What is 3PL Logistics? Benefits and How It Works
Managing logistics in Malaysia can be challenging, especially with growing e-commerce demand, cross-border shipping, and varying regulations.
Third-party logistics (3PL) services offer businesses an efficient way to outsource their logistics needs, especially for companies handling large inventories, frequent shipments, and fluctuating demand.
Companies across various industries rely on 3PL providers to enhance their supply chain performance.
We’ll explore everything you need to know about what is 3PL logistics, including its services, benefits, industry applications, cost considerations, and key factors to consider when choosing the right provider.
Key Takeaways
- Outsource your warehousing, fulfillment, and shipping to a 3PL provider to streamline your supply chain.
- By leveraging professional logistics services, reduce costs, improve delivery speed, and scale operations.
- Choose a 3PL provider that offers warehousing, order fulfillment, shipping, returns management, and value-added services.
- E-commerce, retail, healthcare, manufacturing, and F&B businesses can all benefit from 3PL logistics solutions.
- Ensure smooth order processing, picking, packing, shipping, tracking, and returns with a well-structured 3PL system.
- Evaluate scalability, technology integration, cost structure, and industry expertise before selecting a 3PL partner.
- Understand warehousing, fulfillment, shipping, and additional service fees to optimise your logistics budget.
What is 3PL Logistics?
Third-party Logistics (3PL) refers to outsourcing logistics operations to external service providers who manage different aspects of the supply chain, such as warehousing, transportation, inventory management, and order fulfillment.
Instead of handling logistics in-house, businesses partner with 3PL providers to improve efficiency, reduce costs, and enhance delivery speed.
Difference Between 3PL and 4PL
While 3PL (Third-Party Logistics) and 4PL (Fourth-Party Logistics) sound similar, they serve different roles in the supply chain.
A 4PL provider often works as a consultant, coordinating multiple 3PL services for a seamless logistics strategy.
| 3PLs (Third-Party Logistics) | Aspect | 4PLs (Fourth-Party Logistics) |
| Provides logistics services such as warehousing, transportation, and fulfillment. | Role | Manages and oversees the entire supply chain, including multiple 3PL providers. |
| Operational – focuses on logistics execution, such as shipping and inventory handling. | Service Scope | Strategic – focuses on optimising the entire supply chain for efficiency and cost reduction. |
| The business still makes decisions but outsources logistics execution. | Control | The 4PL provider makes high-level supply chain decisions and manages 3PLs. |
| Uses 3PL Warehouse Management Systems (WMS) and transport solutions. | Technology Use | Uses advanced analytics, AI, and cloud-based Supply Chain Management Systems (SCMS) to optimise logistics. |
| Businesses need logistics support but still want control over decisions. | Best For | Large enterprises that want to outsource complete supply chain management to experts. |
For most small to medium-sized businesses in Malaysia, a 3PL provider is the best choice for handling logistics without losing operational control.
3PL Logistics Benefits: Why It is Important in Malaysia?
The logistics landscape in Malaysia is evolving rapidly due to e-commerce growth, international trade, and changing consumer expectations.
Many businesses struggle to manage logistics efficiently, making 3PL providers a critical solution for streamlining operations, reducing costs, and improving efficiency.
Here are seven benefits of using 3PL Logistics:
1. Cost Savings & Reduced Operational Burden
Handling logistics in-house requires significant investment in warehouses, staff, inventory management, and transportation.
Many businesses, especially small and medium enterprises (SMEs), struggle with these costs.
How 3PL Helps:
- Eliminates the need for warehouse rentals & logistics staff, reducing fixed costs.
- Bulk shipping discounts from 3PL providers help lower delivery expenses.
- Pay-as-you-use model, allowing businesses to scale up or down as needed.
2. Scalability & Peak Season Management
Malaysia experiences seasonal shopping spikes, such as 11.11, 12.12 sales, Chinese New Year, and Hari Raya promotions.
