When a business produces and ships time-sensitive items, distribution is often the most pressing concern. Shipping goods that have a limited shelf-life takes time and experience. It also requires temperature controlled transport, i.e., refrigerated trucks. Dairy products, meats, produce, and certain beverages must be shipped in temperature controlled transport or they may spoil.
But spoilage is not the only concern. Food manufactures also have to deal with fluctuating volume, seasonal demands, and very particular storage and shipping requirements for the goods they sell. If they do not have experience with temperature controlled transport, they may not be able to make a profit.
An inexperienced company that ships its own products often encounters the dreaded LTL. LTL is an acronym that stands for less-than-truckload shipments. As you might imagine, shipping is always more efficient if the truck or temperature controlled transport is fully loaded. When a train, plane, or truck has room to spare, it is a waste of time, gas, and money. Because their volumes fluctuate, a small food manufacturer often encounters LTL shipments.
A third-party logistics provider (3PL) is a company that offers distribution services for businesses with special needs. Because they focus on storage and shipping, they can often cut costs and increase efficiency. They also eliminate the need for warehouses, trucks, and drivers. The popularity of these companies has increased as more and more businesses have started selling on the Internet.
The average third-party logistics provider makes money because it has many clients. So, instead of sending a truck that is half full to Toledo, Ohio, it will pack the truck to the brim and make two or three stops before it reaches its final destination. At the end of the day, these providers save money by pulling full loads instead of less-than-truckload shipments. It really is quite
simple. Instead of making two or three separate trips, they make one trip with a few stops along the way.
Third-party logistics may not be a permanent solution for your storage, packaging, and shipping needs. When a company realizes sufficient profits, owners and managers often establish their own distribution networks. But this is only possible when a company has consistent volumes and their demand is not seasonal. Otherwise, the company will lose beau coup bucks on LTL shipping and maintenance costs.
Temperature controlled transport is expensive. In addition to truck drivers, a company must also employ a full team of mechanics that must service each vehicle before it goes out on the road. After all, if the refrigeration unit breaks down, the cargo will spoil and thousands of dollars worth of perishable goods will be lost. Spoilage can also harm a company’s reputation, sometimes beyond repair.