Around 60% of online retailers opt to outsource logistics to simplify their operations. Managing logistics can be a lot to handle, especially as your business grows.
That’s why so many companies are choosing to outsource logistics, it’s a smart way to save time, cut costs, and reduce stress.
Instead of juggling warehousing, shipping, and everything in between, you can let experts take care of the heavy lifting while you focus on growing your brand.
Outsource logistics isn’t just about convenience; it’s about building efficiency and creating a better experience for your customers.
Whether you’re new to the idea or already exploring your options, this blog breaks down the key benefits of letting professionals handle your logistics.
Curious about how it works and what it can do for your business? Let’s dig in and find out why outsourcing logistics might be the solution you’ve been looking for.
What is Outsourcing Logistics?
Outsourcing logistics means delegating your supply chain tasks, such as transportation, warehousing, and order fulfillment to an external provider.
Instead of managing these processes internally, a third-party logistics (3PL) company takes care of them for you.
This arrangement allows businesses to focus on their core operations while relying on specialists to handle the logistics side of business.
Why Businesses Choose to Outsource Logistics
It has become a common practice for businesses of all sizes to outsource logistics.
As supply chains grow more complex, businesses are turning to experts to manage critical logistics tasks.
This approach allows them to adapt to changing demands while ensuring smooth operations.
Now we will explore the reasons behind this shift and what makes outsourcing logistics a smart choice for many.
1. Economies of Scale
3PLs and other managed logistics providers use their vast networks and economies of scale to help businesses save money on shipping and other logistics costs.
Since these providers handle large volumes of freight daily, they have strong relationships with carriers and suppliers, giving them access to bulk discounts and preferential rates that individual businesses can’t typically secure on their own.
By opting for logistics outsourcing, companies can tap into these savings without needing to meet high freight volume thresholds themselves.
Logistics outsourcing not only reduces shipping expenses but also simplifies negotiations, as 3PL manages contracts and ensures cost-effective solutions tailored to your needs.
This creates a win-win situation where businesses enjoy better rates and streamlined processes.
With 35+ years of experience in 3PL logistics outsourcing, Newl provides access to bulk discounts and streamlined operations tailored to your needs.
Let our experts handle the complexities while you focus on growing your business.
2. Cut Back on Infrastructure Investments
The costs of maintaining logistics infrastructure, such as warehouses, fleets, and equipment, can be significant for businesses.
When you outsource logistics, these costs are built into the fees charged by managed logistics providers. Here’s how it works:
- Shared Costs
The infrastructure is shared among the provider’s customers, so you only pay for a portion of the total expense instead of bearing the full financial burden.
- Reduced Maintenance Responsibility
Costs like warehouse repairs or equipment maintenance are handled by the provider, saving you from unexpected repair bills.
- No Upfront Capital Investment
You don’t need to allocate large amounts of capital to build or buy infrastructure, freeing up funds for other business priorities.
- Time Savings
By outsourcing, you eliminate the need to manage logistics assets internally, allowing your team to focus on growth and core operations.
This model provides access to high-quality facilities and services without the high costs and responsibilities of owning and maintaining logistics infrastructure.
3. Experience Technology-Driven Efficiency with 3PLs
Third-party logistics providers (3PLs) leverage advanced, often proprietary, technology to enhance operational efficiency for their clients.
These tools simplify processes, improve visibility, and support smarter decision-making.
Here’s how 3PL technology can make a difference:
- Automation of Routine Tasks
Automating tasks like order processing, inventory management, and shipment tracking reduces errors and allows your team to focus on strategic priorities.
- Real-Time Visibility
Advanced tracking systems provide live updates on inventory and shipments, enabling proactive adjustments and improved supply chain management.
- Smarter Decision-Making
Data analytics tools analyze performance metrics, offering insights that help businesses optimize operations and reduce costs.
- Seamless Integration
Modern 3PL tech integrates easily with existing systems like e-commerce platforms and ERPs, creating a unified, efficient workflow.
This technology gives businesses access to powerful tools without the need for heavy investments, ensuring maximum efficiency and cost savings.
4. Eliminate Unnecessary Logistics Costs
Outsourcing logistics enables businesses to customize services to match their exact requirements, helping avoid unnecessary expenses. Here’s what that looks like:
- Flexible Warehouse Space
Seasonal businesses don’t have to commit to a full warehouse all year. With outsourced logistics, you can scale storage space up or down as needed, paying only for what you use.
- Simplified Seasonal Staffing
During peak periods, 3PL providers handle the extra labor demands, so you’re not burdened with hiring, training, and managing temporary staff.
This ensures smooth operations without added effort.
- Pay for What You Need
Logistics providers let you choose only the services you require, whether it’s transportation, order fulfillment, or inventory management. This avoids wasting resources on unnecessary functions.
By cutting out extra logistics costs, businesses can operate more efficiently and focus on what matters most.
