What is 3PL?
Businesses hire a 3PL when order volume outgrows what they can pick, pack, and ship in-house. Rather than leasing more space and staffing a warehouse, they tap a provider that already has facilities, carrier discounts, and logistics expertise. This model is common worldwide, and according to Armstrong & Associates, the global 3PL market grew an estimated 3.4% in 2024 to $1.22 trillion.
Key characteristics
Service quality tends to rise too: in the 2025 Annual Third-Party Logistics Study, 82% of surveyed shippers said their 3PLs improved customer service.
- Warehousing and storage: 3PLs store inventory in their own facilities, often across several locations. This guide to 3PL warehousing explains how it works.
- Order fulfillment: they pick, pack, and ship customer orders as those orders arrive.
- Transportation and freight: they negotiate carrier rates and route shipments to control delivery costs.
- Technology and visibility: 3PL software for ecommerce links sales channels, carriers, and inventory for real-time tracking. A 3PL warehouse management system keeps inventory accurate across multiple clients.
- Returns and reverse logistics: they process customer returns and restock usable items.
Example
Crossroad Distributor Source, a wholesale distributor, leans on a 3PL model to scale fulfillment. The company achieved 100% on-time delivery of forward orders and tracks 4,500 stock keeping units (SKUs) across multiple locations in North America.
Related terms
FAQ
What does 3PL stand for?
3PL stands for third-party logistics. It describes outsourcing warehousing, fulfillment, and shipping to a specialist provider.
What is the difference between a 3PL and a 4PL?
A 3PL executes hands-on logistics such as warehousing and shipping. A 4PL orchestrates strategy and manages several 3PLs on a company’s behalf.
Do 3PLs actually help?
Among shippers surveyed for the 2025 Annual Third-Party Logistics Study, 89% reported successful partnerships with their 3PLs.