Home – New Forums Logistics 3PL – Questions for those considering 3PL or using @ the moment?

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  • #991305
    LucasArthur
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    Hi FS Communities (not commies :))

    Firstly, this is not a sell to FS message and are genuinely seeking some advice from those that have or are about to use 3PL services.. Mind you, if you want to do business with us we will not frown at the opportunity, although this is not the driving force behind the post.

    As most of you regulars may know me, i have been around a little while here as well as being involved in various business enterprises from single FS operations to corporate stuff. A little update that was posted a few weeks ago is my reason for this post, and apologies as it may get long but do appreciate those that read and provide input on the matter.

    Allow me to give some brief comments:

    Overview
    A little while ago we had a need to use the services of a 3PL provider and to be brutally honest, we could not locate anyone a) willing to deal in the low volumes we had to offer nor b) be personable enough to spend the time to understand our needs. With most dismissing any query rather quickly advising their inability to fulfil our requirements.

    Where has this led us?
    After this misadventure, we have opted to start our own 3PL leveraging one of our partners previous industry experiences and drive. So, now we are offering 3PL to others and no longer seeking for ourselves, in fact we are now going the path of 3PL only and will slowly migrate away from several other ventures we are involved with.

    Our journey over the last month, since starting down the 3PL path:
    This journey has been fantastic, in fact we have had several clients come on board already ranging in size from small mom and pop sellers on eBay through to a NZ based company that needed a 3PL offering pick/pack and storage fulfilling orders to the large supermarket chains.. WooHoo, has been quite exciting to be frank (not health insurance of course.. LOL – sorry my humour has carried over) and a steep learning curve, even with our previous experience.

    Why this post:
    My reason for the post is to try and understand those about to enter the 3PL field and/or are currently using 3PL – specifically my like minded colleagues from the FS community. When I was researching the service we required (seeking 3PL provider) I had the FS mindset on and found that every time I queried the service it was quite expensive, cumbersome, impersonal and cost prohibitive in its entirety.

    My reasons below, or my thoughts I mean:

    Expensive: costs every time my items were touched + stored + sent

    Cumbersome: To many restrictions on how I can ship, where I can ship, if I wanted to see my stock, know about my stock or even have someone personally collect stock from a depot as such and was unwelcoming with suggestions of how I may need a solution ‘out of the box’ to what is already on offer by the company I was speaking with

    Impersonal: Of the many I spoke to, it appeared I was just a ‘client’ in a big sea and that it would be a struggle for people within the 3PL service to understand my unique products – which led me to how can I control the outgoings of said product and quality etc

    Cost Prohibitive: from set up costs through to shipping costs as well as the expectation of minimum volumes in order to be worthy of receiving some 3PL services was amazingly difficult to comprehend.

    My questions of those intending or currently using 3PL providers (and I note some of these are ‘business plan’ stage queries)?

    1. What is it that made you choose your existing provider (or what are you looking for in your new provider)?
    2. At what point did you decide you need a 3PL service? (eg you needed to focus more on selling, not enough space in garage, needed a warehouse but not really able to use full space yet to justify costs such as wages, rent etc?)
    3. Are you confused by the amount of various charges associated with 3PL? those being fork on, fork off, pick fees, pack fees, storage fees, admin fees etc etc
    4. Would you be more inclined to look at 3PL if it was offered as a fixed price per pallet/line space per week as opposed to all the ‘additional’ fees way? Note : this may have some restrictions such as no more than xx picks/packs/receipts per week and only cover labour not freight costs etc?
      a. If you were more inclined to have fixed price, is there a magical figure that would make this appealing to you?
    5. Would working with a smaller 3PL provider that can guarantee personal contact and management of your account be more appealing than a large corporate 3PL provider?

