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Monday, November 28, 2011

What is the Difference between 1PL, 2PL, 3PL, 4PL and 5PL logistics ?

The rise of 3PL in logistics and supply chain is now well evident but how far has 4PL developed and what is 5PL?

- A first-party logistics provider (1PL) is a firm or an individual that needs to have cargo, freight, goods, produce or merchandise transported from a point A to a point B. The term first-party logistics provider stands both for the cargo sender and for the cargo receiver.
A 1PL can be a manufacturer, trader, importer/exporter, wholesaler, retailer or distributor in the international commerce field. It can also be institutions such a government department or an
individual or family removing from one place to another.
Anyone having goods moved from their place of origin to their new place is considered to be first-party logistics provider.

- A second-party logistics provider (2PL) is an asset-based carrier, which actually owns the means of transportation. Typical 2PLs would be shipping lines which own, lease or charter their ships; airlines which own, lease or charter their planes and truck companies which own or
lease their trucks.

- A third-party logistics provider (3PL) provides outsourced or 'third party' logistics services to companies for part or sometimes all of their supply chain management function.
Well known 3PLs include DHL, Wincanton, Norbert-Dentressangle, CEVA & NYK Logistics

- A fourth-party logistics provider (4PL) is an independent, singularly accountable, non-asset based integrator who will assemble the resources, capabilities and technology of its own organisation and other organisations, incuding 3PLs, to design, build and run comprehensive
supply chain solutions for clients.

- A fifth party logistics provider (5PL) will aggregate the demands of the 3PL and others into bulk volume for negotiating more favourable rates with airlines and shipping companies.
Non asset based, it will work seamlessly across all disciplines.
The central ethos of 5PL is its commitment to collaboration and to obtaining a higher degree of resource utilisation in order to achieve savings and open up opportunities to secure the best possible solution at minimum cost/carbon etc.

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