What Is Third Party Logistics (3PL)? The Complete Guide

For growing businesses across Canada, a point is eventually reached where managing warehousing, shipping, and inventory in-house becomes unsustainable. Orders pile up, storage costs climb, and fulfilment errors begin to erode customer trust.

That is exactly where third party logistics comes in.

In this complete guide, everything from the core definition to the types of services offered, how the process works, and how to choose the right 3PL provider in Canada is covered. Whether a small e-commerce brand is being launched or a nationwide distribution network is being scaled, a clear understanding of 3PL is essential to making smarter supply chain decisions.

What Does Third Party Logistics Mean?

Third party logistics (3PL) refers to the outsourcing of logistics and supply chain operations to a specialized external provider. Rather than handling warehousing, order fulfilment, shipping, and distribution internally, these functions are entrusted to a dedicated logistics partner.

In simpler terms, a 3PL company acts as the operational backbone of a business’s supply chain. Inventory is stored in the provider’s warehouse, orders are picked and packed by their team, and shipments are coordinated through their carrier network — all without the business needing to manage any of it directly.

The concept is not new. Third party logistics has been a cornerstone of efficient commerce for decades. In fact, providers like Delibrex have been delivering warehousing and distribution solutions across Western Canada since 1974.

What Does Third Party Logistics Involve?

A common question is: what is actually included when a 3PL partnership is established? The scope can vary depending on the provider, but most comprehensive third party logistics services cover the following core areas:

Warehousing and Storage

Inventory is received at the 3PL provider’s facility and stored securely until orders are placed. This includes:

• Dedicated or shared warehouse space allocation • Inventory receiving, inspection, and cataloguing • Temperature-controlled storage for sensitive products • Specialized storage for regulated goods (pharmaceuticals, chemicals, food-grade items) • Real-time inventory tracking and reporting through client portals

For businesses handling Health Canada–regulated products, compliance-ready facilities are essential. Delibrex operates two fully equipped warehouses in Edmonton, Alberta — including a Health Canada Licensed facility capable of handling pharmaceutical and natural health products.

Order Fulfilment (Pick, Pack, and Ship)

Once an order is placed, the order fulfilment process is set into motion:

• Items are picked from warehouse shelves based on the order details • Products are packed securely according to shipping requirements • Shipping labels are generated and carrier pickups are arranged • Tracking information is sent back to the business and end customer

This seamless workflow is what allows businesses to promise fast, reliable delivery without operating their own warehouse.

E-Commerce Fulfilment

For online sellers, e-commerce fulfilment is a specialized branch of third party logistics. Integration with platforms like Shopify, Amazon, WooCommerce, and other marketplaces is provided so that:

• Orders are automatically synced from the online store to the 3PL warehouse • Real-time inventory levels are maintained across all sales channels • Returns are processed and restocked efficiently • Branded packaging and custom inserts can be accommodated

E-commerce fulfilment has become one of the fastest-growing segments in the 3PL industry, driven by the rapid expansion of online shopping across Canada.

Distribution and Freight Coordination

Beyond storage and shipping, many third party logistics providers also handle broader distribution services:

• Freight forwarding and transportation management • Cross-docking for faster product turnaround • Last-mile delivery coordination • Carrier rate negotiation and optimization • Shipment tracking and delivery confirmation

Established 3PL providers maintain relationships with major carriers — such as Canada Post, FedEx, UPS, and Purolator — enabling competitive shipping rates that would be difficult for individual businesses to negotiate on their own.

How Does Third Party Logistics Work?

Understanding what third party logistics means is one thing. Understanding how it actually works in practice is another. Here is a simplified look at the typical 3PL process:

Stage	What Happens
Onboarding	The business and 3PL provider establish service terms, integrate systems, and set up inventory protocols.
Receiving	Inventory is shipped to the 3PL warehouse, inspected, and catalogued into the management system.
Storage	Products are stored in designated areas based on type, size, and handling requirements.
Order Processing	When a customer places an order, it is transmitted to the 3PL system (automatically or manually).
Pick and Pack	Warehouse staff locate the items, pack them securely, and prepare them for shipping.
Shipping	The optimal carrier and service level are selected. The package is dispatched and tracking is generated.
Returns Management	Returned items are received, inspected, and either restocked or disposed of per the business’s policy.

For businesses evaluating the order fulfilment process within the supply chain, this end-to-end visibility is one of the most compelling reasons to partner with a proven 3PL provider.

What Is the Purpose of Third Party Logistics?

The purpose of third party logistics extends far beyond simple cost savings. While reduced overhead is certainly a benefit, the real value lies in what 3PL enables a business to achieve:

Focus on Core Business Activities

When logistics operations are handled by a dedicated partner, internal teams are freed to concentrate on product development, marketing, sales, and customer relationships — the activities that actually drive revenue growth.

Scalability Without Capital Investment

Seasonal demand spikes, product launches, and market expansion all require additional warehouse space and labour. With a 3PL provider, these resources are scaled up or down as needed — without long-term leases, equipment purchases, or staffing commitments.

Access to Expertise and Infrastructure

Third party logistics companies bring decades of operational experience, established carrier relationships, advanced warehouse management systems, and compliance expertise that would take years and significant capital to build in-house.

