Agricultural logistics is complicated. Crops and animal products have limited shelf lives, but demand for them exists in all areas, not just near farms. As such, farm supply chains must be quick, far-reaching and reliable, but ensuring those qualities is often far from easy.

Third-party logistics (3PL) — which manage shipping and warehousing operations so agricultural businesses do not have to — may pose an optimal solution.

The Need for a Better Agricultural Supply Chain

Profit margins in agriculture are often relatively low, so high shipping costs are a prominent concern. Fuel price volatility and rising logistics demand from e-commerce growth may exacerbate these expenses. International trade difficulties cast doubt over these processes, too, as exports account for 20% of U.S. agriculture by value.

These supply chain woes will become increasingly prominent as agricultural demand rises. While global population growth has slowed, it may still reach 9 billion people by 2037. That represents considerably more mouths to feed without much time to scale up food logistics. Non-food agricultural products like biofuels could strain supply chains even further.

While high demands, costs and disruptions affect all industries, agriculture faces some unique challenges. Much of its shipping must use refrigerated containers, and farms require fast turnaround times to prevent spoilage, especially as food waste becomes a bigger issue. Accounting for these considerations presents a significant roadblock for tomorrow’s farmers.

Benefits of 3PL in Agriculture

Transitioning to 3PL instead of in-house logistics management is crucial amid these obstacles. That criticality stems from a few key benefits 3PL providers offer farm supply chains.

1. Reduced Complexity

One of the greatest advantages of 3PL in agriculture is the reduced workload on farms. In these setups, the provider will manage all the scheduling, routing, truck maintenance and related issues instead of the farming business. That leaves farmers with more time and energy to focus on what they do best.

The advantages of referring these decisions to third-party experts are considerable. According to one study, 73% of 3PL users say the agreement has improved their logistics’ effectiveness, and 64% say it has lowered related costs. As agricultural supply chains get increasingly complex, those savings and improvements become all the more impactful.

2. Higher Flexibility

Offloading logistics workflows to a 3PL also leaves farms with greater flexibility. Renting warehouse space, buying and maintaining vehicles, and paying supply chain workers is expensive. Those high upfront prices make it difficult to scale or otherwise adjust operations, but a 3PL already has the resources necessary to meet various demands.

A 3PL also lets companies pay only for the warehouse and trucks they need. When farms can pay for their portion of the supply chain instead of managing entire warehouses, they enjoy lower operating costs. The resulting financial freedom enables greater flexibility and scalability to adapt to a changing market.

3. Farther Reach

In addition to saving money, 3PL can increase farm revenue through greater distribution. Many providers already have the infrastructure and footprint to deliver goods across state or international lines that farms may be unable to do otherwise. Consequently, agricultural businesses can sell in new markets without excessive upfront expenses.

This expansion is important for two reasons. First, it enables farms to improve their cash flow to sustain operations amid other monetary challenges. Secondly, it means a greater population can access food that may only grow in certain areas. Such distribution is vital as food demands surge but available farmland remains constrained.

Considerations for Choosing an Agricultural 3PL Provider

Like any strategic partnership, the extent to which farms experience 3PL’s benefits depends on their specific provider. Agricultural leaders must consider several key factors when comparing 3PLs to make the most of this opportunity.

1. Refrigeration

Food safety is one of the biggest concerns surrounding agricultural logistics. Roughly one-third of all food produced goes to waste during distribution. Waste aside, expired agricultural products can pose health risks if people consume them, so any 3PL in this industry must meet strict care standards.

Refrigeration is among the most significant steps. Reliable shipping partners must have enough refrigerated containers to support the safe transport of all food and the maintenance strategies and keep these systems functional. Farms should ask how 3PLs keep sensitive shipments chilled and how they prioritize these shipments before partnering with them.

2. Communication

Visibility — or the lack thereof — is another common issue. Today, 60% of organizations in all industries report full visibility into their tier-one supply chain partners. While that may seem positive, it means almost half cannot see everything their immediate suppliers, carriers or providers are doing. That is an issue when shipments are as time-sensitive as agricultural products.

A reliable logistics partner will communicate thoroughly about their expectations, processes and shipment progress. Ideally, they will provide real-time updates through a cloud management platform so farms can track their shipments at any moment. Communication about costs and fees is also crucial, especially as they change.

3. Geographic Footprint

A 3PL’s reach should also come into consideration. While a smaller, local provider may offer lower rates, its usefulness is limited if it cannot reliably transport goods to other markets. This concern grows as agricultural entities scale up their operations.

While a larger footprint is often beneficial, the best 3PL is not always the one with the most distribution. Shipping some items with limited shelf lives internationally is impractical, if not entirely unviable, so farms should recognize when they may need to focus on domestic or regional markets. Still, a provider with more infrastructure nationwide will likely support faster deliveries and enable greater flexibility.

4. Sustainability

As more attention turns to the climate, farms should consider their 3PLs’ sustainability. Transportation accounts for 29% of U.S. greenhouse gas emissions, and farming already carries a substantial carbon footprint. Public image aside, agriculture must prioritize eco-friendliness to protect the longevity of its crops.

Some shipping companies are slowly embracing electric vehicle fleets, and these are a good, green option. Alternatively, 3PLs using technologies like predictive maintenance and artificial intelligence-powered route planning to reduce their emissions are worth attention. Commitment to climate targets and transparency about the steps taken to support such initiatives are positive signs, too.

5. Regulatory Compliance

Supply chains face considerable regulatory pressure, so agricultural organizations must account for compliance. Reporting requirements, emissions testing, taxes and import duties, cybersecurity standards, and food safety protocols may all be relevant.

Farms can start by researching which laws and regulations they and their logistics partners may fall under. Then, they can talk to potential providers to understand how these parties manage such concerns. Any business that cannot explain how it meets relevant regulatory standards is too risky.

Modern Agriculture Needs Third-Party Logistics

Farms will have to feed more people across a wider area as the population grows but farmland remains limited. The only way to do so reliably and without excessive investment is to partner with a 3PL.

Third-party logistics is already a key part of many agricultural supply chains. Those who have not yet joined this trend should consider how they can benefit from it today.