3PL versus 4PL logistics: Similarities & differences
To choose between 3PL and 4PL providers, learn how each one can help your logistics operations
Many shippers hire logistics companies to help them get products from point A to point B. But what kind of logistics service providers are there to choose from? The two most popular options are third-party logistics (3PL) companies and fourth-party logistics (4PL) companies.
3PL companies are specialized service providers that handle the logistics processes and transportation management between a manufacturer or a warehousing specialist and a supplier. They commonly subcontract outside companies to provide supply chain services for their clients.
3PL providers include couriers, freight forwarders, and other organizations that integrate transportation and logistics services.
4PL companies are often called “lead logistics providers.” While they provide the same basic services as 3PL companies, there’s one significant difference: 4PL companies also handle comprehensive supply chain solutions on behalf of their clients..
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Key Differences Between 3PL & 4PL
3PL companies typically only handle one aspect of supply chain management. They act as intermediaries and outsource transportation or logistical services to subcontracted companies. Companies hired by a 3PL service provider are responsible for ensuring shipments reach their destination on time and under budget.
In contrast, 4PL companies manage their client’s supply chain. While 4PLs also subcontract logistical and transportation services, they take it a step further by helping to make their customer’s supply chains more efficient. They can also manage 3PL companies for their clients.
Sometimes, 3PL companies that offer diverse services band together to form a 4PL company. Merging into a joint venture allows them to provide a comprehensive solution to suppliers.
Empty Trucking Position
Self-driving trucks may fill empty trucking positions
Finding qualified LTL drivers has been a growing issue for years. Today, carriers are investigating new solutions. Self-driving trucks are being tested, and may eventually be a viable option for long and short-haul jobs.
Removing a human driver from the equation may increase safety by eliminating fatigue risk. It will also dramatically reduce transportation costs, and will allow LTL carriers to expand routes to locations that were previously not feasible.
A wide range of innovations are taking shape in the freight-transportation industry. From better logistics tools to self-driving trucks, these technologies will have a significant impact on the future of freight shipping.