While researching fulfilment providers, you will likely come across two different terms: ‘3PL’ and ‘4PL’. While 3PLs are much more common, both terms relate to the outsourcing of fulfilment and ecommerce logistics services, so it’s important to understand the difference between the two.
In this article, you’ll learn the major differences between a 3PL and a 4PL to help you decide which type of logistics provider makes the most sense for your business.
Characteristics of a 4PL
With a 4PL, you outsource the logistics management and services of a 3PL Melbourne provider as well as functions higher and lower in the ecommerce supply chain like overseeing freight forwarders and last-mile logistics.
The 4PL manages the relationship with different 3PL providers, in addition to other logistics tasks such as transportation, inventory management, and technology. Examples of a 4PL company include Shopify Fulfilment Network, Delivery, and ShipHero.
There are advantages and disadvantages to working with a 4PL. In terms of scalability, 4PLs can add warehouses to their network quickly, which allows merchants to expand their distribution network fast.
But there are some key disadvantages, including the lack of quality control, customer support, and inconsistency. Below is an overview of how 4PLs work.
4PLs manage the supply chain
4PLs act as the single point of contact for operational support and communication with other vendors. This helps streamline logistics processes for the merchant since the 4PL takes on a more strategic, operational role.
With a 4PL, the customer doesn’t have to worry about managing relationships with multiple vendors, finding ways to optimise the retail supply chain, or making decisions on logistics.
However, since every warehouse within a 4PL’s network operates independently, it can cause inconsistencies in fulfilment.
4PLs don’t own assets
Not always the case, but most 4PLs do not own or lease assets. Instead, they coordinate transportation, warehousing, and shipping services with other logistics companies. A 4PL works with other vendors, including a 3PL, to find ways to optimise the customer’s supply chain.
The Main Differences between 4PL and 3PL
The main difference between a 3PL provider and a 4PL provider is that a 4PL handles the entire supply chain, while a 3PL focuses on logistics. Each one provides its own advantages depending on your situation, so understanding what you get with each provider will help you make the right decisions for your company.
Here are some of the key differences between the two options:
- 4PL providers are better for medium-to-large businesses, while 3PL providers are more suitable for small-to-medium businesses.
- 4PL providers function at the optimization and integration level while 3PL providers focus more on daily operations.
- 4PL providers may own assets like trucks and warehouses while 3PL providers generally don’t typically own these assets.
- 4PL companies can effectively coordinate the activities of 3PL providers.
- 4PL providers provide the highest level of logistics services for a great value while 3PL providers are more focused on one-off transactions.
- 4PL providers maintain a single point of contact for every business’ supply chain while with 3PL providers, businesses often need to manage certain aspects of the supply process internally.
3PL vs. 4PL: Which is Right for You?
While 3PL vs. 4PL logistic companies offer many advantages, the choice of the logistics model you choose is mostly determined by your existing business model, company size, budget, infrastructure, and other factors. Ultimately, the choice of logistics model depends on what works best for your own business, leaving you to decide if 3PL vs. 4PL services are better.
With Easyship, your business can enjoy access to our global courier network with pre-negotiated rates and to warehouses all around the world with both B2B and B2C shipping.
3PL vs. 4PL FAQ
What is the 3PL vs. 4PL meaning?
3PL means a manufacturer maintains oversight of their supply chain but outsources their transportation and logistics operations to a 3PL provider. On the other hand, 4PL providers oversee the organization and management of a whole supply chain for manufacturers and wholesalers.
What is 7PL logistics?
the 7PL provider offers both the services of a 3PL provider (warehouse and transport solutions), plus the consultation services of a 4PL. Essentially, it is the combination of both services.
Is FedEx a 3PL?
Yes, FedEx is a major 3PL provider.
Is Easyship a 3PL?
Easyship is the world’s leading shipping platform that connects thousands of sellers and marketplaces to couriers. You’ll get instant access to our global fulfilment network. Plus, you’ll receive up to 89% shipping rates from 250+ couriers.
Is Amazon a 3PL or 4PL?
Amazon acts as their own 4PL because they own and manage the entire supply chain.
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