One of the best ways to remain competitive in the logistics and supply chain industry is to invest in the right third-party logistics (3PL) provider. Working with the right provider helps you optimize and improve your supply chain. And it can also offer faster fulfillment processes, improve customer satisfaction, and reduce costs.
However, before selecting a 3PL provider you must understand the differences between asset-based and non-asset-based 3PL providers — and which one best fits your needs.
Read on to explore the main differences between asset-based and non-asset-based 3PLs. By the end of this guide, you can decide which provider type aligns best with your specific operational needs, budget, and business goals.
What Is an Asset-Based 3PL?
Asset-based 3PLs own and operate physical assets like warehouses, trucks, and equipment. They offer services like warehousing, transportation, and freight handling to manage their clients' supply chain requirements.
Several advantages to using asset-based 3PL order fulfillment providers include:
- Greater control over the supply chain: These 3PLs own and operate their own assets, which means they have full control over operations. This means you can expect consistent standards, quick resolution of issues, and better overall visibility.
- Reliable service due to ownership of resources: Because asset-based 3PLs use their own infrastructure rather than outsourcing, they have an easier time maintaining a consistent level of service. This makes them a better option in high-pressure situations.
- Potential cost savings in bundled services: Many asset-based 3PLs are budget-friendly. They bundle services such as transportation, warehousing, and freight handling.
However, there are also disadvantages associated with asset-based 3PL solutions:
- Limited flexibility if the provider's network or services don’t align with your needs: Asset-based 3PLs may have limited scalability and geographic coverage. This is because they do everything themselves. Meanwhile, non-asset-based 3PLs rely on a large network of carriers and service providers to meet your needs.
- Higher capital investment in maintaining infrastructure: Asset-based 3PLs may charge higher fees due to having to maintain warehouses, trucks, and other logistics assets. Accordingly, they may not be the best pick for businesses with smaller budgets or those that only require occasional logistics support.
What Is a Non-Asset-Based 3PL?
Unlike asset-based 3PLs, non-asset-based 3PLs do not own the assets required to manage and implement a supply chain. Instead, they operate as middlemen, negotiating deals with trucking companies and warehouses to facilitate their clients' supply chains.
Examples of services provided by non-asset-based 3PL providers include freight brokerage, supply chain consulting, and technology-driven solutions.
Some 3PL advantages of using a non-asset-based providers include:
- More flexibility to tailor solutions for various needs: These providers don't maintain an inventory. This means they can provide more flexibility than their asset-based counterparts.
- Access to a wider range of carriers and service providers: Non-asset-based 3PLs maintain extensive networks of carriers and service providers, giving you access to a wide range of logistics solutions.
- Focus on optimizing supply chain strategy and efficiency: Unlike asset-based 3PLs, non-asset-based providers don't own assets. As such, they can focus on optimizing supply chain strategy and efficiency.
- Lower cost: Because they don't invest in vehicles, warehouses, or distribution centers, non-asset-based providers tend to offer their services at a lower cost.
The drawbacks of relying on a non-asset-based 3PL include:
- Less control over operational execution: Non-asset-based 3PLs rely on third-party partners to handle the physical aspects of the supply chain, such as warehousing and transportation. This gives you less control over daily operations, making it more challenging to enforce standards, ensure consistent quality, or address issues quickly.
- Potential variability in service levels depending on third-party partners: The quality of a non-asset-based 3PL's service depends on their third-party contractors' performance. If these partners don't perform well, you may experience errors, delays, bottlenecks, miscommunication, reputational loss, and other nightmare scenarios.
Key Differences: Asset-Based vs. Non-Asset-Based 3PL
Here is a summary of the key differences between asset-based and non-asset-based 3PL:
| Key Factors | Asset-Based 3PL | Non-Asset-Based 3PL |
| Ownership of assets | Owns and operates logistics assets | Uses third-party networks to run logistics assets |
| Flexibility | Limited | Highly adaptable and scalable |
| Cost considerations | Typically more expensive, although bundled services can be cost-efficient | Variable costs, but usually tends to be more budget-friendly |
| Focus on strategy versus execution | Execution, visibility, and reliability | Strategy and optimization |
| Network reach | Fixed, based on owned assets and resources | Expansive due to large network of carriers and other partners |
How to Decide Which Type Is Right for You
Now that you understand the differences between asset-based and non-asset-based 3PL, you can decide which type is right for you. The following list of factors can help you make a decision:
- Scale of operations:r business operates on a large scale with potential for expansion, a non-asset-based 3PL may be a better choice due to its flexibility and extensive network of partners that can adapt to your growing needs.
- Need for control versus flexibility: prefer having more control and visibility over the logistics process, you should pick an asset-based 3PL.
- Industry-specific requirements:n asset-based 3PL if you need industry-specific requirements, such as temperature-controlled storage. Asset-based providers are typically better at providing these requirements due to their direct ownership of resources.
- Budget and cost-effectiveness:ypes offer budget-friendly choices, although fixed costs for asset-based 3PLs tend to be higher. The rule of thumb is to pick an asset-based 3PL if you want bundled services on a budget. A non-asset-based 3PL may be a better choice if you don't need bundled services.
- Future growth plans and scalability:ut not least, consider whether the provider can scale with your business. If you foresee expansion into other geographic areas, a non-asset-based 3PL is superior because of its scalable flexibility and customization.
Making the Right Choice
When deciding between an asset-based and a non-asset-based 3PL, aligning your logistics partner with your business goals is vital to success. Once you've chosen the right partner, you'll reap numerous 3PL benefits, including smoother operations, faster time-to-delivery, more and higher-rated online reviews, and a higher bottom line.
If you're having difficulties choosing one of the two types, remember that you aren't limited to choosing just one type of 3PL. In some cases, a hybrid approach may be the ideal solution. Working with both types provides the control and reliability of asset-based services while maintaining the scalability and flexibility of non-asset-based solutions.
Ultimately, the first step to choosing a 3PL fulfillment provider is to assess your current logistics strategy. You can then reach out to QuickBox for a consultation. QuickBox offers a wide range of 3PL services for eCommerce and multichannel retailers, including packaging, order fulfillment, shipping, and other value-added services to meet your end market's evolving demands.
Ready to optimize your logistics? Discover how we can streamline your logistics process — request a quote from us today!
Sources
Birkhead, Paul. “Advantages of 3PLs vs. Asset-Based Carriers: Which Is Right for You?” Eniture.com, 2023. https://blog.eniture.com/advantages-3pls-vs.-asset-based-carriers-which-is-right-for-you.
Cain, Ron. “How to Choose between Asset and Non-Asset Based 3PLs.” IndustryWeek, October 4, 2007. https://www.industryweek.com/supply-chain/planning-forecasting/article/21945401/how-to-choose-between-asset-and-non-asset-based-3pls.
Fastfrate.com. “Asset vs. Non-Asset Based 3PL. What Is Best for You?” Accessed January 6, 2025. https://www.fastfrate.com/wp-content/uploads/2023/01/Asset_vs_Non-Asset.pdf.