Third-Party Logistics Versus Brokers Services
As the old saying goes, “One man’s 3PL is another man’s broker.” A couple of years ago, I spoke on a CSCMP panel led and moderated by Tom Escott that “debated” the merits, differences, and advantages of a shipper’s relationship with a 3PL versus a broker. It was a lively and enjoyable session, and I felt that both service types described well their value propositions.
Both 3PLs and brokers serve as an intermediary between shippers and carriers – and depending on the service being provided – 3PLs can look like brokers and brokers can look like 3PLs. This is why “broker” and “3PL” are often used interchangeably. But just because they can provide a similar service, doesn’t mean they are the same, or that the provider you have is delivering the type of service your company really needs.
Transportation brokers play an important role in a shipper’s overall transportation strategy. The broker’s ability to reach a broad network of thousands of smaller carriers to secure capacity with high-quality service at a competitive cost is essential, especially as shippers attempt to defend themselves against capacity crunches by adding one or two high-quality brokers to their manageable stable of asset-based carriers.
In the same way, a 3PL engages its carrier network on behalf of a shipper to secure truckload, less than truckload or intermodal capacity. 3PLs will also utilize one or two high-quality brokers to supplement the asset-based carriers it contracts for a particular customer. Yet despite the similarities, there are distinct differences between the two.