3PL and 4PL logistics are similar, but do you truly know the intricacies between them?
15 August 2023
Traditional 3PL service providers offer transactional logistics services either by utilizing their own assets or sourcing these assets elsewhere. In contrast, a 4PL is a dedicated global logistics partner that manages customers’ networks on their behalf, including contracted carriers, vendors, brokers, haulers, and other key groups. A 4PL also supports your company’s digitalization via improved operational efficiencies and enhanced cargo visibility.
Imagine if your business communicated through a single, dedicated control tower that assumed full responsibility for the success of your supply chain operations. That’s what we do.
Logistics outsourcing emphasizes long-term strategy because a 4PL organizes and orchestrates your end-to-end supply chain. They operate as an extension of your logistics department to execute requested services based on existing contracts. A 4PL will also help you identify new services to meet your needs when contracts do not meet the appropriate requirements. Over time a 4PL service provider will acquire a thorough understanding of your business to become an integral part of your supply chain.
A 4PL functions like a brain within the human body: managing a sensitive, complex central nervous system. Within such a system, any minor change could cause ripple effects throughout the entire entity, altering how it reacts in real-time.
A 4PL recognizes that any imperceptible event will at least slightly alter the current situation, and perhaps even the entire plan. Importantly, a 4PL can tweak plans when disruption occurs while working closely with clients to find solutions that mitigate risk in their supply chain.
4PL service providers operate from a neutral position specifically to augment clients’ business capabilities. A 4PL service provider does not own physical assets (ships, planes, etc.) that can influence its decision-making, and the relationship is characterized as mutually beneficial, often supported through gainsharing agreements. These business dynamics incentivize a 4PL to provide the supply chain solution that is in the customer’s best interest rather than the solution it’s in the best position to provide.
A 4PL will analyze your unique challenges and risks to identify potential areas for improvement and develop customized logistics solutions. An established 4PL partnership allows your company to focus more on its core strengths or urgent needs, whether that be sales strategy, market expansion, or anything else. Without worrying about logistics management, you are free to allocate resources and fuel growth elsewhere.