Page 18 - Logistics News April 2021
P. 18
3PL vs 4PL
What’s the difference
between 3PLs and 4PLs?
By Jason O’Leary, Co-founder and Managing Partner, Surety Bonds Direct
Today’s logistics industry offers shippers many new and exciting options. Third-party
logistics (3PL) and fourth-party logistics (4PL) have both seen an explosion in popularity and
are now being used to ship all kinds of goods.
Both 3PL and 4PL o er big potential benefits on logistics strategies typically isn’t part of
for retailers to outsource major elements the deal, so don’t expect any input on an
of their supply chain. So, what are the key overarching logistics vision. The more complex
di erences between 3PLs and 4PLs, and a business’s supply chain, potentially the
which is your best option? Here are some of greater the number of 3PLs it has to deal with
the main di erences, along with important to fulfil all of its logistics needs.
considerations for making the right choice. 3PLs also rely on economies of scale to
be cost-e ective. For an SMB shipper with
What is third-party logistics? low order volumes, this can be a problem
A 3PL provides contract logistics and because it makes shipping more costly.
transportation services. The client retains Additionally, 3PLs generally don’t handle the
oversight of its supply chain and processes, more advanced legal paperwork and insurance
but the 3PL does the legwork of arranging issues of a supply chain, meaning they have to
carriers, warehouse services and other key be handled in-house.
supply chain elements.
What is fourth-party logistics?
3PL advantages While a 3PL provides the assets and labour
Working with a 3PL is often the most cost- needed to move orders, a 4PL oversees and
e ective option for small to midsize (SMB) organises the entirety of a supply chain. From
retailers and ecommerce shippers. Many of transportation and warehousing to project
them provide a variety of valuable services management and supply chain design, a 4PL
such as packaging, warehousing and inventory takes care not only of day-to-day operations
management on a scaled as-needed basis that but broad oversight and authority over how
makes them more accessible for an SMB. the supply chain functions.
Some 3PLs don’t own their assets such
as trucks and warehouses, subcontracting 4PL advantages
out functions to carriers or warehousing Quality 4PLs know how to optimise and
businesses. This can improve flexibility and streamline shipping at every level, from
create cost savings the 3PL can pass onto packaging to last-mile logistics, in a way that
its customers. Large 3PLs often own their creates eciencies and provides a next-level
logistics assets, creating improved reliability customer experience. 4PLs can leverage a
for clients and customers. huge range of assets and provide services that
can take a business’s logistics to the next level.
3PL drawbacks Their expertise in planning and operations
Businesses and 3PLs have a fundamentally can free up your time to let you focus on core
transactional relationship. Advising a business business pursuits.
16 April 2021 | Logistics News