Delibrex, for example, brings over 50 years of logistics experience as a family-owned Canadian business, along with specialized capabilities such as chemical and dangerous goods storage, food-grade handling, and Health Canada–licensed pharmaceutical warehousing.

Reduced Shipping Costs

Through volume-based carrier agreements, 3PL providers can negotiate shipping rates that are significantly lower than what most individual businesses could secure. These savings are passed directly to the client.

Improved Customer Satisfaction

Faster processing times, accurate order fulfilment, and reliable delivery timelines all contribute to a better end-customer experience. In competitive markets, fulfilment speed and accuracy can be the differentiating factor.

What Are Third Party Logistics Services? (Examples by Industry)

One of the strengths of a 3rd party logistics company is its ability to serve diverse industries. The specific services provided are often tailored to the unique requirements of each sector:

Industry	Specialized 3PL Services
E-Commerce and Retail	Multi-channel fulfilment, branded packaging, returns management, Shopify/Amazon integration
Healthcare and Pharmaceutical	Health Canada Licensed storage, temperature-controlled handling, regulatory compliance
Food and Beverage	Food-grade warehousing, cold chain management, expiry date tracking
Oil and Gas	Hazardous materials storage, WHMIS compliance, bulk inventory management
Commercial and Industrial	Pallet storage, cross-docking, B2B distribution, freight coordination

This versatility is what makes third party logistics services applicable to businesses of virtually every size and sector. A startup shipping 50 orders per month and a manufacturer distributing across all of Western Canada can both benefit from the same provider — just at different scales.

What Is a 3rd Party Warehouse?

A 3rd party warehouse is a facility owned and operated by a 3PL provider, where client inventory is stored, managed, and shipped. It differs from a private warehouse (owned by the business) or a public warehouse (rented space without fulfilment services) in several key ways:

• Managed services are included — receiving, storage, picking, packing, and shipping are all handled by the 3PL team • Technology integration provides real-time inventory visibility through client portals and system connections • Compliance and licensing ensure that regulated products (pharmaceutical, chemical, food) are stored according to Canadian standards • Shared infrastructure means costs are distributed across multiple clients, making it more affordable than operating a private facility

Strategically located warehouses are particularly valuable. Delibrex’s two Edmonton-based facilities provide efficient access to markets across Alberta, British Columbia, Saskatchewan, and the rest of Canada — making them an ideal base for businesses targeting Western Canadian consumers.

How to Choose the Right 3PL Provider

Not all third party logistics companies are created equal. When evaluating potential 3PL partners, the following factors should be carefully considered:

Location and Coverage Area

The warehouse location directly impacts shipping speed and cost. A provider with facilities in a central distribution hub — like Edmonton — can offer efficient coverage across a wide geographic area.

Industry Experience and Compliance

Specialized industries require specialized handling. For healthcare or pharmaceutical products, a Health Canada Licensed facility is non-negotiable. For chemical products, WHMIS and TDG compliance must be verified.

Technology and Visibility

Modern 3PL providers offer real-time inventory tracking, automated order processing, and seamless integration with e-commerce platforms. Transparency should never be compromised.

Scalability

The right provider can grow with the business. Storage capacity, staffing levels, and shipping volume should all be scalable without requiring a contract renegotiation every time demand shifts.

Reputation and Track Record

Experience matters. A provider with a proven history — ideally decades, not months — offers a level of reliability that newer operations simply cannot match. Delibrex has been serving Canadian businesses since 1974, providing a trusted foundation built on 50+ years of operational excellence.

Pricing Structure

Costs should be transparent and predictable. A detailed breakdown of storage fees, pick-and-pack charges, shipping rates, and any additional service fees should be provided upfront. For a closer look at typical costs, the guide on order fulfilment services in Canada and what they cost offers a comprehensive overview.

Third Party Logistics in Canada: Why Location Matters

For Canadian businesses, geography plays a critical role in logistics efficiency. The vast distances between major population centres mean that warehouse location can significantly impact delivery timelines and freight costs.

Edmonton, Alberta, is strategically positioned as a Western Canadian logistics hub. It offers:

• Central access to major markets in British Columbia, Alberta, and Saskatchewan • Proximity to major transportation corridors and freight routes • Lower operating costs compared to Vancouver or Toronto • Efficient reach for nationwide Canadian distribution

Businesses that partner with an Edmonton-based 3PL provider like Delibrex benefit from this geographic advantage — achieving faster delivery to Western Canadian customers while maintaining cost-effective access to the rest of the country.

Ready to Streamline Your Supply Chain?

Third party logistics is more than just outsourcing warehouse space. It is a strategic partnership that enables businesses to scale efficiently, reduce costs, improve customer satisfaction, and focus on what they do best.

Whether an e-commerce brand is being grown, a healthcare product line is being distributed, or industrial supply chains are being optimized, the right 3PL provider makes all the difference.

Delibrex has been helping Canadian businesses with trusted, compliant, and scalable logistics solutions for over 50 years.

Request a free quote today and discover how a dedicated fulfilment partner can transform your operations.

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