It is possible that you have ever come across the 1PL, 2PL or 3PL nomenclatures when it comes to logistics. These acronyms serve to differentiate different kinds of logistics providers, depending on the role they play in the company’s supply chain. If you had the doubt about its exact meaning, we will try to help you with it.
The name X-PL corresponds to a number (X) followed by the initials PL ( Party Logistics, or logistics providers ). Thus, each number corresponds to a type of logistics operator, attending to its functions and its integration with the loader that demands its services.
Types of logistics providers or PL
The five types of PL in logisticts are explained below.
Logistics providers 1PL
Interestingly, at 1PL we meet companies when they do not hire external logistics providers to fulfill their transportation needs. That is, when the companies carry out the transport service to the customer themselves, whether they are merchants, manufacturers, etc. Sometimes the company that receives the merchandise is also considered as 1PL, in the sense that it can also take care of the logistics of the merchandise received without the help of third parties.
2PL logistics providers
In this case, the logistics provider is already entered as an external agent. What is characteristic on this occasion is that the 2PL has the necessary physical means: the trucks, boats, or planes in which the merchandise travels are its property.
3PL logistics providers
In 3PLs, the complexity of operations increases. Here we are no longer just talking about transportation. A 3PL operator, in addition to transportation, will carry out warehousing tasks (which may include order preparation, inventory management, packaging …) and will be more involved in the supply chain as a whole. Usually, here you can establish the difference between logistics operators versus the name of carriers, who are focused more exclusively on the transit of materials.
4PL logistics providers
Here we are faced with a different type of outsourcing. A 4PL operator is hired to design the customer’s supply chain, subcontracting the physical execution of said chain. The 4PL logistics provider, contrary to what we have seen in other cases, is not the owner of the physical means with which the task is carried out. It is common, however, that he owns technological products – traceability, warehouse management, production, demand prediction … – that help design and control the supply chain of the client who hires him. It is closely related to consulting and in some cases, it is also used to evaluate the performance of the 3PL operator or the supply chain “from outside”.
5PL the last to arrive
5PL companies perform demand aggregator functions . Its customers are shippers with logistics and transportation needs, and the 5PLs take care of finding the right suppliers for them. Its value lies in trying to get better prices through large volumes and in finding quality and suitable suppliers for each type of service that its clients need.
These are the five most common types of logistics providers . In them we can see from the simplicity of the company that manages itself, to the tasks closest to the consulting or logistics operators that deal with complex processes with their own resources.