- The main difference between 3PL and fourth party logistics 4PL is that a 4PL handles the entirety of a supply chain
- 3PL services is a model is where a manufacturer maintains oversight of their supply chain but outsources their transportation and logistics operations
- Fourth party logistics 4PL services oversee the organization and management of a whole supply chain for manufacturers and wholesalers
Often, it's a tough decision for businesses to choose either 3PL or 4PL logistics to optimize their supply chain management.
Third-party logistics, otherwise known as 3PL, is where a manufacturer maintains oversight of their supply chain but outsources their transportation and logistics operations to a 3PL provider. A fourth party logistics 4PL is a company that provides logistics services to manufacturers, including organizing and overseeing the supply chain. Though they are similar, 3PL and 4PL logistics differ in many aspects.
Easyship can help you choose between 3PL vs. fourth party logistics 4PL logistic providers. Here's a look at how 3PL vs. 4PL work and the main differences.
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What's The Difference Between 3PL vs. 4PL?
The main difference between 3PL vs. 4PL is that a 4PL handles the entirety of a supply chain. By contrast, a 3PL is mainly concerned with handling just the logistics management process.
3PL vs. 4PL is hotly debated between companies these days about which model is superior. Each one works better for different situations, and understanding how 3PL and 4PL logistics differ is crucial for every company.
Some of the key differences between 3PL vs. fourth party logistics 4PL include:
- 3PLs are more suitable for small or medium businesses, while 4PLs are generally better suited to medium or large firms
- 3PLs focus more on daily operations, while 4PLs function at the optimization and integration level
- 4PLs can effectively coordinate the activities of 3PLs when comparing 3PL and fourth party logistics 4PL
- 3PLs don't own assets like trucks and warehouses as fourth party logistics 4PLs do
- 3PLs are focused more on one-off transactions, while 4PLs provide a higher level of logistics services for a great value when comparing 3PL and 4PL logistics
- 3PLs cost less because 4PLs outsource both the organization and oversight of their supply chain to a 4PL provider
What is 3PL?
Third-party logistics (3PL) is a model where a manufacturer outsources its transportation and logistics operations to a third-party provider.
3PL vs. 4PL are similar in many ways but differ in some key respects. A 3PL provider working for a farm may handle packaging, storing, and transportation of the farm's produce. Unlike fourth party logistics 4PL, however, it won't oversee the entirety of the supply chain management and organization.
Some of the services rendered by 3PL include:
- Inventory storage
- Proper inventory management
- Customs brokerage
- Freight forwarding
- Contract management
- Picking and packing of goods
- IT solutions
Pros & Cons of 3PL
3PL providers serve as the middle-man between manufacturers and retailers. We will look at the advantages and cons of using a 3PL provider to help you decide whether 3PL or fourth party logistics 4PL is best for your business.
Pros of 3PL
- It saves time and money
- Great for local and international distributions
- Affordable for small businesses with fast-growing orders
- Ability to have control over returns
- Responsive logistics model
Cons of 3PL
- Less control over inventory
- Expensive if charges are low
- Only suitable for small or medium businesses generally.
- Limited control over the customer service experience and order fulfillment
3PL companies manage the relationship between manufacturers and retailers, but they don't own the products that are shipped. If you find that your supply chain is too complex to manage effectively on your own, you may want to consider using a third-party logistics (3PL) provider.
What is 4PL?
Fourth party logistics 4PL services oversee the organization and management of a whole supply chain for manufacturers and wholesalers. For example, the manufacturer outsources the logistics, packaging, warehousing, and product delivery to a retailer to a 4PL company. Essentially, fourth party logistics 4PL companies take control of all logistical operations for manufacturing companies.
What is fourth party logistics 4PL logistics? Some of the services rendered by 4PL logistics companies include:
- Freight sourcing strategies
- Logistics strategy
- Analysis of transportation expenses
- Analysis of carrier performance
- Effective management of third-party logistics
- Business planning
- Project management
- Proper management of inbound, outbound, and reverse logistics
- Adequate coordination of a broad supplier base in various geographic locations
- Change of management
- Network analysis and designs
- Proper inventory planning and management
Pros & Cons of 4PL
Four party logistics 4PL services, just like every other business model, come with their advantages and cons. 4PL offers the following:
Pros of 4PL
- Unique and professional support
- Effective outsourcing of all logistics needs of a given business
- Provides a single point of contact for all the parties involved in the supply chain
- It offers more sense of ownership and control over your business
- Creates a lean and affordable supply chain for improved profit margin
- Outsources all logistics to third-party professionals, letting manufacturers focus on their product
Cons of 4PL
- Minimal control over order fulfillment and logistics processes
- Maybe not cost-friendly for some small businesses and startups
Fourth party logistics 4PLs can help companies minimize supply chain errors and focus more on their product.
Transitioning to a 3PL with Easyship
Using a 3PL can be a game-changer for eCommerce brands looking to scale. However, you might be hesitating to take the next step – and we don't blame you.
Handing over responsibility requires a lot of thought and care. Your best point of contact will be a warehouse onboarding manager through this process. These consultants can give you the big picture of what happens when you outsource your shipping and logistics. Learn more about warehouse onboarding managers in this blog.
Easyship maintains partnerships with a vast network of 3PL companies around the world, plus we offer 250+ shipping solutions with up to 91% real-time shipping rates.
This means we have connections to the right people to help you store merchandise, accelerate deliveries, and cut shipping costs. Check our feature page to learn how Easyship can scale your business globally.
3PL vs. 4PL: Which is Right for You?
There are advantages to using either a 3PL or a 4PL logistics company. However, the type of company you choose is mainly determined by your existing business model, company size, budget, and infrastructure. Ultimately, the choice of logistics model depends on what works best for your own business.
With Easyship, your business can enjoy access to our global courier network with high-volume discounted rates and warehouses worldwide with both B2B and B2C shipping.
Sign up for free today to scale your business globally and efficiently!
3PL vs. 4PL FAQ
What is the 3PL vs. 4PL meaning?
3PL means a manufacturer maintains oversight of their supply chain but outsources their transportation and logistics operations to a 3PL provider. On the other hand, fourth party logistics 4PL providers oversee the organization and management of a whole supply chain.
What is 7PL logistics?
7PL provider offers both the services of a 3PL provider (warehouse and transport solutions) plus the consultation services of a 4PL. Essentially, it is the combination of both services.
Is FedEx a 3PL?
Yes, FedEx is a primary 3PL provider.
Is Easyship a 3PL?
Easyship is the leading shipping platform that connects thousands of sellers and marketplaces to couriers. You'll get instant access to our global fulfillment network with discounts up to 91% off.
Is Amazon a 3PL or 4PL?
Amazon acts as its own 4PL because they own and manage the entire supply chain.
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