Businesses that handle logistics in-house often struggle to cope with increased orders.
How 3PL Helps:
- Scalable storage & fulfillment solutions to handle demand fluctuations.
- Multiple warehouse locations to speed up order processing.
- Fast delivery options (same-day, next-day) during high-traffic sales events.
3. Nationwide & Cross-Border Shipping Support
Malaysia’s geography—with West and East Malaysia separated by the South China Sea—creates logistical challenges for nationwide distribution.
Additionally, businesses expanding to Singapore, Indonesia, and Thailand must navigate customs clearance and international shipping.
How 3PL Helps:
- Efficient nationwide shipping, even to Sabah & Sarawak.
- Cross-border logistics support for international expansion.
- Customs clearance & compliance management to avoid delays.
4. Faster Deliveries & Enhanced Customer Satisfaction
Customers expect fast, reliable, and affordable shipping.
With major e-commerce platforms offering same-day and next-day delivery, businesses must stay competitive.
How 3PL Helps:
- Multiple warehouses across Malaysia ensure shorter shipping distances.
- Optimised delivery routes for faster and more cost-effective transport.
- Integration with major couriers (Pos Laju, DHL, J&T Express, Ninja Van).
5. Access to Advanced Logistics Technology
Many 3PL providers use cutting-edge technology to improve logistics efficiency, making operations smoother and more transparent.
How 3PL Helps:
- Warehouse Management Systems (WMS) track inventory in real time.
- Order Management Systems (OMS) automate order processing and fulfillment.
- Real-time tracking allows customers to monitor shipments.
- AI-powered demand forecasting prevents overstocking or stockouts.
6. Regulatory Compliance & Risk Reduction
Shipping and storing goods in Malaysia involves customs clearance, import/export regulations, and safety requirements, particularly for pharmaceuticals, food, and electronics. Mishandling these can lead to delays, fines, or product recalls.
How 3PL Helps:
- Manages customs clearance for imported goods.
- Provides insurance & risk management to cover lost or damaged items.
- Ensures compliance with industry regulations (e.g., food safety, medical cold storage).
7. Businesses Can Focus on Growth Instead of Logistics
Many businesses waste time and resources managing logistics instead of focusing on marketing, product development, and customer engagement.
Outsourcing to a 3PL provider allows businesses to:
- Prioritise core business functions while logistics experts handle fulfillment.
- Expand internationally without worrying about warehouse or shipping constraints.
- Improve customer service by ensuring faster, error-free deliveries.
7 Essential 3PL Services That Help Businesses Grow
Third-party logistics (3PL) providers offer a wide range of services that help businesses manage their supply chains efficiently.
Below are seven key 3PL services businesses can benefit from:
| Service | Description |
| Warehousing & Storage | – Provides short-term & long-term storage for businesses. – Uses Warehouse Management Systems (WMS) for inventory tracking. – Offers secure storage, including temperature-controlled warehouses. – Strategically located warehouses for faster deliveries & lower shipping costs. |
| Order Fulfillment | – Handles order processing, picking, and packing for deliveries. – Offers custom packaging, barcoding, and labelling. – Supports batch processing & kitting services for promotions. – Ensures fast and accurate order dispatching. |
| Transportation & Shipping | – Provides last-mile delivery for faster shipments. – Supports freight services via land, sea, and air. – Works with multiple couriers for cost-effective shipping. – Manages cross-border & international shipping with customs clearance support. |
| Inventory Management | – Enables real-time inventory tracking to prevent stockouts. – Uses automated stock replenishment based on demand. – Integrates with e-commerce platforms & ERP systems for smooth operations. – Conducts inventory audits & quality control checks. |
| Reverse Logistics & Returns Management | – Manages product returns & exchanges efficiently. – Inspects and restocks returned products based on quality. – Handles disposal or recycling of unsellable goods. – Provides customer support for return policies. |
| Value-Added Services (VAS) | – Offers custom labelling & barcoding for products. – Provides repackaging & bundling services for promotions. – Conducts quality control inspections to ensure high standards. – Supports COD (Cash on Delivery) handling. |
| Technology & Data Analytics Support | – Integrates with order management systems (OMS). – Provides real-time tracking & visibility for shipments. – Uses AI-driven demand forecasting for inventory optimisation. – Offers custom dashboards & reports for supply chain analysis. |
Learn more about The ShipGuru fulfillment centre services tailored to your business needs.
