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Financing and insurance for third-party logistics (3PL) companies

Running shipping, storage, or fulfillment for other companies, often with your own trucks too.

Short answer

Three things usually come first for a third-party logistics (3PL) company. One is cash to carry receivables, because 3PLs often pay carriers, staff, and rent before customers pay. Another is equipment and space: warehouses, racking, forklifts, and sometimes trucks. The third is coverage that matches each role you play, because a 3PL can be a broker, a warehouse, and a carrier at once, and each role carries different liability. Providers and insurers decide what they offer, not us.

Which financing products do 3PL companies usually look at?

A 3PL's assets are usually receivables, warehouse equipment, and sometimes trucks. Growth means taking on more customers, more space, and more carriers before the revenue arrives, which makes receivables-based financing the usual starting point.

  • Accounts receivable financing

    Customer invoices are usually a 3PL's biggest asset, and you can often keep collections in-house.

  • Asset-based lending

    Receivables plus warehouse equipment and inventory you control can make a larger borrowing base.

  • Line of credit

    Paying carriers, staff, and rent while customers pay on terms.

  • Equipment financing

    Forklifts, racking, warehouse systems, and trucks if you run your own.

  • Factoring

    Turns customer invoices into cash sooner. Compare it with receivables financing, and ask whether the factor contacts your customers.

  • SBA loans

    7(a) loans for working capital and equipment, and 504 loans for buying a warehouse.

Working capital can fit a one-time need, such as onboarding a large new customer. Fuel cards matter only if you run your own trucks; we do not currently route fuel card requests.

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Which insurance lines do 3PL companies usually ask about?

Contracts with shippers often spell out liability for freight, goods in storage, and errors, and they may shift more risk to you than the law alone would. Match your coverage to each role you play and to what your contracts say. Policies vary, so read the declarations, definitions, and exclusions.

  • Contingent auto liability

    Backup liability when you arrange loads on other carriers, as a broker would.

  • Professional liability

    Errors in arranging or managing logistics for customers. Shippers sometimes ask for proof of it.

  • Commercial property

    Warehouses, racking, and equipment. Ask how customers' goods in your care are treated.

  • General liability

    Customers, vendors, and drivers in your warehouses and offices.

  • Workers' compensation

    Warehouse staff and drivers. Requirements depend on your state.

  • Cyber

    Warehouse and transportation systems, customer data, and payments moving by email.

Also worth a look: surety bonds if you broker freight (the $75,000 broker bond), motor truck cargo if you haul freight yourself, primary auto liability for your own trucks, and management liability for a larger workforce.

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What makes a 3PL different?

"3PL" is a business model, not one legal role. Federal rules define a broker as someone who, for compensation, arranges transportation by an authorized motor carrier, and a freight forwarder as someone who consolidates shipments and assumes responsibility for them from receipt to destination while using carriers for part of the trip. A 3PL may do either, run trucks as a carrier, store goods as a warehouse, or all of these. Each role has its own registration and liability.

Warehouse liability turns on reasonable care. Under the Uniform Commercial Code, a warehouse is liable for loss of or injury to goods caused by its failure to use the care a reasonably careful person would use, and a storage agreement or warehouse receipt can limit the amount of that liability. Read your agreements for the limit you've set.

People and forklifts. Employers must train and evaluate forklift operators, with a performance evaluation at least once every three years.

Read the related pages. Freight brokerages covers the broker bond and records, brokers and dispatchers covers the broader group, and small fleets covers running your own trucks.

Frequently asked questions

Is a 3PL a broker?

It can be, depending on what it does. If a 3PL, for compensation, arranges transportation by an authorized motor carrier, that activity fits the federal broker definition. A 3PL may also act as a freight forwarder, a carrier, or a warehouse. Check with FMCSA about which registrations your activities need.

What is a 3PL liable for when goods are damaged in storage?

Under the Uniform Commercial Code, a warehouse is liable for loss or injury caused by its failure to use reasonable care, and a storage agreement or warehouse receipt can limit the amount. Your contracts may change the picture, so read them. We can't tell you how a specific claim will come out.

What financing fits a growing 3PL?

Usually something built on receivables, such as accounts receivable financing or asset-based lending, because receivables are often the biggest asset. Providers decide terms and look closely at customer concentration and billing.

What insurance does a 3PL need?

That depends on each role you play and on your contracts. Brokering points to contingent auto liability and the broker bond, warehousing to property coverage for goods in your care, and running trucks to auto liability and cargo. Ask your agent to map coverage to each role. We can't tell you what you need.

Do forklift operators need training?

Yes. Employers must make sure forklift operators are trained and evaluated, with a performance evaluation at least once every three years.

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