It all started with freight forwarders. Whenever you wanted to move cargo from one country to another, you contacted a freight forwarder to arrange for shipping. Back in the day, most companies had their own warehouse and their own staff to handle their distribution functions.
Forwarders in the beginning handled Ocean freight Services, air freight services and sometimes customs clearance. As International trade grew, the need for consolidation services and cross docking Services, forwarding companies (same as previous concept) invested in larger warehouse space and hired more staff.
International Forwarding Companies started taking on more responsibilities and took a larger piece of the logistics pie adding more and more services.
Mega freight forwarders were formed with offices in many countries. That made it easy for many companies to do business internationally.
The demand for more services grew exponentially every year. With real estate prices rising, many companies chose not to invest in warehousing space and use the services of public warehousing companies or freight forwarders who started offering warehousing, distribution and transportation service“.
Freight Forwarders become 3 PL companies
Third Party Logistics Companies were born from warehousing facilities and freight forwarders and then came the confusion. Every trucking company and warehouse started calling themselves a 3pl Company in essence trying to compete with freight forwarding companies. Do not be surprised if you see a small trucking company with 2 small box trucks calling itself a 3pl. Let us forget about terminology for a moment, in reality third party logistics providers, are much more than a one dimensional trucking company or a freight forwarder that only does shipping after being called a 3pl company.
A 3pl Company might not be a freight forwarder but works with freight forwarders.
True 3Pl companies have become the foundation of : order fulfillment services which we know is growing rapidly.
In recent years there has been a decline in the number of 3Pl companies in the USA. Not every company offering logistics services is or can be a 3PL. This requires skill and resources.