A Guide to Contract Logistics

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Contract logistics have changed the e-commerce landscape by making worldwide shipping hassle-free. Read on to know more.

Contract logistics are beneficial to online businesses of all sizes and can be especially useful to companies that handle high volumes. Contract logistics means outsourcing some or all shipping, storage, and customer service to a third-party company. Instead of paying employees to fulfill orders, these services cost pennies on the dollar, so your business can do more with less overhead cost. 

Contract Logistics

What is contract logistics?

Contract logistics refers to a long-term collaboration with a company that offers a wide range of logistics services, from warehousing and stock management to customer delivery, dispatch follow-up, and after-sales services.

Thus, contract logistics firms handle logistics such as supply chain strategy and planning, efficiency design and management, warehouse and inventory management, transportation and distribution, and order processing.

Contract logistics isn’t just for large companies with high volumes of shipments. Many small and medium-sized businesses use contract logistics providers because it allows them to focus on their core competencies. With these logistics solutions, you can rely on a third party to handle shipping and storage needs while you devote more time and energy to growing your business.

How to Choose a Contract Logistics Partner?

A vital business choice is selecting the correct logistics partner. Since your logistics partner will manage and control the delivery of your products to your clients, you must pick the correct one.


There are many logistics organizations out there, and the first thing you should consider while searching for one is the company’s reputation. Analyze their website, social media pages, and testimonials from previous customers.


The transportation of stocks is the primary service logistics firms provide. However, the quality of services of each logistics provider is what distinguishes them from one another. Some organizations cater to specific customers and routes, while others have a restricted number of consignees and shipping routes. Small-scale logistic companies may not be the right choice if you are in need of a wide-ranging distribution network.

Customer Service

Customer service is a significant consideration. You may actively see this by observing their communication responsiveness and problem-solving skills. It’s better to work with a logistics business that offers 24-hour customer support because you’ll be able to contact them whenever you need them.

International Network

Partnering with a logistics company with a solid global network helps your business grow. A logistics company with an extensive global network can ensure a single point of contact for the whole process. Furthermore, an international logistics company may assist you in gaining better market insights in different regions of the world, which is beneficial to all groups of organizations.

Safety and Technology

You must look into your potential logistics partner’s safety policy, shipping, and packaging processes.

You should understand how the logistics company will ensure that your product is delivered safely from when it starts from the shipping point until it arrives at its landing place. As a result, the logistics firm must combine the most up-to-date IT solutions for warehouse and transportation management.

Take time to do your research and find a partner who will be there for you whenever you need them. Remember, having good partners is just as important as having good products!

Benefits of Contract Logistics

Contract logistics is crucial to a successful e-commerce business. Here are some of the most significant advantages of hiring a contract logistics partner:

  • Increased Productivity – First and foremost, contract logistics allows you to leverage one of your most valuable assets – time. You may focus on growing your business and enhancing customer service while contract logistics handles these areas of operations.
  • Optimization of Costs – Another significant benefit of contract logistics is cost savings. Many expenses come into play with running an e-commerce business, from transportation costs to labor. By hiring contract logistics providers to handle tasks such as warehousing and shipping, you can save money while still maintaining high-quality standards. 

By outsourcing specific portions of your business, you lower the risk connected with those areas, ensuring that your entire operation is not jeopardized if something goes wrong. 

  • Brand Image – Contract logistics help improve your brand image. By partnering with a reliable and reputable third-party provider, you show customers that you have their best interests in mind by ensuring they receive products quickly and efficiently. This improves your reputation among customers and makes them more likely to return to shop again. 
  • Flexibility – A contract logistics company would be more adaptable when responding to demand and supply fluctuations. Compared to an in-house logistics department, a third-party contract logistics company has more adaptability to scopes because they may share their crew and resources between tasks.
  • Value-Added Service (VAS) – In addition to these practical advantages, your contract logistics business will provide you with premium customer service as part of its services.  
  • Liability and Consequential Damages – A logistics contract can include liability and consequential damages clauses intended to make it easier for a business to recoup costs or losses if something goes wrong during a contracted delivery. These clauses can effectively protect your business against financial harm caused by delayed shipments and damaged goods. However, since they only come into play after an incident has occurred, they aren’t particularly helpful at avoiding situations that could have adverse effects on your company.

What is the Difference Between Contract Logistics and 3PL?

  • Many people confuse 3PLs and contract logistics, but they’re two separate terms. 3PL is short for third-party logistics and refers to a company that provides transportation, warehousing, delivery, and other business services to companies that do not have those capabilities. 

