What's the difference between fourth party and third party logistics?

3 rd party Logistics is a service provider for any manfacturing,production,retailing,distriubuting industries. This3rd party oly dealt the logistics and value added services.

But the4th party logistics are managing2 or3 logistics parties in a org., is called as foruth party logistics

Third-party logistics providers (3PL) provide logistics and supply chain management to customers, while fourth-party logistics providers (4PL) integrate the resources of all components of the supply chain in order to build improvements and provide expertise to the entire supply chain management function

Quickly and in a few words, the3PL (Third-Party Logistics provider) is warehouse&transport outsourcing. The4PL (4th-Party Logistics Provider) is I.T. flow management

A3PL targets function or set of functions whereas a4PL targets management of the entire process. Therefore you would find in some cases that a3PL is managed by a4PL providers. 

The differences between third and fourth party logistics has been a talking point within the warehouse logistics sector for some time. While some might have a very clear outlook as to what the main differences are, others may be more hazy on the subject. To understand what the differences are between the two, it is advisable to understand what each service offers.

Third Party Logistics

Third party logistics is when a company outsources it’s section of logistics operation to a specialist company. Examples of third party logistics providers would be those that offer warehousing and distribution, tracking and tracing and specific packaging. Third party logistics often target a specific function and also have operations in cross-docking, warehousing and freight forwarding. Third party logistics may also be known as3PL. The term3Pl was introduced in the1970s to distinguish companies that offered contracts for transportation.

The differences between third and fourth party logistics has been a talking point within the warehouse logistics sector for some time. While some might have a very clear outlook as to what the main differences are, others may be more hazy on the subject. To understand what the differences are between the two, it is advisable to understand what each service offers.

Third party logistics is when a company outsources it’s section of logistics operation to a specialist company. Examples of third party logistics providers would be those that offer warehousing and distribution, tracking and tracing and specific packaging. Third party logistics often target a specific function and also have operations in cross-docking, warehousing and freight forwarding. Third party logistics may also be known as3PL. The term3Pl was introduced in the1970s to distinguish companies that offered contracts for transportation.

While there is a basic outline as to what classes a provider as a3PL, it’s worth noting that not all3PLs will supply the same service as each other, and will all provide a service tailored to their business model. Take a look at our post on ‘How to choose a3PL’.

Where third party logistic companies would provide certain aspects of logistics, companies that offer fourth party logistics would take on the responsibility of a company’s whole logistics operation. This could be via an independent company, or a company set up under the same umbrella, but is classed as a separate company that deals exclusively with the logistics side of the business. In this regard, it is also possible for a third party logistics company to form a fourth party logistics agreement with a company.

Forth party logistics are also known as4PLs, a term that was first introduced in1996, albeit with a slightly different definition. Accenture described4PLs as a supply chain integrator that uses its own resources to offer a supply chain solution, but this term is no longer registered.4PLs are also known as “Lead Logistics Providers” and it’s not unusual to see4PLs who also operate as transportation companies. A4PL would be a service provider that doesn’t own any assets, but will manage the entire logistics for a company.

Those within the logistics sector also see4PLs as independent, with no assets or employment affiliation with the company they are providing logistics services for. Some also see4PLS as being more focused on strategic approaches in the way it operates.

As you can see, in today’s evolving world, it can be somewhat difficult to determine if a company is a3PL or4PL, or indeed both. People will also perceive companies as3PL or4PL depending on the services they offer and the approaches they take within their business model. The most straightforward way to determine if a company is3PL or4PL, is whether that particular company uses its own resources and technology to run a supply chain for its customers, if it does, then it would be classed as4PL, whereas3PLs would provide services for some or all of a customer’s logistics requirements.