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Why Your 3PL Gets Better Shipping Rates Than You Do On Your Own

When you’ve only got a few boxes to ship, it’s a very simple matter of taking your box to the nearest post office, UPS or FedEx drop box.

As your company grows, though, you may find that shipping costs are eating into your profit margin. But, you can’t justify raising the prices of your products and your customers are already hesitant to pay the higher-than-market shipping rates you have to charge to just break even.

How, then, do other companies manage to keep their shipping rates manageable? They partner with a 3PL, of course!

Why a 3PL Gets Better Shipping Rates

3rd party logistics companies (3PLs) get better rates than a single shipper could hope, and for a simple reason: they know how to work the system. 3PLs don’t happen overnight, many have spent decades in the logistics industry building relationships and learning shortcuts to shipping even faster.

Here are a few of the ways they’re getting the prices they do:

Negotiating rates. 3PLs have proven their value to their shipping partners over the years, and those shipping partners are open to negotiating prices to keep the 3PLs happy. Chances are good that even if you manage to negotiate lower rates with a particular carrier, you’ll not see the kinds of discounts your 3PL has.

Combining shipments. 3PLs that work with many small companies often optimize their product distribution by combining shipments. Many shippers give discounts based on bulk, and your 3PL knows it. They’ll always work to put as many small shipments together as possible to lower the per item ship rate.

High tech package routing. Integrating their shipping systems with the shippers they use means that 3PLs have always got an advantage over the average shipper. Rerouting packages to trucks that need filling and changing shipping modes on the fly is flexibility that can really save money.

A small shipper can drop a lot of cash trying to do everything themselves. The truth is that as your company grows, its warehousing and product distribution needs are going to overwhelm a one man band. By reaching out to a 3PL, you’ll not only get to take advantage of their great shipping rates, but you’ll have access to warehousing and picking technology your small business might never be able to afford alone.

Outsourcing your logistics services is another way you can go above and beyond for your customers, especially those who can’t wait for their items. By speeding up every aspect of the process and lowering shipping costs using a 3PL, you’ll retain first time customers for a lifetime.

 

June 02, 2015
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