Manufacturing, autos and logistics
3PL (third-party logistics)
A company a business pays to run its warehousing, fulfilment or transport.
Last reviewedWhat 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.
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Related terms
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- Variable costA cost that rises and falls with how much you make.
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