Surely at some point you will have heard this term mentioned or read an article in which they referred to logistics; “3PL” “1PL” “4PL” or even “5PL”. In case you want to remember its meaning, in this article we will talk about what third-party logistics is; as well as the differences between 1,2,3,4 5PL. Learn how they can provide personalized solutions for companies.
The term “3PL” (Third Party Logistics) can be translated as third-party logistics or outsourced logistics. This is considered a way of carrying out certain national and international operations, in which a company is hired to provide solutions that exceed the capabilities and knowledge of those who wish to import or export.
Generally for a common company, the task of developing its own logistics, meeting demands, having spaces to store its cargo and overcoming each stage of import or export; It is usually much more expensive than using a specialized third-party logistics provider. This type of suppliers in addition to being capable of meeting the total needs of a given logistics process. They have the knowledge required to avoid what often results in unexpected expenses resulting from some omission.
Just as this type of logistics is well known and used, other forms such as 1PL, 2PL, 4PL and 5PL are also used. They are part of the current transportation context and to understand them we have some of their main characteristics:
1PL: First-party Logistics
This transportation model refers to the fact that the same manufacturer subcontracts certain logistics companies focused on transporting what the contracting company presents to them; That is to say, the company is in charge of the tasks inherent to operations. While the subcontracted company is responsible for supporting the fleet and managing the drivers who will carry the load.
2PL: Second-party Logistics
The companies providing this service or transportation model are considered as logistics operators; since in addition to focusing on the transfer of goods. They also take care of storing products and vehicles within their own warehouse. For its part, the company that decides to hire a logistics operator of this nature; is still responsible for coordinating the fleet and preparations related to orders within the warehouse.
3PL: Third-party Logistics
In the case of third-party logistics, the process contemplates more necessary aspects, it offers an integration of services since in addition to providing the fleet and the place where the products will be stored, it also contemplates the organization of transportation operations and warehouse management.
In general, integrating more logistics services gives the classification in question. The more tailored and personalized a logistics provider's services are, the higher up the rankings they will be. In this case, the contracting party still exercises control over the flow of goods; although it is more oriented on a global scale and for its part the supplier exercises control within the warehouse although on a much more local scale.
4PL: Fourth-party Logistics
The 4PL, sometimes known as a leading logistics provider. It is a type of logistics carried out by a company that is in charge of the supply chain that the client requires; It organizes everything from resources and technology to the services previously seen in the 3PL. Everything to create a comprehensive and completely personalized solution. Sometimes the 4PL usually analyzes a large volume of data, manages transportation, storage and even operates under high efficiency indices.
5PL: Fifth-party Logistics
5PL is a relatively new term, it is considered the evolution of logistics since it entails a total integration of externally provided services. Computer systems and information technologies must work in a coordinated manner to ensure real-time visibility and generate absolute control of the entire supply chain regardless of how many suppliers are involved. This naturally allows manufacturing companies to focus fully on what they do best by directing logistics and supply chain management efforts to highly specialized support.
Just as the 3PL manages to respond to certain specific national or international logistics needs, each of the different types of logistics provided by third parties has its objectives and in turn the suppliers execute a specialization focused on particular sectors. There are some aimed at the automotive sector, the food and beverage sector or also the pharmaceutical industry.
To learn more about the different types of logistics operations and provide solutions to your national or international cargo requirements, at APR Cargo we can provide you with timely advice for your case.