    Again, I truly appreciate you reading this and promise your replies will not go into my cold call database :) and is purely for my personal insights. My goal is to assist the FS style business as this is where my passion lies, always has and I strongly feel always will although I feel there is a strong barrier between justifying costs of 3PL to a smaller operator who sometimes may not look at the complete costs to offer such a service. These costs including, but not limited to:

    • Warehouse rental ($20k plus per annum – very conservative small factory)
    • One warehouse staff member to manage stock ($38k plus + super + work comp)
    • Other factory running costs (electricity, phones, net, insurance etc) say $10k plus
    • And there are many more although the basics add up to about $80k pa ($6,600 per month)

    Understanding this is a huge number based on a full warehouse, although if needing warehousing this is really the minimum to run on your own and there are other expenses such as Account Manager, Mobiles etc etc that I have not factored in. And yes, I am looking at it from a 3PL provider on this occasion and not an FS operator :p

    Actually, one more question on your 3PL experiences:
    What bad experiences have you had using or researching 3PL providers?

    Again, my apologies for length of post and thanks for reading this far although if you feel you wish to add anything I may have overlooked in querying what barriers are faced by FS styled businesses entering and using a 3PL service, please do so… As always, I learn every time I log onto FS and truly appreciate the valuable input of all its members.

    Thanks peeps and see you in the forum :)

    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1180860
    1911naomi
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    Hello, as you know I’ve recently been on the search for a freight forwarder / customs broker and it was a painful process.

    Most didn’t get back to me at all, most did not come across as very helpful or friendly.

    While i know it was the busiest time of the year like i said before a simple auto reply email advising that would of been more professional then not responding at all.

    In the end i managed to obtain 4 quotes. out of the 4 only two actually seemed to want my business and were really helpful.

    I went with the person who was there cheapest but also chose him as he was the most helpful and he got back to every enquiry of mine within a few hours.

    Had it been the other way around i would most likely spend little more for the fast correspondence as i hate waiting days for replies.

    Realistically there should be a 24hours turn around time for correspondence (business days of course) even if its to say ill look into this or get back to you shortly.

    So yes i think there is demand for a more personalised service and also those that want to help newbies and small business and also have the patience to deal with newbies as i literally didn’t know a thing besides what i read on the forum.

    Another thing that bugged me is when i asked for quotes it comes back as in a way that i actually have to work out how much its going to costs me.
    I feel if i send you all the details you require (weight, dimensions and everything else that was asked) then please work out how much you will charge me and don’t make me calculate.

    I can’t remember the measurements freight forwarders use for cost at the top of my head but all quotes came as –
    (an example)
    $500 for fist cubic meter then $150 per extra cubic meter and so forwarth
    and everything was this way

    Anyway thats my rant right now about right forwarders:)

    #1180861
    LucasArthur
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    Howdy Young Lady

    Thanks for taking the time to read this post, i know it was lengthy and i truly appreciate it…

    Your topic is one i have personal gripes with, even from my corporate days, whereby someone is seeking advice or guidance and places a call out for help (be it email or phone call) and it takes forever to get a reply.. If at all.

    This is purely common courtesy, i know sometimes we do not know what is happening in anothers life although it should be a fundamental principle if you are in a position that requires said actions.. Mostly it just comes down to lack of ownership (read care) or interest.

    Although this is not really my topic, being freight forwarding, and was really about Third Party Logistics (3PL) incorporating warehousing and storage solutions, i actually really enjoy your comments about expectations.

    Expectations of response times is pivotal to any role i have and will do. Many of the regulars have probably seen my replies and posts re this subject over the last few years and it is undoubtedly one of the key differences between some suppliers getting business or not.

    One of our ventures is furniture, and my key strategy (although there are a few) has been the ability to be contactable and accessible at all times.. I know this goes against many peoples business guidelines of reply times and setting unrealistic expectations, although selling online be it own web site or ebay, if i can reply immediately (or within minutes) sometimes i get a sale within a few minutes of my reply simply by answering a basic question – be it freight or other. In fact, many times i have replied and shocked people with my 10pm replies and received many thank you’s for doing so.

