The cheapest logistics companies (3PLs, or third party logistics providers) aren’t necessarily the best…
And the same goes for everything else in the shipping industry. While there’s often a misguided perception out there that logistics is all about price, the truth is actually much more complex.
You see, when it comes to shipping, many potential clients just don’t take into account the nuances of proper shipping and how knowledgeable logistics companies can translate that not into just savings, but into a better overall shipping experience.
Price Plays an Outsized Role for Logistics Companies — But So Do Other Factors
Look, if someone is promising you that they do amazing work for the lowest possible price, you should be wary, no matter what industry you’re in.
If you have three different builders offering you a price on a new home, and one builder is significantly cheaper, chances are that guy’s cutting corners like you wouldn’t believe.
You don’t want to live in a place built on the cheap — why would you entrust your goods to the hands of someone who’s taking shortcuts?
Though many 3PLs like to pretend it isn’t the case, many shipments go awry. Mistakes, like your product ending up in the wrong city, or showing up weeks too late, or getting damaged, not only cost you money, but might cost you your customer along the way.
No one wants that — and the truth is, you’re smart enough to recognize that. You know that this isn’t something to skimp on, but at the same time, cost plays a large role.
But so does quality. And so does time in transit.
In fact, assuming a 3PL is able to provide a perfect level of service and get your product where it needs to be in great condition, often the next biggest question is this — how long will it take?
Some shippers can wait a while — these shippers plan far ahead and have the capacity, the storage, and/or the demand levels that allow them to ship whenever they want.
But not everyone is so blessed. For many folks out there, product can’t just sit around until someone buys it — it has to be shipped almost as soon as it’s ready, and the sooner it reaches its destination, the better.
In my experience, time often pushes price out of the way and becomes an overriding factor, one that matters more than anything else.
There’s nothing quite as frustrating as losing an account because of a late shipment — and most companies are willing to eat the shipping costs if it means the preservation of a critical relationship.
So you need to ask yourself this — with this incredibly low price that I’m being offered by this 3PL, am I going to end up with a successful shipment?
Or am I going to end up with “unforeseen” delays and damaged goods?
I don’t know about you, but I’m willing to pay a little extra to make sure my business is able to maintain its reputation — and when you’re shipping goods across the country, I promise you that you’re the one who will get blamed when the shipment arrives damaged (or doesn’t show up at all), and not the 3PL who was supposed to do the whole thing so cheaply.
Another Big Factor That Most Logistics Companies Don’t Measure Equally on Is Technology
Another point where you see logistics companies cutting corners is on technology.
In fact, this is often where strangely low prices can come from.
It usually looks like this — the 3PL hasn’t invested in the right technology, or they don’t know how to leverage it properly (or both). As a result, you end up with shipments that take longer, have a higher risk of damage, that aren’t insured properly, or that end up costing significantly more than the initial quote.
In fact, that’s something every shipper should keep firmly planted in their minds — if you get a quote that is arbitrarily lower than all the other quotes you’ve received, and there’s no clear reason for the difference, it’s a good bet that the initial quote isn’t going to be your final cost.
This often isn’t even done on purpose or dishonestly — it’s just a misuse of technology, from someone who doesn’t know how to use their systems properly to get an accurate rate.
Even setting technology aside, the quality is still a factor — why spend your time working with a 3PL who’s just going to hit you with a lot of one-and-done shipments when you could be working with a partner who is going to help you optimize your logistics over time? Who wouldn’t want to work with a partner that can help you become more efficient, save time, and become a more reliable shipper (which is something your clients will appreciate)?
A Good 3PL Is Going to Work with You Over Time to Put a Logistics Action Plan Into Place
And that action plan is going to, over time, turn into a set of standard operating procedures that save you money, increase your efficiency, and maintain the level of quality that your customers expect.
By doing all that, not only can you maintain and grow existing customer relationships, but you can easily make promises to new customers about shipping that you’ll confidently be able to keep.
And there’s nothing quite as nice in the business world as being able to make a promise that you know you can keep.
Contact us today to find out how a partnership with Diversified Transportation Services can be exactly what you need to take your business to the next level.
Whether you're a company looking to improve one facet of your supply chain, your entire supply chain, or simply looking for a transportation and logistics consultation, we can help.