Clearing up Confusion: Is Contract Logistics the Same as 3PL

If you run an e-commerce store or conduct any sort of business that involves the transfer of goods over vast distances, you are probably looking into logistics providers to make your transactions easier and more efficient. 

And since logistics as a field encompasses many different aspects of the supply chain, looking for the right logistics service that will suit your needs can become quite overwhelming. In particular people tend to get confused between 3rd party logistics (3PL) and contract logistics as the two terms are often used interchangeably.


Are 3PL and Contract Logistics the Same?

  • While contract logistics providers and 3PL companies can both be considered third parties, and the terms 3PL and contract logistics are often used interchangeably when referring to the movement of cargo, the two terms are in fact not the same.

How are they Different? 

  • The main difference between 3PL and contract logistics is their scope. In general Contract logistics providers focus on just a single part of the supply chain: Predominantly delivery management. These types of freight forwarders specialize purely in the movement of cargo, and overseeing the necessary processes such as customs clearance, accomplishing the necessary documentation and shipping

  • 3rd Party Logistics on the other hand is more flexible and are involved in tasks concerning more parts of a supply chain such as order management, packing, order tracking, customer communication and services, returns management etc. 

What’s Best for You?

  • In general, it is recommended that smaller businesses that usually make less than 250 sales per week to utilize the services of a contract logistics provider to ensure the efficiency of the product delivery process

  • However, once a company is able to exceed 250 sales a week, it makes more financial sense to utilize 3rd Party Logistics due to economy of scale, as 3PL’s flexibility allows company that specialize in this kind of logistics to better handle larger volumes of orders

In conclusion, the rapid increase in the reliance on e-commerce has meant that 3PL companies and freight forwarders have grown in importance not just in the Philippines but worldwide as well.

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