Logistics outsourcing means transferring a firm's logistics functions and associated capabilities to specialised external services providers. Outsourcing transport and other logistics activities means that it is more rational to buy external logistics services than to operate in-house.

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Globalization, lead time reductions, customer orientation and outsourcing are some major changes contributing to this interest in logistics. Supply chain integration and the outsourcing of logistics services have become an important way for companies in their strive to develop competitive advantages.

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Also, firms can outsource wholly or partially, that is, they can outsource the entire distribution process or only certain parts of it. The concept's main idea is that a company should focus on production of goods and/or carry out those activities that make it competitive.

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This enables the outsourcing company to focus on core competences. By focusing on core competences, the company will, at least theoretically, enjoy more success on individual markets. The idea of focusing on core competences has long been recognized in the literature as strategic critical success factor in the long-term survival of any firm (Prahalad and Hamel, 1990).

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There are a number of benefits of outsourcing logistics functions.  In general,  that outsourcing can by itself reduce costs of service and/or improve efficiency. It has been established that the logistics outsourcing improves the competitive position of the firm by rationalizing business activities and synergic effects. Transferring the logistics activities to the outsource supplier enables the firm to concentrate on its core competences. External logistics providers also facilitate cooperation in the supply chain.

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Outsourcing provides certain power that is not available within a company's internal departments. This power can have many dimensions: economies of scale, process expertise, greater capacity for flexibility, access to capital, access to expensive technology, etc. The combination of these dimensions creates the cost savings inherent in outsourcing, because the external supplier has the economy of scale, the expertise and the capital investments in leading technology to perform the same tasks more efficiently and effectively than the outsourcing company. Using external producers, the company can lower its operation costs. They offer a lower price for carrying out services or products due to the economy of scale or other advantages based on specialization.