More businesses than ever are turning to contract logistics to ship their goods. The global market for contract logistics has been constant during the pandemic and is forecast to grow by 24 per cent by 2025. With the challenges involved in supply chains today, it’s no wonder companies are opting for trusted and experienced partners when outsourcing distribution.
Contract logistics providers use their knowledge and infrastructure to manage parts of the supply chain for other companies. This typically involves transportation but extends to other services.
Types of Contract Logistics Services
There are several different aspects to the modern supply chain, and service providers may offer outsourcing of various stages, such as:
- Warehousing or storing of goods
- Transportation and haulage
- Processing orders.
By partnering with a company to look after aspects of your supply chain, you’ll receive several benefits.
Benefits of Contract Logistics
The most obvious benefit of contract logistics is avoiding having to invest in equipment yourself. For transportation outsourcing, this would mean you save on purchasing vehicles and hiring drivers. You would also be better able to respond to fluctuations in sales; instead of buying more delivery vehicles at peak times, you can increase your outsourced order.
You also benefit from your partner’s in-depth expertise. For example, if you manufacture perishable or sensitive food goods, you can hire a specialist in food safety during transportation, ensuring that your goods are correctly stored and arrive at your customers at their freshest.
Finally, outsourcing can save you money. Contract logistics providers often benefit from more considerable purchasing power in their field so that they can pass that saving onto clients. For smaller businesses with less than a full truckload of goods to send, it will be much cheaper to outsource and benefit from, essentially, sharing the cost of that transport with other companies.
When should you use contract logistics?
You may decide to use contract logistics when:
- You don’t have the initial investment available to provide a service yourself
- Hiring the extra staff needed would be unfeasible
- You require specialist services (such as food transportation)
- You and your employees are too busy running your business.
Working with a reliable contract logistics partner can save you time and money in these and many other situations.
What is the difference between contract logistics and 3PL?
A common question is “what is contract logistics and what is 3PL?”. 3rd party logistics (3PL) is a term often used interchangeably with contract logistics, but with a slight difference. 3PL providers cover the entire supply chain process from beginning (warehousing) all the way through to delivery.
For some, outsourcing the entire process gives peace of mind and can sometimes be cheaper. However, 3PL may not make sense for every business as there may be less control and influence over your goods before getting to your customers.
Let’s talk
There are several benefits to working with a trusted contract logistics partner. Contact Dennis Distribution today to see how we can help you.