If you’re considering starting a (or growing your) shipping logistics business, you need to decide if you’ll be a generalist or choose a specialty. There are many factors to consider, but more often than not, choosing a niche can be more profitable. Then you can partner with other businesses to provide the services your customers need that you don’t offer.
Before we get into how to join a logistics business network, here’s what you need to know about different types of shipping logistics networks.
Inbound logistics moves goods from suppliers to production. This is the first step of a supply chain. These are generally the shipping of raw goods and supplies to a company for manufacturing and creation into the finished goods that will eventually be sold and distributed to end customers. Inbound logistics may include shipping routes and methods, as well as storage and warehousing when needed.
Depending on the size of your company and the quantity of raw goods you’re purchasing, you may benefit from contracting full truck load (FTL) or full container load (FCL) methods to get a cheaper rate.
Outbound logistics moves finished goods from manufacturers to end customers. These days consumers expect their ordered products to arrive quickly. Your customers may also demand visibility to track the progress of their shipments. This means outbound logistics networks may require unique tracking numbers and a platform for customers to see where their package is today.
For example, cars are manufactured in a select number of facilities across the country. When manufactured, many are put on trains and travel to key transportation hubs across the continent. From there, they are usually placed on trucks for delivery to car lots before trucking or driving them to the car dealerships. Dealers can log into their fulfillment system to see the last hub or checkpoint their cars were at, so they can update their customers on delivery estimates.
Amazon, for example, ships products to warehouses in major cities. From there, they fulfill orders as they come in from local warehouse stock. They are then put on trucks or delivery vans to get to their final destination. Users can track the process through the Amazon website.
Reverse logistics moves goods from the end user back to the supplier or manufacturer. This is usually done for product returns, repairs, or product recycling. To provide the best customer service, your reverse logistics network should make shipping the product back to you as easy as possible. This may include software to print return labels and agreements with shipping companies to either pick up the product from the user’s residence or business or deliver to a shipping hub office such as a local post office or shipping company.
1st Party Logistics (1PL)
In 1st Party Logistics, the organization does its own cargo, freight, and transportation using its staff and equipment. This is common for smaller shops to deliver locally. The only “players” in this process are the company making the goods and the end customer. No other parties are involved between the two.
2nd Party Logistics (2PL)
In a 2nd Party Logistics network, the company employs the help of a shipping or delivery company to get goods from the manufacturer to the end customer. A 2PL supplier only provides the shipping. This is how peer-delivery networks like Uber Eats work (the restaurant makes the food, and the Uber driver picks it up and delivers it to the customer).
3rd Party Logistics (3PL)
A 3rd party logistic supply chain includes transportation and delivery as well as additional services such as warehousing and customs brokering. It may also include supply chain management. With these networks, the 3PL company manages any shipping challenges so the manufacturer can focus on preparing orders for shipment.
4th Party Logistics (4PL)
In a 4th Party Logistics, the company employs another business to oversee the entire supply chain for the business. This helps optimize the whole process, not just the supplier-to-customer part of the supply chain.
5th Party Logistics (5PL)
A 5th Party Logistics provider works to aggregate the services of 3PL providers. The 5PL provider will work with many companies and optimize shipping by combining your shipments with their other clients to qualify you for bulk discounts.
Develop your own network of partners
Your freight forwarding company can partner with others to provide more robust services for your customers. You can create different types of networks and get the support of others in similar industries.
For example, by joining the Combined Logistics Networks (CLN), one of the world’s most established and dynamic freight forwarding networks, you can find and create mutually beneficial business partnerships. Their network includes over 320 independent international forwarders focusing on global cargo solutions. Membership includes members in the following:
- Project forwarding
- Dangerous goods
- Courier and express
- Ships spares marine forwarding
- Exhibitions logistics
- Time critical shipments
- Household removals
- Liquid bulk handling
- E-commerce cargo
- Silk route rail.
The benefits of joining CLN include:
- Immediate global network coverage (we only accept a limited number of members from each region)
- Worldwide and global branding within our network
- Trusted and reliable members to do business with
- Payment security within the network
- Exclusive access to network intranet site for resources
- Discounts to RW Solutions events and conferences
- Profit sharing through the CLN cargo miles program
Now is the time to join one of the biggest and most established global freight forwarding networks. Sign-up to become a member today.