A Closer Look at Third Party Shipping Arrangements

2008-12-01 13:15:26

( Legal )



Concept of Third Party Shipping

Decades ago, it was common practice for a manufacturing or merchandising firm to receive orders, process them, and then ship them to the recipient according to the terms of the agreement.

But in recent years, businesses have realized that managing and maintaining their own delivery vans and shipping departments are costly. You need to repair and keep your delivery trucks in working condition. You need to pay salaries to drivers and staff who are directly involved in delivering the goods. You also need to buy insurance policies to cover for any loss or damage to your goods while they are in transit.

As a result, many suppliers of raw materials and finished goods have been resorting to third party shipping arrangements in order to cut down their overhead. They have discovered many advantages and benefits in using third party providers to handle shipping and delivery on their behalf.

Advantages and Benefits

With a third party shipping arrangement, you don't have to maintain your own delivery or shipping department. Everything from trucks to delivery personnel is outsourced. The third party shipping provider will just arrange for the vehicles to come and pick up your goods at your warehouse or factory premises.

You save on costs of gasoline, salaries of delivery employees, insurance, and penalties if the order arrived late at its destination. All these will be the responsibility of the third party shipping agent. You won't have to deal with labor problems, truck breakdowns, or road accidents.

And unless your contract is long-term in nature, you can always elect other third party logistics companies to handle your deliveries for you. Or you can even have non-exclusive contracts with several third party providers.

Disadvantages and Risks

You are at the mercy of the third party provider if you have an exclusive arrangement. Expect occasional delays as most third party logistics companies also maintain contracts with several other companies.

To avoid delays, you should not deal exclusively with just one shipping company, but with several. This will assure that there will always be someone who can be depended on to ship your goods promptly.

Also make sure that someone in your company always keeps track of the status of any deliveries made by these third party providers. Get as much feedback from your customers about the quality of the delivery service. Advise your customers to report any problems either with the condition of the goods or the quality of the service accorded by these third party shipping agencies.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.