What is 3rd Party Shipping?

Learn how to focus on the core competencies of your business

  • Written by Ellie Kwon
  • Published on December 7, 2023
  • Time to read 9 minutes

So, What is 3rd Party Shipping

3rd party shipping refers to the process of a company outsourcing the shipping of their products to a third-party 3PL. This means that instead of handling the shipping process in-house, the company pays another company. The third-party 3PL will typically handle everything from packaging and labeling to transportation and delivery of the products. This allows the company to focus on other aspects of their business while leaving the shipping process to the professionals

Aspects of 3rd Party Shipping

When a company outsources the shipping process to a third-party 3PL, many aspects are often included in the services offered. Let me lay them out. 

Order Fulfillment

This includes three parts. First, there is receiving and processing orders. Then, they pick and pack orders of products. Finally, they prep them for shipment.

Inventory Management

3PLs have warehouse. Tons of them, meaning they’re in the inventory game. Third-party 3PLs may also manage a company’s inventory. This includes storage, tracking, and restocking.

Shipping and Delivery

The 3PL will handle the transport. This includes the delivery of the products to the end customer.

Returns Management

In the case of returns, the 3PL can also manage the process. They will receive and process returned items.

Customer Service

Some third-party 3PLs offer customer service support to handle inquiries and complaints related to shipping and delivery.

By outsourcing these aspects of their business, companies can save time and resources and focus on other core areas.

Benefits of 3rd Party Shipping

There are several advantages to using 3rd party shipping, including:

  1. Cost savings: By outsourcing the shipping process, companies can save money. It saves them on overhead costs such as warehousing, transportation, and staffing.
  1. Expertise: Third-party 3PLs have the expertise and resources to handle shipping more efficiently. They can also provide valuable insights and advice on optimizing the shipping process.
  1. Scalability: As a company’s shipping needs grow, a third-party 3PL can quickly scale its services to meet the demand.
  1. Focus on core business: By outsourcing the shipping process, companies can focus on other core business areas, such as product development, marketing, and customer service.
  1. International shipping: Third-party 3PLs can provide the expertise to navigate international shipping regulations and requirements.

Using a third-party 3PL for shipping can significantly benefit companies looking to streamline their operations and save money.

A graphic illustration shows a flow chart, following the 3rd party shipping process from beginning to end.

How Does 3rd Party Shipping Work?

  1. When a company decides to use 3rd party shipping, they choose a third-party 3PL to handle the shipping of their products. They choose the best-fit 3PL for their needs.
  1. The 3PL will then work with the company to receive and process orders, pick and pack products, and prep them for shipment. They will handle the transportation and delivery of the products to the end customer. They may also manage the company’s inventory and handle returns.
  1. The company and 3PL will typically have a contract outlining the terms of the agreement. This includes pricing, service levels, and responsibilities of each party. The 3PL will then use their own resources. These include warehouses, trucks, and staff to fulfill the company’s shipping needs.

By using a third-party 3PL for shipping, companies can benefit from the provider’s expertise and resources. They also benefit from cost savings from not managing the shipping process in-house. The 3PL can also provide additional services. For example, this may include tracking and reporting. Ultimately this helps the company manage their shipping more efficiently.

Is 3rd Party Shipping Different Than Using a 3PL?

3rd party shipping and using a third-party logistics (3PL) provider are essentially the same thing. They both refer to outsourcing a company’s shipping process to a third-party 3PL. 

The main difference is that 3rd party shipping is a broader term that can include any shipping handled by a third party.

Alternatively, 3PL specifically refers to logistics services outsourced to a third party. This includes shipping, warehousing, and supply chain management. However, in practice, the terms are often used interchangeably and can be considered synonymous.

To Outsource or To Not Outsource

Deciding whether or not to use 3rd party shipping can depend on several factors. Is your company experiencing growth and an increase in orders? Is it becoming difficult to keep up with the shipping demands? Outsourcing the shipping process can help alleviate the stress and free up resources for other business areas. 

Further, is your company expanding into new markets or offering international shipping? A third-party 3PL can provide the expertise and resources needed to navigate these new territories. 

Ultimately, the decision to use 3rd party shipping will depend on your company’s specific needs and goals. It may be helpful to weigh the costs and benefits of outsourcing the shipping process against in-house operations to determine the best course of action.

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