Logistics makes the world go ‘round, and the choice between using third-party logistics (3PL) or fourth-party logistics (4PL or leading-party logistics) is one of the most important choices you’ll have to make if you have a company that specializes in goods that have to get from one point to the next.
Lucky for us, the terms 3PL vs 4PL are pretty clearly defined in business and logistics literature.
3PL vs 4PL Logistics, Which to Choose?
Here’s what you should know about 3PL and 4PL, and which of the two you should choose for your business.
Defining 3PL Logistics
Third-party logistics (also called 3PL) refers to a larger company that makes use of its own warehouses and transportation fleet to handle distribution; this is one of the most essential parts in the supply chain, and without a distributor who does this, goods would be completely unable to reach processing plants or stores.
The important thing that defines 3PL logistics is that a 3PL warehouse company usually relies on their own resources to do the job. It’s their own warehouses, and their own transportation fleet. Services are very rarely outsourced to other companies when we’re talking about third-party logistics, and in this case the third-party logistics company is the third party in question.
Defining 4PL Logistics & the Difference
4PL logistics is a far more all-encompassing distribution solution, and the easiest way to explain it to anyone who has never heard the term defined is this: 4PL logistics companies most often make use of the 3PL logistics companies (in fact, several) to handle their storage, distribution and other logistics needs.
Fourth-party Logistics often applies to larger companies, or companies that need a larger distribution chain. Some of the advantages to choosing this can mean that the entire distribution chain is both faster and cheaper, especially for larger companies or ones that are quickly on the way up.
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