    Contract logistics is a subset of 3PL where one company outsources specific or all parts of its supply chain to an outside company—similar to outsourcing. However, unlike outsourcing, which is usually done through a bidding process, contract logistics are more about getting individualized support for your particular business needs.

    For example, you might outsource your entire supply chain to a 3PL if you are just starting and don’t have any infrastructure yet; however, as your business grows and you need more specialized support (like faster shipping), you may want to switch over to contract logistics so that you can get tailored support for your growing needs.

Contract Logistics

Contract Logistics Verticals

When it comes to moving your products, if you’re going big and you’re sending a lot of packages every day, there are three main options for shipping out your products. 

You can go with a vendor that offers integrated shipping, where they will handle everything from pickup to delivery; you can find a freight broker who will take care of all of that for you, or you can use contract logistics providers. 

Contract logistics providers are independent companies that offer pick-up, order fulfillment, and even returns processing services. They usually specialize in specific industries—like fashion or food & beverage—and often have contracts with large retailers to help them move their goods around. 

The verticals of contract logistics are:

  • Heavy equipment and machinery 
  • Automotive 
  • Project cargo
  • Energy, Oil, and Gas 
  • Retail and Consumer Goods
  • Health care
  • Manufacturing and Industrial

Contract logistics is beneficial because it frees up resources within your company so you can focus on other things—like growing your business.

Role of Contract Logistics in the E-commerce Landscape

Technically advanced supply chains with a robust worldwide network are part of modern e-commerce firms. To keep your delivery promise and customer service commitments, it is crucial to have a solid contract logistics system. This kind of third-party logistics (3PL) provider acts as an extension of your business, so you can focus on what matters most—your bottom line. 

The right contract logistics partner will provide order fulfillment services that reduce cost, increase efficiency and help maintain consistent product quality. They’ll also work with you to customize a solution based on your specific needs.

There are many benefits to working with contract logistics providers for e-commerce shipping solutions. For instance, contract logistics companies use their scale and experience to negotiate lower rates with carriers than small or midsize businesses can get on their own. 

They also provide various value-added services that will help you reduce overall shipping costs, such as consolidation, packaging design, and label printing. As a bonus, most contract logistics offer volume discounts to help you save even more over time. You’ll have access to experts.

If you don’t have your team of logistics experts, it makes sense to partner with a company that does. They know how to handle everything from fragile glassware and electronics to heavy machinery and other large items.


Contract logistics can significantly benefit you when you need a logistical partner to supplement your internal capabilities. Contract logistics operations offer flexibility and scalability that are critical components of any supply chain model. 

If your organization is small to medium size and you have limited resources, it makes sense for you to go for contract logistics to grow your band. You will be able to concentrate on the activities which are essential for your company to grow, 

On the other hand, larger organizations may require outsourced logistics to scale. Many organizational obstacles are resolved, and a company does not need to hire more workers or increase the costs of logistics infrastructure.Contract logistics might, thus, save money while maximizing productivity.

If you are looking to break into the worldwide market, it is a challenging and time-consuming task to construct your own logistics system abroad. Furthermore, you must transport stocks to and from the border, coordinate customs clearance, store items in a certified warehouse, and deliver to the end customer to organize international traffic. All of these concerns are dealt with competently.

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Contract logistics involves outsourcing parts of your business’s warehousing and delivery processes. When done correctly, it can save money and improve efficiency for businesses that depend on frequent delivery.

Contract logistics providers are an essential link between manufacturers and retailers as they provide visibility of products across supply chains, helping companies reduce costs and improve customer service.

3PL performs a vast job from warehousing and inventory management to delivery to the endpoint. In contrast, contract logistics is associated with shipping and delivery functions.

Freight forwarding companies move goods from one location to another for a client, using their own fleet of trucks and drivers. Contract logistics companies act as an extension of the business, order fulfillment, and shipping services. Freight forwarders serve businesses with high volumes of low-value shipments, such as retail stores, wholesalers, and manufacturers looking for cost savings on transportation costs.

Truckers typically use freight; it refers to physically hauling objects. Logistics is most often used by corporations and shipping companies; it relates to controlling and coordinating the movement of products.

Hiring out your logistics services is a great way to expand your team while freeing up some of your time. This is especially helpful if you plan on scaling quickly or have seasonal volume spikes. Outsourcing logistics allows you to focus on what matters most: selling products.

3PL contracts can help a business optimize its delivery process, manage contracts with carriers, and control costs. The 3PL contract should be considered to save money on logistics and reduce workload at distribution centers. This benefits customers and allows businesses to gain valuable insight into how well they manage their inventory.

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