What is 1PL, 2PL, 3PL, 4PL, and 5PL? Is there anything like 6PL in logistics?

Logistics is simply explained as the process of planning, designing, and executing the efficient transportation and storage of goods from the origin point to the customer's hand or point of consumption. The goal of logistics is to meet the customer requirements in less time and at less cost.

In Supply chain management, logistics is the main node of the entire network. If it goes well that helps increase the sales and profits of businesses that deal with the production, shipment, warehousing, and delivery of products. Furthermore, a dependable logistics service can increase the worth of a company and assist in preserving a great public image. But, not each and every business could do their logistics along with their actual work like manufacturing, warehousing, and so on. So here they started giving their responsibility out their company which is called outsourcing.

They are numerous outsourcing methods are there in the market, they are 1PL, 2PL, 3PL, 4PL, and 5PL (PL stands for Party Logistics). 

1PL or First party logistics:

The 1st party logistics to referred to a firm or individual, that has its own cargo, and freight and can transport goods and merchandise from one point to another point by itself. Particularly, the consignors of different goods and products and organises the transport of products to their respective destinations. Actually, there are two parties getting benefits one is the consigner and another one is the consignee, strictly no middle man involved which better explains the 1PL.

2PL or Second party logistics:

The Second party logistics is easily described as transportation with the middleman. In the previous case, there was no middleman involved to do anything meanwhile 2PL simply give their transportation burden to another organisation. They are purely asset-based carriers and they do transportation operations for their clients by leasing the ship and airlines by contract. Mostly, 2PL is used by the companies when they need to export their goods globally.

3PL or Third-party logistics:

Here comes the most famous and main part of the list, which is 3PL or Third-party logistics. The main and huge example of this type of outsourcing is the Amazon e-commerce platform. They are currently peak in their 3PL service from the multiple suppliers to the multiple end customers. The functions of 3PL include warehousing, transportation, custom brokerage, and also some other supply chain management stuff and more. It also helps with IT support and it literally acts like a very important and main attribute of each and every business they operate.

4PL or Fourth party logistics:

In this 1PL, 2PL, 3PL, 4PL, and 5PL, this Fourth party logistics is the new and leading one. More often it is also called a Lead logistics provider. Mostly, this 4PL is treated as the consulting firm for the supply chain because it will take full responsibility for the entire supply chain like it is its own business. Many times 4PL providers make huge decisions on the clients' business. They act like head administrators of the business and have frequent contact with 3PL to maintain them as well.

5PL or Fifth party logistics:

The Fifth party logistics provider is also known as a logistics aggregator, because, they combine the demands of the multiple 3PL. This technique allows them to negotiate better carrier rates. Also, customers can use the 5PL to operate all aspects of the supply chain effectively.

Nowadays 3PL is really famous and used by more companies meanwhile 4PL and 5PL are new to the market. Some experts say that there will be more chances for the arrival of 6PL and rule the logistics or supply chain empire. 6PL or Sixth party logistics are nothing strange, that going to be fully automated and mostly logistics will be done by drones. Also, it will do the all process of the supply chain like 3PL, 4PL, and 5PL.

Posted by

Lokesh Venkatachalam