3PL Examples for Industries in Malaysia
Third-party Logistics (3PL) services are widely used across different industries in Malaysia.
Businesses rely on 3PL providers to handle warehousing, transportation, and fulfillment, ensuring smooth and efficient supply chain operations.
These are the following industries that benefit from 3PL logistics, along with examples:
1. E-Commerce Industry
With the rapid growth of online shopping in Malaysia, e-commerce businesses depend on 3PL providers for fast, reliable, and cost-effective logistics solutions.
How 3PL Supports E-Commerce:
- Warehousing & Fulfillment: Storing inventory in strategic locations to enable faster deliveries.
- Order Processing: Managing high order volumes from platforms like Shopee, Lazada, TikTok Shop, and Zalora.
- Last-Mile Delivery: Offering same-day or next-day delivery to meet customer expectations.
- Cash-on-Delivery (COD) Services: Many Malaysians prefer COD, and 3PL providers handle this securely.
Example: A fashion brand selling on Shopee outsources storage, order fulfillment, and shipping to a 3PL provider to ensure seamless deliveries during peak sales periods like 11.11, 12.12, and Raya promotions.
2. Retail Industry
Retailers—physical stores and online brands—use 3PL logistics to streamline inventory management and ensure a steady supply of products.
How 3PL Supports Retailers:
- Inventory Management: Helps brands keep track of stock levels across multiple store locations.
- Omnichannel Fulfillment: Supports both online orders and in-store replenishment.
- Reverse Logistics: Handles product returns efficiently, reducing losses.
Example: A home appliance retailer partners with a 3PL provider to distribute products across Malaysia, ensuring timely stock replenishment for stores in Kuala Lumpur, Johor, and Sabah.
3. Healthcare & Pharmaceuticals Industry
The medical and pharmaceutical sector requires specialised logistics solutions, especially for temperature-sensitive products like vaccines, medicines, and medical equipment.
How 3PL Supports Healthcare & Pharmaceuticals:
- Cold Chain Logistics: Maintaining the required temperature for vaccines and perishable drugs.
- Regulatory Compliance: Ensuring shipments meet Malaysia’s health and safety regulations.
- Secure Distribution: Preventing theft or contamination during transportation.
Example: A pharmaceutical company relies on a 3PL provider with cold chain capabilities to safely transport insulin from its warehouse to hospitals across Malaysia.
4. Manufacturing & Industrial Goods
Manufacturers and industrial businesses use 3PL providers to streamline production logistics, raw material supply, and finished goods distribution.
How 3PL Supports Manufacturers:
- Just-in-Time (JIT) Logistics: Delivering raw materials exactly when needed to avoid overstocking.
- Heavy-Duty Transportation: Managing shipments of large machinery and industrial parts.
- Warehouse Storage: Keeping spare parts and excess inventory in secure locations.
Example: An electronics manufacturer in Penang partners with a 3PL provider to manage the storage and distribution of semiconductor components across Malaysia and Southeast Asia.
5. Food & Beverage (F&B) Industry
The food and beverage sector requires specialised logistics, particularly for perishable items that need temperature-controlled transport and quick delivery.
How 3PL Supports F&B Businesses:
- Cold Storage & Refrigerated Transport: Keeping fresh and frozen food at optimal temperatures.
- Fast Delivery for Perishable Goods: Ensuring food products reach retailers before expiration.
- Supply Chain Optimisation: Managing bulk distribution to grocery stores, restaurants, and food outlets.
