for orders that need expedited shipping or high-value products.
International freight forwarding involves additional layers of complexity, including customs paperwork at both ends of the journey, duties, and multi-modal transport. International freight typically travels by container ship in either FCL or LCL (less than container load) shipments or, for lighter or more valuable products, via air freight. During the COVID-19 pandemic, orders of PPE shipped by air freight. Electronics manufacturers also commonly use air freight to transport their goods. Container ships transport everything from automotive parts to clothing.
As supply chains become ever more global, international freight forwarding is something that many eCommerce businesses need.
You can work directly with a freight forwarding company to handle the paperwork and arrange transport for your goods. Or you can use a logistics services provider to manage international freight forwarding along with other 4PL services. Which option you choose will depend, at least in part, on the size of your company.
A 4PL or freight forwarding company can bundle your LCL shipments with those of other companies to save you money on shipping. The advantage of using a logistics services provider is that the 4PL aggregates a large volume of shipments, so the freight forwarders it works with have an incentive to provide better service.
Inventory planning and management are foundational to every successful eCommerce business. Managing inventory can also be a pain in the neck. The best way to relieve the pain is to automate your inventory management as much as possible.
A logistics services provider may have an inventory management solution that integrates with warehousing services. For example, Red Stag Fulfillment’s inventory management system offers you inventory visibility, stockout projections, and data on order trends.
An inventory management solution from your logistics provider can provide data to help you generate inventory forecasts and improve your inventory replenishment processes. The net result of better inventory management is fewer backorders and greater profitability.
Third-party logistics is a catch-all for a range of logistics services. Most 3PL services companies will provide the basics of eCommerce fulfillment: receiving, warehousing, pick and pack order fulfillment, and outbound shipping.
A 3PL may also provide additional logistics services, including:
- Returns (reverse logistics)
- Kitting and assembly
- FTL and LTL shipping
For eCommerce companies that outsource their order fulfillment, third-party logistics companies become valuable business partners. At Red Stag Fulfillment, we provide all the services listed above, and we go above and beyond. We want our logistics services to drive your eCommerce success.
Logistics services examples
It’s easier to understand how logistics services work by looking at an example. Let’s start with a hypothetical furniture company called Sit Still.
Sit Still sells comfy chairs and couches online to U.S. consumers. The furniture is manufactured in China, so the company needs help with the logistics to transport the products to its U.S. third-party logistics company. Its shipments weigh a minimum of 40 pounds. When someone orders a living room set, the total weight can top 150 pounds.
Supply chain management from manufacturer to fulfillment center
Sit Still’s logistics provider evaluates its shipping options and finds the right freight forwarder to ship bulky chairs and sofas by ocean rather than air.
The freight forwarder makes sure the paperwork meets local border control requirements before the container of furniture is loaded onto the ship in China. It also ensures that the container has cargo insurance in place. If the container isn’t full of couches and chairs, the freight forwarder might save Sit Still money by consolidating the shipment with other compatible goods.
A few weeks later, when the container ship reaches port in the U.S., the freight forwarder once again makes sure the paperwork is in order so the furniture can clear customs. After the container arrives in the U.S., one 4PL service might be to breakbulk or split the container into LTL shipments for distribution to multiple fulfillment centers.
The final step for the freight forwarder is arranging for truck transportation to the fulfillment warehouse. Because Sit Still uses a logistics provider, its supply chain manager has a single contact point throughout the process. Additionally, the 4PL handled any issues that arose during the freight forwarding process.
Inventory management and fulfillment
In the warehouse, Sit Still benefits from more logistics services. Its 3PL warehouses the furniture and ships wholesale orders to retailers using LTL freight shipping. Customer deliveries that weigh more than 150 pounds are also good candidates for LTL shipping. The freight company can deliver the items directly to the customer’s home. For furniture shipments under 150 pounds, Sit Still’s fulfillment company may use UPS and FedEx services.
Better yet, the 4PL inventory management system helps you stay on top of your inventory and avoid stockouts. The system analyzes order trends, helping Sit Still know when its inventory hits the reorder point.
By taking advantage of a full range of logistics services, the furniture company frees its staff to focus on higher-level tasks to expand the business and boost its bottom line. Outsourcing part of its operations was an excellent choice for this online retailer.
Red Stag Fulfillment logistics services can help you optimize your supply chain management
But that’s not enough. We’re always looking for more and better ways to serve our clients. So we’ve created an inventory management system that gives you visibility and insights into your inventory planning. And we are working with freight forwarding partners to offer additional logistics services. We’re moving into the 7PL space, combining top-notch 3PL services with 4PL supply chain management.
Our goal is to optimize logistics for our clients by working with partners up and down the supply chain. You benefit from increased supply chain visibility. That collaboration is a great way to find efficiencies that can save you money. Plus, you get to have one point of contact for all your logistics services rather than juggling multiple vendors.
Learn more about logistics services:
- 3PL, 4PL, 5PL, explained
- Is freight forwarding right for your business?
- The Impact of Product Size and Weight on EFulfillment Partnerships