There are many needs within the supply chain space. Needs that get filled by companies that can take on the challenges and excel. The most common is a third-party logistics company (3PL), there are however 4PLs and even 5PLs. So, what is the difference between a 3PL, 4PL, and 5PL?
What is a 3PL?
Let’s start by identifying what a 3PL is. A 3PL can be defined as a company that handles the shipper’s transportation and logistics activities between the consignor and consignee (aka the sender or the receiver). A 3PL is a separate entity that is brought on to simply pick up the freight from the consignor and deliver it to the consignee.
This process isn’t always a direct line. Sometimes the 3PL will need to store the freight for a period of time or in some cases, such as with a white glove shipment, they may be responsible for installation. These additional services are rarer but do happen. Additionally, it’s important to note that some 3PL’s focus entirely on one aspect. Some only will offer warehousing services while some will only offer transportation services.
So, to summarize, a 3PL can be responsible for any of the steps between the current location of the freight and its final destination. Now, let’s take a look at 4PLs
What is a 4PL?
A 4PL is everything a 3PL is with the addition of planning, information technology integration, transport planning, order tracking, and tracing, logistics consulting, and financial services. 4PL’s should aim to be the one-stop shop for the manufacturer’s logistics requirements.
A 4PL will generally have complete oversight of their partner’s supply chain and as a result, can offer strong logistics services and consultation. Most 3PL companies will naturally try to turn into 4PL companies, even if only for a couple of customers. As a 4PL they can provide better services and integrate completely with their partner’s supply chain.
Now that we have defined 3PLs and 4PLs, let’s take a look at what a 5PL company is.
What is a 5PL?
A 5PL is a company that offers overall logistics solutions for a partner’s entire supply chain. So what does that mean? With both 3PLs and 4PLs, the shipper is reaching out and letting them know that they have some freight that needs shipped. Well, a 5PL is even taking on that responsibility. They become an integrated part of their partner’s supply chain. A 5PL may even then build partnerships with other 3PL and 4PL if it is advantageous to the customer.
Partnering with a 5PL takes a lot of trust, communication, and experience. They can, however, be a great asset. When you know that your shipping is completely handled by a group of experts you can then focus on the areas of your business that you excel in.
The Key Difference between 3PL, 4PL, and 5PL
In summation, the differences between 3PL, 4PL, and 5PL is the level of integration and involvement in their customer’s supply chain. A 3PL is there to simply fulfill the orders of the shipper. A 4PL is there to fulfill orders, find, and make improvements. Then, a 5PL is there to handle each and every aspect of the supply chain.
No matter what level of logistics provider you plan on using it needs to be with a company that you trust. Shipping and logistics are built on trust, reliability, and communication. At Becker Logistics, we base everything we do on integrity. We make sure that each promise is fulfilled and every service offered. We are able to handle every supply chain need of our customers and have the team and technology to make it work. To see if Becker Logistics is the right company for you reach out and contact us. Additionally, if you wish to get started today, click here and request a quote.
