Choosing a 3PL: Should Price Matter?

Price is an important when choosing a third-party logistics (3PL) provider, however, it should not be the determining factor. There are several reasons why price should not be the driving force in the selection of the right 3PL for your business.

Quality of Service

The level of service and the quality of services provided by a 3PL can vary. Though the cheapest option may seem like the right move for your business financially, going the cheaper route might result in lower service quality, which can ultimately lead to issues such as delayed deliveries, damaged goods, and poor communication. Choosing a 3PL with a slightly higher price but that can provide your organization with better services may save you money in the long run.

Experience and Expertise

Different 3PLs have different areas of expertise. Choosing a provider with experience specific to your industry or with your particular type of products can be more valuable than partnering with the cheaper option. Partnering with a 3PL that recognizes your unique logistics challenges can offer tailored solutions for your company.

Technology and Infrastructure

Modern technology and well-maintained infrastructure can make a significant difference in efficiency and reliability. Though the upfront cost may be initially higher, better technology and infrastructure may reduce costs and improve your supply chain performance in the long run.

Location and Network

The geographic location of your 3PL partner’s facilities and transportation network can have a significant impact on your shipping costs and transit times. For example, a 3PL with a centralized location, like NewStream Enterprises, might be the best option for your business to help optimize your supply chain.

Risk Management

If a your 3PL provider offers lower prices by cutting corners or not adequately addressing risk management, it can expose your business to potential issues like theft, damage, or compliance violations.

Reputation and References

Evaluating your 3PL’s reputation and seeking reference from their current or past clients can provide valuable insights into their track record and how well they’ve performed for others. A low cost 3PL with a poor reputation may end up costing you more in terms of lost business opportunities and customer trust.

Scalability and Flexibility

A reputable 3PL should be able to adapt to your changing business needs. Price-focused decisions might lead to inflexible contracts that don’t allow you to scale up or down according to market demand.

Regulatory Compliance

Regulatory requirements in logistics, especially in international shipping, can be complex. Choosing a 3PL solely based on price without considering their ability to navigate these requirements can result in costly compliance issues.

A cost-effective 3PL should not compromise on service quality, expertise, technology, infrastructure, location, and adaptability, among other factors. With over 30 years of comprehensive supply chain management, at NewStream we offer not only a wide range of services to benefit your company with competitive pricing. Our team of experts are equipped with knowledge and expertise you need to focus on your core competencies so you can win with your customers and love your supply chain!

Ready to choose your perfect 3PL partner? Let’s chat, our experts are waiting to help!