1PL, 2PL, 3PL and 4PL

Today I will try to shed some light over some terms that from my point of view are slightly confusing and controversial sometimes due to the inconsistent definitions many websites and companies itself have used.

What 1PL, 2PL and so on stand for?

-          1PL or First Party Logistics: A First party logistics provider is a company or an individual that need a product to be transported from a point A to a point B.

Example: Company A needs its product to be transported to the company B. They are both 1PL.

-          2PL or Second Party Logistics: A Second party logistics provider specializes in one particular area of the supply chain, usually transporting goods from one point to another. This company owns the means of transportation.

Example: Company A delivers company´s B merchandise with its own means of transportation, Company A is a 2PL. DHL or UPS are 2PL.

-          3PL or Third Party Logistics: A Third party logistics provider is a company that can be used to satisfy most or all the logistics needs of a company. Things that can be outsourced are transportation, warehousing, packaging, distribution and so forth. 3PL companies usually hold and transport goods without actually owning them.

Example: Company A outsources part or all its logistics to a Company B which takes care of the whole process. Company B is a 3PL. Norbert Dentressangle is a 3PL.

-      4PL or Forth Party Logistics: A Fourth-party logistics provider don´t necessarily provides logistics services itself but rather gives advice and solutions to other companies regarding their logistics. This service might include the use of multiple 2PL and 3PL providers to build and run the most successful supply chain solutions

Example: Company A advises Company B to use Company C for their supply chain and logistics needs, Company A is a 4PL. For example Deloitte and Accenture are 4PL.

I hope this post has helped to clarify the concepts of 1PL, 2PL, 3PL and 4PL.

Recently the 5PL acronym has came up but this is just an extension of the 4PL concept that is mostly used for companies that want to seem cutting edge enterprises.