Contract logistics encompasses a wide range of services ranging from delivery of products or spare parts to final mile customer delivery. A contract logistics provider must have the necessary equipment for the range of services offered: warehouses, human resources, suitable equipment, stock management, dispatch follow-up, after-sales service, etc.
The logistics services provider becomes a vital link in the chain that connects all of the industrial company’s or retailer’s partners and ensures the smooth running of the business. As a result, contract logistics is more than just moving products; it is a far more thorough course of action that combines traditional logistics with supply chain management processes.
Benefits of contract logistics
Possibility to scale
When a firm outsources its logistics, it can concentrate on improving customer service, sales, and marketing therefore, there is no need to spend money on infrastructure or hire more people. A contract logistics company will manage all logistics-related tasks.
Focus on the company’s core activity
Organising goods delivery, storage, and transportation can require a lot of time and resources for a company whose core operation is not logistics. Therefore, a business could lose control of its priorities. A contract logistics provider manages all logistics difficulties and provides a ready-made solution to a company allowing them to focus on their core activity.
An integrated approach to logistics
A provider can organise operations to prevent long-term storage and downtime because they control all or most of the logistics activities. As a result, the delivery time to the end customer will decrease and become more streamlined.
Is contract logistics the same as a 3PL or 4PL?
Contract logistics have evolved rapidly due to the rise of on-demand logistics, but they often get confused with 3PLs or 4PLs that offer a different set of capabilities. While contract logistic companies typically help arrange transportation and routes, a 3PL company manages much more than just transportation; 3PLs provide a full suite of logistics services, from warehousing and order fulfillment, to inventory management and automated shipping. 4PLs do all this and manage the whole supply chain, creating a value chain in which many different stakeholders play a role.