What is a third-party logistics (3PL) and how is it different from 1PL, 2PL, 4PL and 5PL?
Surely at some point you have heard mention this term or read an article in which they referred to the logistics “3PL” “1PL” “4PL” or even “5PL”, in case you want to remember its meaning or if it´s a completely new term to you, in this article we will talk about what is a third party logistics as well as the differences between 1,2,3,4 5PL and how they can provide customized solutions for companies; The term “3PL” stands for third party logistics or outsourced logistics, this is considered a way to carry out certain operations both national and international, in which a company is hired to provide solutions that exceed the skills and knowledge of who wants to import or export.
Generally for a common company, the task of developing their own logistics, meeting the demands, having spaces to store their cargo and overcoming each stage of import or export, is usually much more expensive than hiring a third-party logistics provider specialized; In addition to being able to meet the total needs of a given logistics process, these types of suppliers have the knowledge required to avoid what often results in unexpected expenses due to some omission.
Just as this type of logistics is well known and also used, other forms such as 1PL, 2PL, 4PL and 5PL are part of the current transport context and to understand them we have to explain a few characteristics:
1PL: First-party Logistics
This transport 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, the company is responsible for the tasks inherent to the operations, while the subcontracted company is responsible of supporting through the fleet and the management of the drivers that will carry the load.
2PL: Second-party Logistics
The companies that provide this service or transport model are considered as logistics operators, since in addition to focusing on the movement of goods, they also store 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, offers an integration of the services, in addition to providing the fleet and the place where the products are stored, it also contemplates the organization of the operations of Transportation and warehouse management.
In general, the integration plus logistics services grants the classification in question, while more adapted to the needs and customized are the services of a logistics provider, the higher the ranking will be; In this case, the contracting party still runs control over the flow of goods, although it is more oriented to a global scale and, for its part, the supplier runs control within the warehouse although a much more local scale.
4PL: Fourth-party Logistics
The 4PL, sometimes known as a leading logistics provider, is a type of logistics carried out by a company that handles the supply chain that the customer requires; Organizes everything from resources and technology to the services previously seen in the 3PL, all to create a comprehensive and completely customized solution, sometimes the 4PL usually analyzes a large volume of data, manage transport, storage and even operate under indexes of high efficiency.
5PL: Fifth-party Logistics
The 5PL is a relatively new term, it is considered as the evolution of logistics since it implies a total integration of the services provided externally; Computer systems and information technologies must work in a coordinated manner to ensure real-time visibility and generate complete control of the entire supply chain regardless of how many suppliers have been involved. This naturally allows manufacturing companies to fully focus on what they do best by directing the logistics and supply chain management efforts to highly specialized support.
Just as the 3PL manages to respond to certain specific national or international logistic needs, each of the different types of logistics provided by third parties has its objectives and in turn the suppliers run a specialization focused on particular sectors, for example there are providers directed to the automotive sector, food and beverage or the pharmaceutical industry.
To learn more about the different types of logistics operations and provide solutions to your national or international cargo requirements, in APR cargo we can provide you with timely advice for your case.
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