    Not patting myself on the back, just highlighting your point of replying to queries. Understanding my example is extreme, but my example also captures people on eBay that are literally looking at my product and on occasions my reply prevents them seeking an alternate or identical product from another supplier and they buy mine without going onto another ebay store :) LOVE IT!

    Getting back to your point, i also value the input re cost and combining costs.. Am truly interested in seeing anyone that uses 3PL at the moment on how they would expect this to operate as its a bit like how long is a piece of string.. EG, may do 1 order this week and 100 the next, how can this equate to a fixed cost? :(

    Anyways, thanks again Naomi.. Truly cant wait to see your end product once in hand, share it with us at FS so we can CELEBRATE with you.

    Cheers
    Jason

    1911naomi, post: 211002 wrote:
    Hello, as you know I’ve recently been on the search for a freight forwarder / customs broker and it was a painful process.

    Most didn’t get back to me at all, most did not come across as very helpful or friendly.

    While i know it was the busiest time of the year like i said before a simple auto reply email advising that would of been more professional then not responding at all.

    In the end i managed to obtain 4 quotes. out of the 4 only two actually seemed to want my business and were really helpful.

    I went with the person who was there cheapest but also chose him as he was the most helpful and he got back to every enquiry of mine within a few hours.

    Had it been the other way around i would most likely spend little more for the fast correspondence as i hate waiting days for replies.

    Realistically there should be a 24hours turn around time for correspondence (business days of course) even if its to say ill look into this or get back to you shortly.

    So yes i think there is demand for a more personalised service and also those that want to help newbies and small business and also have the patience to deal with newbies as i literally didn’t know a thing besides what i read on the forum.

    Another thing that bugged me is when i asked for quotes it comes back as in a way that i actually have to work out how much its going to costs me.
    I feel if i send you all the details you require (weight, dimensions and everything else that was asked) then please work out how much you will charge me and don’t make me calculate.

    I can’t remember the measurements freight forwarders use for cost at the top of my head but all quotes came as –
    (an example)
    $500 for fist cubic meter then $150 per extra cubic meter and so forwarth
    and everything was this way

    Anyway thats my rant right now about right forwarders:)

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1180862
    Johny
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    I know is not the topic of the discussion but I’ll answer this one

    Another thing that bugged me is when i asked for quotes it comes back as in a way that i actually have to work out how much its going to costs me.
    I feel if i send you all the details you require (weight, dimensions and everything else that was asked) then please work out how much you will charge me and don’t make me calculate.

    This is a general conversation between person and their forwarder:-

    Customer: I have a shipment which is 10 boxes at 20 x 20 x 20cm, GW 10kg per box.

    Forwarder: That will be $X

    Shipment arrives from the factory to the forwarder and the actual details are 10boxes at 25 x 25 x 25cm, GW 15kg per box

    Forwarder: As the details had to be amended the price has been adjusted to $Y.

    Customer: Hey, you told me this was the price. You cheater! You are all the same ripping off us poor people. How do you sleep at night.

    Forwarder: That’s why we provide you the terms and you can work it out yourself.

    #1180863
    1911naomi
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    Once its explained fair enough, but how am i supposed to know that unless its explained to me or i go through a situation like that.

    I didn’t know why they quoted that way and it just bugged me

    Johny, post: 211018 wrote:
    I know is not the topic of the discussion but I’ll answer this one

    This is a general conversation between person and their forwarder:-

    Customer: I have a shipment which is 10 boxes at 20 x 20 x 20cm, GW 10kg per box.

    Forwarder: That will be $X

    Shipment arrives from the factory to the forwarder and the actual details are 10boxes at 25 x 25 x 25cm, GW 15kg per box

    Forwarder: As the details had to be amended the price has been adjusted to $Y.

    Customer: Hey, you told me this was the price. You cheater! You are all the same ripping off us poor people. How do you sleep at night.

    Forwarder: That’s why we provide you the terms and you can work it out yourself.

    #1180864
    LucasArthur
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    1911naomi, post: 211021 wrote:
    Once its explained fair enough, but how am i supposed to know that unless its explained to me or i go through a situation like that.

