Arrangement in which a firm contracts outsources its logistics operations to two or more specialist firms (3PL) and hires another specialist firm (4PL) to coordinate the activities of the 3PL.
A 4PL is neutral and will manage the logistics process, regardless of what carriers, forwarders, or warehouses are used. The 4PL can and will even manage 3PLs that the customer is already currently using. Many 4PLs have addressed the huge requirements of electronic interface between numerous companies. Companies like JDA, GT Nexus, Chetak Logistics provides specific capabilities in electronic data interchange (EDI), electronic funds transfer (EFT).
Now a new crop of companies have emerged who are actual transportation companies too. While a 4PL is sometimes described as non-asset-owning service provider, their role is to provide broader scope managing of the entire supply chain.
A first-party logistics provider (1PL) is a firm or an individual that needs to have cargo, freight, goods, produce or merchandise transported from a point A to a point B. The term first-party logistics provider stands both for the cargo sender and for the cargo receiver.
A 1PL can be a manufacturer, trader, importer/exporter, wholesaler, retailer or distributor in the international commerce field. It can also be institutions such a government department or an individual or family removing from one place to another.
Anyone having goods moved from their place of origin to their new place is considered to be first party logistics provider.
A second-party logistics provider (2PL) is an asset-based carrier, which actually owns the means of transportation. Typical 2PLs would be shipping lines which own, lease or charter their ships; airlines which own, lease or charter their planes and truck companies which own or lease their trucks.
A third-party logistics provider (3PL) provides outsourced or 'third party' logistics services to companies for part or sometimes all of their supply chain management function. Well known 3PLs include DHL, Wincanton, Norbert-Dentressangle, CEVA & NYK Logistics.
A fourth-party logistics provider (4PL) is an independent, singularly accountable, non-asset based integrator who will assemble the resources, capabilities and technology of its own organisation and other organisations, incuding 3PLs, to design, build and run comprehensive supply chain solutions for clients.
A fifth party logistics provider (5PL) will aggregate the demands of the 3PL and others into bulk volume for negotiating more favourable rates with airlines and shipping companies. Non asset based, it will work seamlessly across all disciplines. The central ethos of 5PL is its commitment to collaboration and to obtaining a higher degree of resource utilisation in order to achieve savings and open up opportunities to secure the best possible solution at minimum cost/carbon etc.,
