Contract Logistics: Meaning, Purpose and Example

Whether you’re new to contract logistics or seeking to enhance your understanding to provide customers with a better experience, this guide is for you.

What is contract logistics?

Contract logistics entails outsourcing logistics functions to specialized third-party firms. These companies specialize in supply chain planning, warehousing, transportation, distribution, inventory management, etc.

A prime example of a contract logistics provider is a freight forwarder. They focus exclusively on the transportation of goods. Their responsibilities include managing customs clearance, handling all necessary documentation, and overseeing the shipping.

How does it work?

Some businesses manage their logistics, often employing logistics managers to oversee the various stages of the process.

However, many companies find it more efficient and cost-effective to outsource all or part of their logistics to specialized contract logistics provider.

By examining the simplified supply chain process map below, it’s clear that contract logistics involves outsourcing logistics at different phases. From manufacturing to warehousing and distribution to trading partners, these firms utilize external suppliers for air freight, sea freight, overland transportation, and logistics centers.


Given that different industries have unique logistical requirements, contract logistics providers must develop a deep understanding of the specific practices within each sector they serve.

What's the benefit of contract freight management?

The most obvious advantage of contract logistics for a company is cost savings, as it eliminates the need to establish and maintain an expensive logistics infrastructure.

Outsourcing logistics means a company can avoid the costs associated with shipping facilities, trucks, packing materials, and the personnel required to manage these operations. It allows the business to focus more on its core activities.

Moreover, large contract logistics providers often benefit from economies of scale, enabling them to secure lower prices from suppliers than a typical business could achieve.

What is the difference between contract logistics and 3PL?

While contract logistics companies generally organize transportation and routes by sea, air, and land, a 3PL (third-party logistics) provider offers a broader range of services. 3PLs go beyond just transportation, offering comprehensive logistics solutions such as warehousing, order fulfillment, inventory management, and automated shipping.

How to choose the right logistics partner?

Firstly, your prospective partner should analyze your needs accurately. Their logistics strategy should support your business growth and provide a competitive edge and high-value services that enhance customer satisfaction.

Second, they should be adept at managing all your challenges by utilizing their workforce efficiently. It involves overseeing the entire process, from production to storage and distribution to the final customer.

In addition, after-sales service can be a complex aspect of reverse logistics. Integrating this service into your contract logistics can offer significant advantages:

  • Your provider manages after-sales and return logistics, including the collection of products from customers.
  • They ensure products are reconditioned when received toward the end of their life cycle.
  • In some cases, they may even handle the disassembly and reassembly of end-of-life products.

Streamline your logistics management

Airsupply, a China reputable freight forwarder, provides air, sea, and land freight services to offer efficient and reliable transportation options. We ensure tailored solutions to meet your shipping requirements with transparent and competitive pricing.

Moreover, our professional experts can handle your cargo customs clearance quickly and efficiently, minimizing shipping delays and ensuring smooth delivery.

With Airsupply, you can trust that your logistics needs are in capable hands, allowing you to focus on your core business activities.

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