    I didn’t know why they quoted that way and it just bugged me

    Hey Naomi

    Yeah i hear you re all these uncertainties although it is just a part and parcel of freight.. If you read through the posts as such the most common input received about getting or locating a freight forwarder always comes down to locating someone you can trust.

    Reasons behind this, especially sea freight, is that there are so many variable line inputs on invoices which include:
    – duties
    – taxes
    – line entry fees (admin)
    – port charges
    – etc etc

    and the way in which they allocate this is old school and allows for seasonal, weight and even size fluctuations as Johny mentioned.

    This is why no-one ever quotes a ‘complete’ price and this personally took me a long time to get my head around initially as well until i found the right person to deal with :)

    Cheerio
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1180865
    1911naomi
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    I think overall freight costs itself are not too bad its the customs duty and import tax that seems a joke and the other customs charges. But I’m sure that can be justified too.
    Sorry Jason i will let your post get back on track.

    HarryLuke Logistics, post: 211024 wrote:
    Hey Naomi

    Yeah i hear you re all these uncertainties although it is just a part and parcel of freight.. If you read through the posts as such the most common input received about getting or locating a freight forwarder always comes down to locating someone you can trust.

    Reasons behind this, especially sea freight, is that there are so many variable line inputs on invoices which include:
    – duties
    – taxes
    – line entry fees (admin)
    – port charges
    – etc etc

    and the way in which they allocate this is old school and allows for seasonal, weight and even size fluctuations as Johny mentioned.

    This is why no-one ever quotes a ‘complete’ price and this personally took me a long time to get my head around initially as well until i found the right person to deal with :)

    Cheerio
    Jason

    #1180866
    bb1
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    Johny, post: 211018 wrote:
    I know is not the topic of the discussion but I’ll answer this one

    This is a general conversation between person and their forwarder:-

    Customer: I have a shipment which is 10 boxes at 20 x 20 x 20cm, GW 10kg per box.

    Forwarder: That will be $X

    Shipment arrives from the factory to the forwarder and the actual details are 10boxes at 25 x 25 x 25cm, GW 15kg per box

    Forwarder: As the details had to be amended the price has been adjusted to $Y.

    Customer: Hey, you told me this was the price. You cheater! You are all the same ripping off us poor people. How do you sleep at night.

    Forwarder: That’s why we provide you the terms and you can work it out yourself.

    Johny, I understand your reasoning, but by the same token it is just as easy to say for the pakages as outlined in your request the total would be $XXXXX, but if on pickup or arrival the consignment is different, we will advise a revised quote.

    Than you can justify a different quote.

    I don’t nomally do phone quotes but on the occasions I have that is the approach I use, and it works ok. If we tell the client up front that our quote is based on information provided.

    I just feel like Naomi said its better to give an all up price with the option of variation

    #1180867
    Johny
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    Johny, I understand your reasoning, but by the same token it is just as easy to say for the pakages as outlined in your request the total would be $XXXXX, but if on pickup or arrival the consignment is different, we will advise a revised quote.

    I don’t disagree. But everything is good in theory and a lot of these processes have been developed over time because of actual circumstances.

    What one person does or what one person thinks is irrelevent. What many people do develops a trend and that’s how things develop.

    And I personally don’t have a problem with how this has developed. The reason I think that way is because the person buying the stuff should have an understanding of how these things are calculated. How else can they determine their REAL costs and be able to quantify WHY this forwarder may bet better to use, or that one may be a better option.

    And as Jason pointed out, there are so many variables and ways in which the costings can change.

    It is my experience, that when it comes to sourcing and costings, people just don’t like it when there are changes. They can even tend to get nasty about it. And changes are not uncommon.

    I cannot remember the last time someone said to me “Hey Johny, no problem, happy to pay that extra cost “. Usually it is ‘You told me this, I expect you to honour it.”

    Of course it would be great to just get one all in price, all I have mentioned is why it is often not done that way and why it is not necessarily practical to do it.

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