This article will briefly cover some of the main differences between a 1PL, 2PL, 3PL, 4PL, and a 5PL logistics company.
The rise of 3PL in logistics is now well evident in modern business but how far have 4PL and 5PL developed and what are they?
1PL (first-party logistics)
A 1PL, a first-party logistics, can be either an organization or an individual that needs to have cargo, freight, or goods transported from point A to point B.
The term, 1PL, stands for both the cargo sender and the cargo receiver.
A 1PL refers to either a manufacturer, trader, importer, exporter, wholesaler, retailer, or distributor in the international field of commerce.
Anyone having goods moved from their place of origin to their new place is considered a first-party logistics company.
2PL (second-party logistics)
A 2PL, a second-party logistics, is an asset-based carrier that owns its own means of transportation.
Typical 2PLs would be carriers that own, lease, or charter their transportation means.
3PL (third-party logistics)
A 3PL, third-party logistics, is a company that offers outsourced or third-party logistics services to companies for either part or their entire supply chain management function.
Well-known 3PLs include DHL, FedEx, CEVA, and more.
4PL (fourth-party logistics)
A 4PL, a fourth-party logistics, is an independent, singularly accountable, non-asset-based integrator.
Typical 4PLs would assemble the resources, capabilities, and technologies of their own company and other 3PL companies to plan, establish and provide comprehensive supply chain solutions for their clients.
5PL (fifth-party logistics)
A 5PL, fifth-party logistics, is a logistics company that aggregates the demands of the 3PL and others into bulk volume for negotiating better rates with the airlines, car carriers, and shipping companies.
Typical 5PLs would try to obtain a higher degree of resource utilization in order to achieve savings and create opportunities to secure the best possible supply chain solution at the lowest cost.