Example: A frozen seafood supplier in Kuala Lumpur uses a 3PL provider with temperature-controlled logistics to deliver fresh fish to supermarkets nationwide.
6. Automotive Industry
The automotive sector relies on 3PL providers to transport parts, manage spare parts inventory, and distribute vehicles efficiently.
How 3PL Supports Automotive Businesses:
- Spare Parts Logistics: Managing supply chain for car repair centers and dealerships.
- Vehicle Transportation: Ensuring safe and timely delivery of cars from manufacturing plants to dealerships.
- Customs Clearance & Cross-Border Shipping: Handling import/export of auto parts from Japan, China, and Germany.
Example: A car manufacturer in Selangor partners with a 3PL provider to ship new vehicles to dealerships in Malaysia and Singapore.
7. Technology & Electronics Industry
The tech sector, including consumer electronics and IT hardware, requires fast, secure, and high-precision logistics to meet global demands.
How 3PL Supports Tech & Electronics Businesses:
- Secure Warehousing & Distribution: Protecting valuable electronics from damage or theft.
- International Shipping Expertise: Managing cross-border trade with suppliers in China, the US, and Europe.
- Reverse Logistics: Handling returns, repairs, and product recalls efficiently.
Example: A smartphone distributor in Malaysia works with a 3PL provider to ensure new product launches are delivered to retailers across the country on time.
6 Steps in 3PL Fulfillment to Speed Up Orders and Boost Deliveries
Fulfillment in 3PL logistics refers to the entire process of handling customer orders—from receiving inventory to shipping products to their final destination.
A Third-Party Logistics (3PL) provider ensures that orders are processed efficiently, accurately, and delivered on time.
Here’s a step-by-step guide to the fulfillment process with expert tips to optimise each stage:
Step 1: Order Processing
When a customer places an order, the 3PL provider’s system automatically receives it through integration with e-commerce platforms (e.g., Shopee, Lazada, Shopify).
Orders are verified for accuracy, ensuring correct items, quantities, and shipping details.
The system assigns the best warehouse location to process the order efficiently.
Fast and accurate order processing prevents delays, errors, and customer complaints.
Pro Tip: Use automated order management systems to reduce processing errors and speed up fulfillment.
Step 2: Picking & Packing
The warehouse team retrieves the ordered items from storage based on SKU codes.
Products are carefully packed to prevent damage and may include custom packaging, branding, or promotional inserts.
Shipping labels are generated with customer tracking information.
Proper picking and packing ensure product safety and branding consistency.
Pro Tip: Implement a barcode scanning system for picking to eliminate mistakes and speed up processing time.
Step 3: Shipping & Last-Mile Delivery
3PL providers work with multiple courier services (Pos Laju, DHL, J&T Express, Ninja Van, etc.) to find the fastest and most cost-effective shipping method.
Businesses can choose from various delivery options (standard, express, same-day, next-day).
Customers receive real-time tracking information for their orders.
Efficient shipping ensures faster deliveries, customer satisfaction, and reduced shipping costs.
Pro Tip: Work with multiple courier services to get better shipping rates and avoid delays during peak seasons.
Step 4: Order Tracking & Visibility
The 3PL system updates order status in real-time, allowing businesses and customers to track shipments.
Automated notifications (email/SMS updates) inform customers about order dispatch, estimated delivery, and delays.
Businesses can access reports on delivery performance and logistics efficiency.
Transparency in tracking builds customer trust and helps businesses monitor logistics performance.
Pro Tip: Provide customers with a tracking link or mobile app updates for a better delivery experience.
Step 5: Returns & Reverse Logistics
If a customer requests a return or exchange, the 3PL provider handles the return process seamlessly.
Returned products undergo quality inspection to determine if they can be restocked or need disposal.
Businesses get detailed reports on return reasons to improve product quality and customer experience.
A smooth return process enhances customer satisfaction and brand reputation.
