Research and Markets’ latest report reveals that 3PLs are in high demand because of challenges in supply chain and e-commerce expansion. Predictions suggest the third-party logistics (3PLs) market will hit $1.9 trillion from $1.1 trillion in 2024. If you aim to scale your venture to new heights, it’s obvious that shipping to global markets is a priority. But this path has difficult complexities: custom laws and tariffs, cross-border transportation challenges, regulatory compliance, and inventory management that can be daunting to handle. That’s why many entrepreneurs are outsourcing logistics management to third-party service providers. The benefits of 3PLs for growing businesses, especially in managing issues linked to international business, include increased efficiency, cost savings, and better customer service. That’s because a 3PL provides multiple services, from freight transportation to inventory management, and warehousing. With these offerings brands expand internationally without an expensive in-house logistics team. Let’s delve deeper into why 3PLs are crucial for international trade.
Knowledge in International Custom Compliance and Documentation
International trade is nothing more than sending parcels from region A to B. And delivering them to clients on time. That’s what most entrepreneurs assume. However, this is just part of the process. You’re required to meet a long list of complex regulations and organize customs paperwork like customs declaration forms, commercial invoices, and bills of lading or receipts of goods. You’ll be stressed trying to manage these alone because you lack the expertise. Here’s where 3PLs come in handy. They have deep knowledge in international trade laws and will streamline documentation and customs clearance.
For example, say you’re shipping goods from the USA to the EU. Your third-party logistics partner already knows most of Europe’s shipment rules. They will handle VAT compliance, customs documentation, and tariff codes, preventing mistakes that delay passage at customs offices and ensuring smooth business expansion. An outsourced logistics company could also automate filing and HS code classification to minimize documentation errors, like undervaluing shipped goods and wrong tariff classification codes, which are key causes of shipping delays and lost revenue.
Connections to Global Networks
How does a firm benefit from outsourcing logistics to a third-party company with access to networks across states? You’re guaranteed multimodal transportation; air, road, sea, and rail for cross-border shipping because your outsourced partner knows internationally approved carriers, logistic brokers, and freight forwarders. A 3PL company will leverage its access to carriers to negotiate better freight rates, route optimization for faster transit times, and shipment consolidation.
Something else about 3PLs with a vast network of transport services, warehouses, and distribution centers is 100% support of business scalability. For example, outsourcing solutions like WSI 3PL services gives you access to a flexible and robust warehouse network. How does this benefit your business to grow? The flexibility to rent storage, transportation, and labour based on shipping volume means you can manage shrinkage and growth with ease. For instance, when the shipment orders are less, you don’t worry about paying more for warehousing or shipment only to generate less revenue. Since you’re just paying for the exact warehouse space or freight services you need. You save money.
Offer Tech-Powered Optimization
DTT Data, Penn State University, and Penske conducted a study that found an extra 25% shippers choose 3PLs for better tech value and business operations. And 74% would partner with a 3PL who uses AI. Modern third-party logistics firms use sophisticated tech for real-time visibility and process automation- vital aspects for cross-border logistics and compliance. You’ve probably seen IoT sensors, GPS, RFID, and telematics systems attached to shipment. These tech tools track your shipment in real-time, give updates on goods location and conditions. So if a problem arises you can address it immediately. A 3PL also uses algorithms processed with AI and machine learning to enhance route selection. These two advanced technologies analyze data of various routes to determine the shortest or most efficient to promote faster transportation times and deliveries.
Using AI to analyze large datasets, logistics service providers can predict customer demands. When an organization has even the slightest idea of what consumers want they can optimize inventory levels to prevent stockouts and win client trust. Blockchain is also gaining popularity in logistics because it boosts transparency and secures data. What this tech does is ensure that the movement of products and transactions is recorded to prevent documentation errors and compliance issues. Other tech tools used are warehouse management software (WMS) and transport management software (TMS). When integrated, these tools automate document management, making the flow of data, from the creation of documents to storage and retrieval, easy. The ability to access the correct info ensures shippers meet difficult compliance rules efficiently.
Juggling clearance at customs offices, taxes, and international transport is overwhelming and can slow your progress of building a global customer base. However, you shouldn’t struggle when you can outsource logistics to a third-party company that understands every aspect of compliance standards. These service providers are well-connected to freight companies, warehouses, customs brokers, and local experts, whom they work with to speed up deliveries and cut costs. With a 3PL by your side, you’ll also enjoy supply chain optimization driven by hi-tech, such as AI, blockchain, machine learning, and data analytics.
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