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What is the difference between a third party logistics provider and a transportation/freight broker?
As I understand it, companies outsource their logistics activities to a 3PL provider which takes care of all of that clients logistics functions. But what is a transportation/freight broker? Are they just a company that will match a carrier with a shipper for the lowest price, but not necessarily take over the entire logistics process? Are they just a quick fix while a 3PL provider is a long term deal?
Answer: I do know that the Broker finds other carriers for the customer. It will most likely be a different carrier each time. I believe it depends on which carrier gets back to the broker first...where I work we use trucking brokers and trucking companies directly. I'm not sure how a 3rd party logistics provider works...sorry!
From: Gordon West (glwest@gordonlwest.com) a 3pl is different from a broker in three ways:
1. a 3pl does logistical analysis for supply chain management. this is most obvious to the owner of the property being shipped and less apparent to the carrier. this alows for reduced inventory costs, consolidation of freight for truckload rating, and the use of third party facilities for storage and consolidation.
2. a 3pl contracts with the owner of the property to provide "contracted" carriers. carriers are screened and rates established on awarded lanes. a broker contracts with the "shipper" and uses carriers on an as needed basis with no contracted rates established.
3. the fastest way to identify the difference (though not 100% accurate) is in the contract to the carrier. a broker will have a back solicitation clause that prevents the carrier from contacting the property owner directly for solicitation of freight and/or payment. a 3pl contracts with the property owner, not the carrier. should a "shipper" in contract with a 3pl use an alternate carrier the contract would stipulate that the 3pl would still be paid for those services and not obligate the carrier in a "back solicitation" clause.
hope this helps.