Pro Tip: Have a clear and easy return policy to increase customer trust and satisfaction.
Step 6: Inventory Management & Replenishment
3PL providers track stock levels in real time to avoid stockouts or overstocking.
Automated restocking alerts notify businesses when inventory is low.
Some providers offer demand forecasting tools to optimise inventory planning.
Helps businesses maintain optimal stock levels and prevent lost sales due to inventory shortages.
Pro Tip: Use AI-powered demand forecasting to optimise stock levels and reduce storage costs.
Want to know more about how logistic services work? Shipguru has a list of frequently asked questions to help you understand our fulfillment services and how we can provide significant perks to your business.
10 Factors to Consider When Choosing a 3PL Logistics Provider
Selecting the right Third-Party Logistics (3PL) provider is crucial for businesses looking to streamline operations, improve efficiency, and enhance customer satisfaction.
A reliable 3PL partner can help reduce costs, optimise supply chains, and support business growth.
These are the ten factors to consider when choosing a 3PL logistics provider:
| Factor | Description | Pro Tip |
| Experience & Industry Expertise | Choose a provider with experience in your industry, a strong track record, and local and international logistics knowledge. Look for case studies and client reviews. | Select a specialised 3PL provider that understands your industry’s unique logistics needs. |
| Scalability & Flexibility | Ensure the provider can handle seasonal demand spikes and business growth. | Work with a 3PL that offers pay-as-you-use pricing to manage costs during high and low seasons. |
| Technology & Integration | Look for real-time tracking, AI-powered forecasting, and ERP/e-commerce integration. | Choose a 3PL with a user-friendly dashboard to monitor real-time shipments and inventory. |
| Shipping & Delivery Capabilities | Ensure they offer same-day, next-day, and international shipping with major courier partners. Check if they offer multiple shipping options and custom clearance services. | Partner with a 3PL that has multiple warehouse locations for faster deliveries and lower shipping costs. |
| Warehouse Locations & Storage Facilities | A strategically located warehouse network improves delivery times and reduces costs. Ask if the provider offers climate-controlled or specialised storage and security measures to protect inventory. | Choose a provider with regional fulfillment centers to reduce last-mile delivery time. |
| Cost Structure & Transparency | Be aware of hidden fees such as fuel surcharges, rush order fees, and storage fees. Choose a provider with clear and upfront pricing and compare pricing models to ensure affordability. | Request a detailed cost breakdown before signing any contract to avoid unexpected charges. |
| Customer Support & Service Level Agreements (SLA) | Look for 24/7 support, dedicated account managers, and clear response times. Review Service Level Agreements (SLAs) to ensure timely responses and issue resolution. | Test their response time by sending inquiries and checking how quickly they reply. |
| Returns & Reverse Logistics Management | Ensure they offer efficient return tracking, product inspections, and restocking services that reduces financial losses and enhances the customer experience. | Work with a provider that offers automated return processing and refunds for better customer experience. |
| Reputation & Client Reviews | Research client reviews, testimonials, and industry recognition for reliability. | Check Google Reviews, Trustpilot, and industry forums for unbiased feedback. |
| Compliance & Risk Management | Verify that they comply with Malaysian logistics regulations and international shipping laws to prevent shipping delays, product loss, and legal issues. | Choose a provider that follows ISO standards and legal compliance for safe operations. |
3PL Logistics Costs in Malaysia: What You Need to Know
When selecting a Third-Party Logistics (3PL) provider in Malaysia, it’s essential to understand the various cost components involved.