5. Increased Scalability
Outsourcing logistics allows companies to adapt quickly to changing needs without the hassle of major investments or staffing challenges. Here’s how:
- Easily Scale Up or Down
Partnering with a 3PL enables you to expand your operations without hiring new team members or investing in infrastructure. When demand decreases, you can scale back services and costs without layoffs.
- Flexible Costs
Instead of a large capital outlay, you only pay for the services you need, making it a cost-effective solution during uncertain economic times.
- Access New Markets
A 3PL’s expertise and connections in new markets make it easier to expand your reach without setting up your own logistics operations, saving time and resources.
This flexibility and scalability make outsourcing logistics a smart choice for businesses aiming to grow or adapt without unnecessary complexity.
6. Greater Flexibility
As logistics needs change, 3PLs can offer flexibility that’s difficult for most companies to come by.
This is particularly helpful for companies with seasonal business. By outsourcing their logistics services, they can use the services they need when they need them and back off during slower times of the year.
3PLs also come in handy when it comes to changed plans. They have the resources to adjust quickly and smoothly so your freight can get where it needs to go on time even when the first option doesn’t work out.
Many 3PLs including Newl build contingency plans into more complicated shipments to ensure they’re able to serve their customer.
7. Keeps Your Team Focused on Growth
Outside of the logistics industry, most business owners don’t set out to run logistics operations.
They’ve developed or sourced a product or products that they specialize in, and logistics is a byproduct of getting that product to their end customer, whether that’s another business or the consumer.
Managing their products’ trip through the supply chain wasn’t their dream.
When you outsource logistics services or employ a 3PL for comprehensive managed logistics services, your team can focus on your core business.
It frees up both the front and back offices, leaving more time and energy for the things your teams do best.
Beyond freeing up people’s power (and their brain power), outsourcing can free up monetary assets.
Utilizing a 3PL helps companies invest their money where it will benefit the business the most rather than sinking it into critical but non-core infrastructure.
8. Enhanced Service Quality
In most businesses, serving the customer well is the most important goal and a managed logistics provider can help companies do that.
Logistics experts are better equipped to field customer concerns and resolve problems, taking those tasks off your team’s plate and handing them over to experts.
Once again, the technology that 3PLs bring to the table can make a huge difference in the level of service a company is able to provide to its customers.
Cutting-edge 3PL tech can help companies provide their customers with unparalleled visibility, more on-time deliveries, and potentially even lower costs due to reduced shipping costs.
By improving level of service by using a 3PL, your business comes away with happier customers.
Outsource to Newl’s Logistics Services
Running a business is challenging enough without the hassle of managing logistics. That’s where Newl’s logistics services comes in.
We make logistics simple, reliable, and efficient, so you can focus on what you do best, growing your business.
Here’s how Newl can help:
1. Comprehensive Solutions for Every Need
Whether it’s warehousing, transportation, or end-to-end logistics, Newl offers tailored solutions designed to meet your specific requirements.
We combine efficiency and flexibility to help your business stay ahead.
2. A Trusted Network You Can Rely On
With an extensive network across North America, we ensure your goods move seamlessly from point A to point B.
Our experienced team and state-of-the-art systems guarantee reliable, on-time deliveries every time.
Partner with Newl for hassle-free logistics that work for you. Let us handle the hard part while you focus on what matters most!
Final Thoughts
Outsourcing logistics isn’t just a cost-saving measure; it’s a smart strategy for businesses looking to grow, adapt, and thrive.
Whether you need flexibility, access to expertise, or the ability to focus on your core operations, outsourcing offers solutions that make running your business easier.
By partnering with the right logistics provider, you can simplify your operations, improve service quality, and stay ahead in a competitive market.
Frequently Asked Questions
1. Which is the best example of outsourcing?
In the global business landscape, some of the most prominent examples of outsourcing include office and warehouse cleaning, advertising, and website development.
These tasks are frequently outsourced because they are essential but not typically part of a company’s core operations, making it more efficient to delegate them to external specialists.
2. What are the factors influencing logistics outsourcing?
Several factors influence the decision to outsource logistics functions. These include:
- Alignment with Core Competencies: Whether logistics is central to the company’s key focus.
- Risk, Liability, and Control: The potential risks and liabilities associated with transferring control of logistics operations.
- Cost vs. Service Tradeoffs: The balance between reducing operational costs and maintaining service quality.
- Information and Communication Systems: The capability to integrate systems between the company and the logistics provider.
3. Is Amazon an example of outsourcing?
Yes, Amazon utilizes outsourcing as a strategic tool to streamline its operations.
For inventory management, Amazon relies on outsourcing to maintain efficiency and ensure smooth processes.
Additionally, Amazon outsources its customer service call-center functions to provide 24/7 support, enabling consistent service across time zones and geographies.