OK, this is a blog about how international logistics work.
I know, I know, this can be basic for people who have some experience in business. But I reckon that there are people like me who have never had the chance to source products from overseas and really require that knowledge now.
I had to buy some parts in bulk from a factory in China and want it sent to my house in Malaysia. Since my order is small, I had to arrange my express shipments to lower the logistics cost to justify the purchase. Here, I came across the concepts of multi-party logistics.
I learned about 3PL in one of my summer jobs a few years back but never thought I would need to use the knowledge myself. Depending on your occupations, this may be useful to you, so read on.
1PL for the Starters
If a manufacturer (however big) made something, sell and send it to you directly without involving any other third party logistics company, they are practicing first-party logistics (1PL).
2PL for the Self-Doers
2PL is what most people picture when they come to think about logistics. A business wants to send a product to its customers, and they contact an independent transport company, fill up a form, pay, and wait for transport to come and pick up the product. Once the product is delivered, the job is done.
3PL as the Industry Standard
How about a company that has more to deliver and would like to outsource some of the logistics work? 3PL is the way to go. They provide additional services such as warehousing, forwarding, storage, packaging, labelling, etc. for companies who are willing to pay to reduce their logistics workloads.
4PL as the Emerging Trend
This is where many online retail sites sit. Not only do they support on logistics and warehousing, they provide digital solutions which allow small-medium enterprises to reach out to more customers. Famous examples include Amazon, Alibaba and Shopee.
5PL for the 'Above and Beyond'
5PL is 4PL on steroids. They take care of every single logistics need for you, helping you to manage your supply chain from factory productions to product fulfilments.
How 3PL International Logistics Actually Work In Practice?
If you found a supplier who is willing to sell you something, and you want to arrange the logistics yourself, these are the general steps you would need to follow:
Initiate logistics services:
Contact a local/international freight forwarder company with good reputations,
Register for international forwarding,
Get the warehouse details (address, person-in-charge, contact number) from your forwarder,
Ship to warehouse:
Inform your supplier about your intent to use a logistics company of your choice,
Provide the forwarder's warehouse details to your supplier,
Get your supplier to ship the purchased product to your forwarder's warehouse,
Pay for shipment:
Method 1: In advance: Pay your supplier in advance to ship the parcel to your forwarder, or
Method 2: On delivery: Pay your forwarder to pay for the express shipment your supplier made for you. The payment will be made at the warehouse by your forwarder. Get the express shipment details (tracking/waybill number, express shipment company name, expected shipment fees) from your supplier. Provide that shipment details to your forwarder so they know what and when to expect from your supplier.
Freight services and more:
Arrange and pay for the services you need (labelling, packaging, unpacking, splitting, checking, storage, air freight, sea freight, etc.) with your forwarder,
Be ready to deal with potential issues at the customs,
Wait for your parcel to arrive.
Side note: Recall the last time when you bought something from overseas and your product arrived at your doorsteps in a few days/weeks miraculously. It is not magic, this happened!
Phew! We survived! That was a long one.
This only covers one way logistics can happen and different logistics company would have slightly different processes. Still, it never hurts to learn more in advance. Here is a nice site to learn about multi-party logistics.
Till next time.
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