Houston, Texas

Most people are familiar with the term 3PL or third-party logistics, but did you know other types of companies offer different logistics solutions? It’s true! In fact, these companies start at 1PL and go all the way up to 5PL, with each of them offering varying levels of professional logistics services.

The main difference among 1PL, 2PL, 3PL, 4PL, and 5PL is their services. For example, as many of you may know, a 3PL offers companies help with warehousing, distribution, and order fulfillment. Hence, a logistics provider can help take care of many eCommerce business elements while not forgetting about the management of raw materials. So, today we’ll discuss 1PL vs 2PL vs 3PL vs 4PL vs 5PL and explain the differences among services offered.

Table of Contents

1PL vs 2PL vs 3PL vs 4PL vs 5PL

What is a 1PL?

A 1PL is a first-party logistics provider that can be an individual or company that needs to have products or goods delivered or cargo shipped via air from one location to another. Common examples of 1PLs are cargo receivers and cargo senders, or more specifically, you can consider a grocery store and the farm they source goods from as 1PLs.

What is a 2PL?

A 2PL is an asset-based hauler that’s responsible for the actual transportation of goods or products. Examples of a 2PL include any shipping carrier that operates airlines, ships, or other vehicles for transporting packages. Many also refer to 2PLs as forwarders because their industry usually supplies transportation. For example, FedEx and UPS are both examples of 2PL companies.

What is a 3PL?

A 3PL is also called third-party logistics, and it refers to the outsourcing of logistics and other supply chain operations to deliver a company’s goods to a customer. Such companies generally offer services such as packing, sorting, receiving, storing, and shipping. Some 3PLs also provide other services such as postponement packaging, inventory management, and kitting and assembly.

The reason 3PLs are so popular is that most have been in business for years and have the proper leverage and knowledge to make the process quicker, simpler, and more cost-effective for their customer. Learn more about the benefits of using 3PL’s by clicking here.

"A 3PL is also called third-party logistics, and it refers to the outsourcing of logistics and other supply chain operations to deliver a company’s goods to a customer. Such companies generally offer services such as packing, sorting, receiving, storing, and shipping."

What is a 4PL?

Fourth-party logistics companies, or 4PLs, are integrators of everything to do with the supply chain. These partners go beyond just handling logistics; they also offer finance, IT, and procurement services most times.

While a 4PL sounds similar to a 3PL, the differences are enormous for growing businesses. For instance, both companies rely on the latest technology to optimize our supply chain regarding accuracy and communication. However, 3PLs are more likely to use proprietary systems for tracking items across the supply chain. At the same time, a 4PL will offer the highest levels of data analysis to help guide decisions for long-term growth.

What is a 5PL?

5PLs are the newest logistics partners on the scene. These companies offer fully integrated logistics systems that follow the supply chain from start to finish. These companies are meant to help give you real-time visibility and complete control over your entire supply chain, regardless of how many suppliers are involved. Hence, it’s critical that you ensure that each 5PL is equal in IT integration and computer systems.

1PL, 2PL, 3PL, 4PL, 5PL

The Bottom Line

Like with anything else related to business, each logistics option has pros and cons. Rather than getting too wrapped up in the acronyms, take a step back and determine what exactly your business needs. If you’re looking for a simple system, then a 1PL is perfect, but if you’re looking to give up near-complete control of your supply chain, then a 5PL is the better option. In the end, what you need will depend on your industry and company’s individual needs. Which do you think is the best for most businesses? Leave a comment below!

TALK TO A HOUSTON-BASED 3PL NOW

Speak to us regarding your 3PL needs
A Definitive Guide to the Dynamics of E-commerce and 3PLs

This comprehensive guide delves deep into the role and impact of third-party logistics providers (3PLs) in e-commerce. We dissect the complexities of warehouse selection, order fulfillment, and logistic providers’ offerings while shedding light on the inevitable growth and challenges of e-commerce logistics

Read More »