Letting another company handle your inventory for the first time can feel like handing over the business. It is a smaller step than that. Your product, your pricing, and your customers stay exactly where they are. What moves is the work of receiving containers, counting stock, and putting each order in a box.
That is the short answer to what is 3PL logistics. Further dow, we walk through your first month with a 3PL week by week, because that is when the handover really takes place.
TL;DR
- 3PL stands for third party logistics, an outside company that stores, packs, and ships your goods under contract.
- The decisions stay with you. Product, price, reorders, and the customer relationship remain yours, while the provider runs the physical work behind them.
- The business model sits on the rate card, with receiving, storage, pick and pack, and extra services each billed by activity.
- The first month is mostly product data and one inbound shipment, and a brand with clean data can be shipping live orders within it.
What Is 3PL Logistics? The Third Party In The Name
Every sale has two sides: you, the brand that owns the goods, and the person or business buying them. A 3PL (third party logistics) provider stands between them, contracted to handle the physical side so that neither of the other two has to. That is the work our 3PL services are built around.
That is the whole 3PL meaning, and the industry built on it is large and still growing. US third party logistics providers earned $323.4 billion in gross revenue in 2025, up 5.0% on the year before, and $72.7 billion of that came from warehousing and distribution, according to Logistics Management.
What Is A 3PL Company Responsible For? Drawing The Line
For a brand new to outsourcing, the most useful thing to settle early is where the provider’s job ends and yours begins.
You keep everything that decides what gets sold, at what price, and to whom. The role of a third party logistics company is everything physical after that: receiving, storage, order fulfillment, and returns. For brands selling to chains, it also covers the EDI and labeling work behind retail fulfillment, which we already run for national outdoor retailers.
One decision sits right on the line. Reordering is your call, based on our inventory records, which is why accuracy matters. We fulfill at 99.9% order accuracy, with orders leaving within 24 hours and every movement visible in your own system as it happens.
The Third Party Logistics Business Model, Read From The Rate Card
A 3PL earns its living from the activity it performs on your stock, and a standard quote lays that out line by line:
- Receiving covers unloading, counting, and checking inbound freight, usually by the pallet, carton, or hour.
- Storage is billed monthly by pallet position, shelf, or bin.
- Pick and pack is charged per order, with a smaller fee for each extra item in it.
- Value-added services such as kitting, inserts, and retail ticketing are priced per unit or per job.
We price the same way. Of those lines, storage is the one moving fastest right now. In September 2026, warehousing capacity shrank at its fastest rate since March 2022 while warehousing prices kept climbing, as the Logistics Managers’ Index reports. Space is getting scarcer, and rates are following.
Asset-Based Or Brokered
Some 3PLs own or lease their buildings and employ the people inside them. Others work as brokers, selling space and freight capacity that belongs to someone else. Both are legitimate models, and the difference shows up when something goes wrong, because it decides whether the people answering your call are the same people handling your stock. We run three facilities of our own in Chandler, Arizona, with our own crew.
The equipment says something about the model as well. Pick and pack is mostly labor, which is why that line tends to creep when a floor gets busy. We invested about $750,000 in machines that box, bag, seal, and label orders, so a heavy month is carried by equipment rather than by a hiring drive that somebody eventually pays for.
Examples Of Third Party Logistics, Taken From Our Floor
A definition only goes so far. These real-life 3PL examples are all running in our buildings today:
- A global distribution point for an importer. A European mountaineering brand ships to customers in the US and abroad from a single stock held in our Foreign Trade Zone. US duty applies only to what stays in the country, and we were the first 3PL in Arizona to get approved for that offering.
- A parts network for a technology company. One of our long-term clients uses us as the central service center for its parts, holding the inventory and shipping each part out where it is needed.
- Regulated product, stored legally. A brand selling e-bikes or power stations needs a building permitted for the cells inside them. Our lithium-ion battery storage site holds that approval.
Contact SKU Distribution today to discuss how our FTZ status and fulfillment expertise can improve your margins and accelerate your growth.
What Your First Month With A 3PL Looks Like
Week One: Product Data And Connections
Every SKU needs a barcode, a weight, and its dimensions, since those decide the box size and the shipping cost. Our integrations team connects your store or ERP (NetSuite and SAP included), usually within days.
Week Two: The First Inbound
You send advance notice of what is on the truck. We count against it at the dock, and that count becomes the record both sides work from.
Weeks Three and Four: Test Orders, Then Live
Test orders run through the floor before your storefront routes real ones to us.
The First Promise You Hand Over
Outsourcing logistics means another company keeps your promise to the customer, every day and in your name. Two questions tell you most of what you need to know about who should do that: who physically handles your stock, and which line on the rate card grows fastest as you do.
You make the promises; we fulfill them. Put both questions to every 3PL on your shortlist, us included. Contact us, and we will be glad to answer first.
FAQ
What is third party logistics, and who are the three parties?
The seller is the first party and the buyer is the second. The third is the outside company contracted to receive, store, pack, ship, and process returns between them, so the seller does not need its own warehouse or crew to reach its customers.
What is a third party logistics provider, compared with a freight broker?
A third party logistics provider handles goods or arranges for them to be handled, whether that means warehousing, fulfillment, transportation, or all three. A freight broker is one kind of 3PL, arranging trucks without ever holding inventory. If you need stock stored and orders packed, look for a provider that runs its own floor.
What is 3PL in shipping, and how is it different from a carrier?
A carrier moves the parcel from the warehouse dock to your customer’s door. The 3PL handles everything before that moment: it picks and packs the order, chooses the carrier and service level, prints the label, and hands the parcel over with tracking attached.
Can a brand keep some fulfillment in-house after moving to a 3PL?
Yes. Some brands keep custom or high-touch orders at home while standard volume moves to the provider. The cost is two inventory counts to reconcile, so the arrangement usually works best as a transition rather than a permanent setup.
How do 3PLs charge for their services?
Each quote is built from the same handful of activities: getting freight in the door, holding it month to month, packing every order, and any extra handling your product needs. Postage is typically billed on top, so ask each provider how it is passed through and whether any minimums or setup fees apply.
