CFA vs 3PL: CFA Full Form in Logistics and Key Differences
Quick answer: In logistics, CFA usually stands for Clearing and Forwarding Agent, a company that clears your goods through customs and arranges freight with the best carrier. In distribution channels, CFA also means Carrying and Forwarding Agent, who stores a manufacturer’s stock regionally and dispatches it to distributors. A 3PL (third-party logistics provider) goes further: it receives, stores, picks, packs and ships your orders and handles returns, and can often handle customs and forwarding too.
Whether it is a 3PL or a CFA, their same function is to ship the final product to the customer’s doorstep. Although they are different. Do you also want to devote more time and energy to the core part of your eCommerce business without being bothered by other things? Then you need a helping hand to help you manage your business’ logistics operations.
Follow this page to help you understand the difference between CFA and 3PL, and choose the best logistics solution for your dropshipping business.
What is CFA?
CFA (Clearing and Forwarding Agent) is mainly responsible for providing third-party product clearing and freight forwarding agency services for e-commerce companies.
Actually, CFA is an intermediary between the shipper and the transportation service. They coordinate all parties to transport the customer’s goods at the best price.
It is equivalent to that CFA only undertakes the part of “helping you find”, and it is the third-party logistics company that actually handles your goods. CFA also does not provide order fulfillment services.
CFA in the Distribution Channel
In domestic distribution, especially in India’s pharmaceutical and FMCG industries, CFA usually means Carrying and Forwarding Agent. Here the CFA sits between the manufacturer and its distributors or stockists. The manufacturer sends stock to the CFA’s regional warehouse, and the CFA stores it, receives orders, and dispatches goods to distributors in its territory according to the manufacturer’s instructions. The CFA works for a commission, does not take ownership of the goods and does not sell them. This lets a manufacturer cover a large region without running its own warehouses in every area.
Services Provided By A CFA
Clearing agent services
Most companies are bothered by the customs part of the operation. So they choose to outsource their services.
You better be too, unless you have the time to figure out the complex rules and regulations of shipping goods across borders. Or you can guarantee that you can avoid misclassifying the goods, otherwise, the huge fine is far more than the price you can find a customs broker.
Freight forwarding services
You may need someone to help you transport raw materials and finished goods. Freight forwarding is this function. You may not find the most economical and fastest shipping route, but a freight forwarder will help you find it based on your products and needs.
Many e-commerce companies choose to outsource all freight transport elements related to their supply chains to a freight forwarder. But there is also the option to use a freight forwarder for part of the journey. It all depends on your needs.
What is 3PL?
3PL (Third-party logistics) provides customers with a range of services. Including transportation, warehousing, inventory management, order management, information integration, and value-added services.
Third-party logistics companies provide all the services you need to outsource your logistics operations. Easy to understand, 3pl takes all the hassle out of order fulfillment for you, leaving you with only the “product sold”.
When 3pl provides these services, they can also be expanded and customized according to market conditions to help you meet customers’ product needs and delivery service requirements.
Services Provided by a 3PL
Receiving
The 3PL is responsible for unloading, registering items into inventory, and placing them on the shelves.
Warehousing
Third-party logistics companies have professional storage sites that can meet a variety of different goods storage services, and third-party logistics companies have their own exclusive points throughout the country, the enterprise’s goods can be circulated throughout the country. This can not only promote the rapid development of enterprises but can also reduce the pressure on the storage of enterprises to better business operations.
Order Fulfillment
Each enterprise will store the goods in the professional warehouse of the third-party logistics company, when the customer needs goods that can be equipped with goods for the enterprise the first time, such as a variety of goods for the collection of goods, and then sub-goods packing, etc. This directly reduces the workload of the enterprise and can also quickly complete the entire delivery process.
Shipping
The most important thing for third-party logistics companies is to complete the transportation tasks delivered by the enterprises. Deliver all kinds of goods required by customers to the destination on time within the specified time frame, while ensuring that the quality of all goods will not be compromised in any way. This will not only reduce the loss of the enterprise but also win the praise for the enterprise.
What is the Difference Between CFA and 3PL?
CFA
Freight forwarders provide broker-type services.
The focus is on “finding”. They help you find the fastest and most cost-effective carrier combination. Do nothing else.
You also need to take care of other tasks like pick and pack, warehouse storage, etc.
3PL
3PLs are one-time solutions. It provides a full range of services, covering the entire supply chain.
The focus is on order fulfillment. Services include pick and pack, warehouse storage, shipping, and returns management.
You can also get customs brokerage and freight forwarding services from your 3PL.
By comparison, the third-party logistics company is more convenient and efficient, saves time, and is more cost-effective.
Your 3pl company may provide you with additional services, which include services provided by CFA. But CFA firms do not provide 3PL services.
Probably you feel it too, your focus should be on finding a reliable 3pl company. So should you need to choose CFA or 3pl? Continue.
CFA vs. 3PL Explained: Which One Should You Choose?
No matter which one you choose, it should start with your business needs. CFAs and 3PLs have many similarities in business, and the lines between the two can sometimes be blurry.
CFAs get your company the best shipping rates and the most convenient shipping methods. Then help you find the best carrier for your needs.
3PL provides you with a full range of services, from warehousing, picking, and packing to shipping, and will take care of all the processes. It can provide you with more flexible logistics services, saving you a lot of time and effort so that you can focus on your core business.
Don’t worry about finding a top-notch fulfillment partner now. Honest FulPhilment might be the logistics company for you. They can provide you with one-stop logistics services for the whole process of receiving, warehousing, distribution, packaging, and delivery. Have transparent pricing and services.
Conclusion
Managing a business can be difficult. But you can turn to third-party logistics to outsource the entire logistics of operations. In effect, these companies take over your entire supply chain and distribution, allowing you to focus on your core competency of manufacturing.
Honest FulPhilment can provide a competent supply chain, logistics, and distribution unit for your products. Contact us now to help you reduce shipping costs and get efficient order fulfillment services, so as to achieve greater profits for your eCommerce business. If you sell on Shopify, also read what are the advantages of Shopify 3PL fulfillment.
FAQ
What is the full form of CFA in logistics?
In shipping and international logistics, CFA usually stands for Clearing and Forwarding Agent, a company that handles customs clearance and arranges freight. In domestic distribution, especially in India, CFA often means Carrying and Forwarding Agent.
What is a CFA in the distribution channel?
In a distribution channel, a CFA (Carrying and Forwarding Agent) holds a manufacturer's stock in a regional warehouse and dispatches it to distributors or stockists on the manufacturer's instructions. The CFA earns a commission and does not own or sell the goods.
What does a CFA do in shipping?
A clearing and forwarding agent prepares customs documents, clears goods through customs and books the best carrier and route for your shipment. It coordinates transport but usually does not store goods or fulfill orders.
What is the difference between a CFA and a 3PL?
A CFA focuses on clearing and forwarding: finding carriers and getting goods through customs. A 3PL offers a full logistics service, including receiving, warehousing, pick and pack, shipping and returns, and can often provide customs and forwarding services as well.
Is CFA an Incoterm?
No. CFA is a type of logistics agent, not an Incoterm. It is sometimes confused with CFR (Cost and Freight), which is an Incoterm describing who pays freight to the destination port.