Manufacturing, autos and logistics
3PL (third-party logistics)
A company a business pays to run its warehousing, fulfilment or transport.
Facts checked against sources onWhat does 3PL (third-party logistics) mean?
A third-party logistics provider (3PL) runs logistics tasks for other companies: warehousing, picking and packing orders, transport, returns and sometimes customs. Businesses use 3PLs to avoid building their own warehouses and to turn a fixed cost into a variable one. Example: an online brand shipping 50,000 orders a month pays a 3PL 2.50 per order, 125,000 a month, while running its own warehouse would cost 100,000 a month fixed plus 1 per order, or 150,000. At 150,000 orders a month the answer flips: the 3PL costs 375,000 and its own warehouse 250,000. A 4PL goes further and manages several logistics providers on the customer's behalf.
Where does it come up in case interview prep?
- How logistics works: carriers, forwarders, warehouses, ports and the last mileLesson in Logistics, shipping, ports and supply-chain services
Related terms
- Freight forwarderA company that arranges shipping for customers by buying space from carriers, without usually owning ships or aircraft.
- Make-or-buy decisionChoosing whether to produce something in-house or buy it from a supplier.
- Fixed costA cost that stays the same when volume changes, within a normal range.
- Variable costA cost that rises and falls with how much you make.
- OEM (original equipment manufacturer)In autos and machinery, the company that designs, assembles and brands the final product.
- Tier 1 supplierA supplier that sells complete parts or systems directly to the carmaker.
- Vehicle platformA shared set of engineering underpinnings used for many car models.
- Battery pack costThe cost of an electric vehicle's battery pack, usually quoted per kWh of capacity.
Learn it in context
See 3PL (third-party logistics) at work in a lesson from Logistics, shipping, ports and supply-chain services, with checks as you go.
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