While 3PL providers may be the type of logistics partner that is spoken of most often – it is not the only one. In fact, there are second-party logistics (2PL) providers that simply collect packages from a company’s own warehouse before transporting them to the customer. And even fourth-party logistics (4PL) firms.
A 4PL provider is actually responsible for managing the 3PL firms that will be directly involved in the fulfillment of e-commerce orders. It has a total overview of a company’s logistics process – but is not actually involved in the movement of goods.
While a 3PL firm owns its own warehouse and the associated equipment needed to get products from origin to destination, a 4PL provider does not own any assets. It simply provides management expertise and organizational analysis to help businesses with their supply chain. Like 3PL, the 4PL market is growing too and is expected to reach $84.43 billion by 2026.
There is no straightforward answer to whether a business is better off working with a 3PL or 4PL firm. While the latter can deliver significant efficiency gains, they do require firms to hand over control of their supply chain – which some companies may not be comfortable with.
If you are a larger operator experiencing rapid growth, the oversight that a 4PL provider gives you may be beneficial, but smaller players will probably find that a 3PL provider delivers more than enough advantages.