The terms for 3PL, 4PL, and 5PL can see quite confusing but I’m hoping to help you clear that up today by going through everything from first party through 5th party logistics.
First party logistics is when a brand or manufacturer handles all logistics themselves. An example would be a brand of paper towels that manufacturers in Illinois and owns and operates a warehouse in Reno, NV and Tobyhanna, PA.
2nd Party Logistics is when a brand hires a warehouse manager as a subcontracted entity. The brand likely owns the physical space and equipment but has a 2nd party manage the day to day operations of the shipping and logistics.
3PL stands for Third Party Logistics
Third party logistics is when a third party owns and operates logistics and sells their services to one or many brands. This is the most common type of logistics used by D2C brands given how cost effective, fast and efficient it is.
A 4PL represents a company that manages a network of 3PL’s.
Once brands begin to grow, they need more than one warehouse. This could even be globally. A 4PL is a company that helps brands manage one or many different 3PLs.
A 5PL is a provider that organizes independent logistic solutions on behalf of multiple clients to focus on lowering cost.
5PLs are focused on doing everything we’ve discussed so far but also helping clients lower cost. One of the biggest line items that eats up margin is shipping/logistics so 5PLs are quickly gaining in popularity to help brands optimize their supply chain.
Create a single customizable network of integrated warehouses by selecting one or many different 3PL providers across the globe.