For most of us, getting a package from Point A to Point B is a simple process. We pack what we want to ship in a box, slap an address label on it, and take it to a carrier such as UPS, FedEx, or the U.S. Postal Service to ship it and deliver it to our intended recipient. Many of us check the rates for shipping our package first, choosing the carrier that offers the lowest rates. If we need for our package to arrive quickly, for instance the next day, we check to see if the carrier is able to do that and again, look for the most competitive pricing.
Very simplistically, this is the service that is provided to companies by freight forwarding service companies or third party logistics providers. Their client companies, however, are typically dealing with truckload shipments, heavy equipment, shipments requiring refrigeration or special handling, and even hazardous materials. It is a very specialized and time-consuming process to find the right type of truck with a driver or company experienced in handling the freight in question in the right geographical area at the lowest, competitive price. To accomplish this successfully requires an enormous network of road freight transport companies or owner/operator truck drivers.
Many companies outsource their supply chain logistics to third party logistics providers for the time and money savings they offer. The fees paid for the services are more than paid for with the reduced labor costs of an in-house logistics department as well as the savings on freight transport costs. Because the logistic providers have such a broad network of relationships with landstar trucking companies with which they do repeat business, they can get the lowered rates otherwise only available to the largest companies due to the scale of business they provide. This puts small and medium size companies on the same footing as their largest competitors.
As an intermediary between companies requiring shipping and carriers who need the business, a freight forwarding services is a valuable asset to both. Road freight transport companies and independent owner/operators benefit from increased business to keep their trucks filled both to their destinations and back to help prevent having to return empty, or “deadhead,” and non-profitably. With shipping costs being a significant percentage of the end cost of an item, third party logistics providers are also an asset to consumers who benefit from lowered prices. Though freight forwarding services don’t actually move any product physically themselves, they play an essential role in getting products from Point A to Point B safely, efficiently, and at the most competitive rates.