Below is a detailed breakdown of 3PL services (such as Extensiv and FlyBear) and their associated pricing ranges in Malaysia:
| Service | Description | Pricing Range |
| Setup and Integration Fees | One-time cost for system setup and integration with the 3PL provider’s platform. | RM450 – RM4,500 (Approx. $100–$1,000), depending on complexity. |
| Receiving Fees | Charges for unloading and storing incoming inventory at the warehouse. | RM5 – RM15 per pallet or RM0.50 – RM2 per unit, depending on product size and quantity. |
| Storage Fees | Monthly fees based on inventory space occupied in the warehouse. | RM1.97 – RM10 per item per month, with potential discounts for bulk storage. |
| Pick and Pack Fees | Cost for selecting items from inventory and packaging them for shipment. | RM0.90 – RM22.50 per item, depending on order complexity. |
| Shipping and Transportation Fees | Charges for transporting goods from the warehouse to customers, including last-mile delivery. | RM5 – RM50 per shipment, based on location, weight, and courier service. |
| Returns Processing Fees | Fees for handling returned items, including inspection and restocking. | RM3 – RM15 per return, depending on processing complexity. |
| Value-Added Services | Additional services such as custom packaging, kitting, labelling, or special handling. | RM1 – RM10 per item, depending on customisation requirements. |
3 Tips for Reducing 3PL Costs
- Compare multiple 3PL logistic providers to find the best rates for your business size.
- Choose a flexible pricing model that scales with your business needs.
- Negotiate long-term contracts for better pricing on storage and fulfillment.
How ShipGuru Transforms 3PL Logistics for Growing Businesses
ShipGuru is a premier 3PL logistics provider in Malaysia, offering a comprehensive suite of services designed to streamline and optimise your supply chain operations.
Here’s what we offer to ensure your orders and deliveries are run seamlessly for your business:
1. Comprehensive 3PL Logistics Services
ShipGuru manages all facets of third-party logistics, encompassing inventory management, order fulfillment, and last-mile delivery.
This holistic approach ensures a seamless supply chain, allowing businesses to focus on core activities while ShipGuru handles the logistics intricacies.
2. Scalable Warehouse Solutions
With strategically located warehouses across Malaysia, including key areas like Selangor and Penang, ShipGuru provides efficient storage solutions tailored to your business needs.
Our facilities are equipped to handle varying inventory volumes, ensuring rapid order processing and smooth distribution channels.
3. Integrated Technology for Seamless Operations
Leveraging advanced systems, ShipGuru integrates seamlessly with existing eCommerce platforms, automating order processing and offering real-time inventory updates.
This technological integration enhances operational efficiency, reduces manual errors, and provides businesses with actionable insights into their supply chain dynamics.
4. End-to-End Supply Chain Management
From meticulous picking and packing to custom packaging solutions, ShipGuru’s end-to-end supply chain management ensures that products are handled carefully and delivered efficiently to customers.
Our comprehensive services cover every step, guaranteeing that your products reach their destination in optimal condition.
5. Dedicated Support
ShipGuru’s experienced team offers personalised support, ensuring that your logistics requirements are met with precision and attention to detail.
Our commitment to customer service means that businesses receive tailored solutions and prompt assistance, fostering a collaborative and responsive partnership.
Conclusion
In today’s fast-paced business environment, Third-Party Logistics (3PL) providers play a crucial role in streamlining supply chains, reducing costs, and improving delivery efficiency.
Outsourcing logistics to a reliable 3PL provider ensures better inventory management, faster shipping, and scalable operations.
We’ve explored the key aspects of 3PL logistics, including:
- What are 3PL logistics, and how do they differ from 4PL?
- Industry applications showcasing how businesses in Malaysia benefit from 3PL services.
- Essential 3PL services, including warehousing, fulfillment, inventory management, and reverse logistics.
- The cost of 3PL logistics, with a breakdown of pricing for various services.
- Factors to consider when choosing a 3PL provider, including ensuring businesses select the right logistics partner.
ShipGuru stands out as a trusted 3PL provider, offering a blend of strategic infrastructure, technological integration, and dedicated support to help businesses optimise their logistics operations in Malaysia.
Looking to optimise your supply chain, reduce logistics costs, and improve customer satisfaction? Contact ShipGuru for more information about our services and get a quotation from us!
