There is often confusion about the difference between a 3PL and a 4PL. Despite their similarities, they are both unique in what they supply and to whom. This article will explain the roles and characteristics of the two logistics providers and how they function in the e-commerce industry.
What is a 4PL?
A fourth-party logistic provider (4PL), also called lead logistics providers (LLP), is a type of logistics company that takes on some of the same roles as third-party logistics (3PL) providers while also having more accountability and responsibility in the process. Their primary job is to manage and delegate parts of the supply chain, transportation of goods, shipping orders, and managing multiple 3PLs: work independently and use a separate operational system even when within the 4PL’s network.
Characteristics of a 4PL
Outsources the logistics management and services of a 3PL provider and oversees the freight forwarders and last-mile logistics throughout the supply chain
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 Fulfillment Network and ShipHero.
Add warehouses to their network quickly, which allows merchants to expand their distribution network.
Manage the supply chain: they act as the single point of contact for operational support and communication with other vendors.
4PLs don’t own assets: they do all the coordinating for transportation, warehousing, and shipping services with other logistic companies. 4PLs work with other vendors including a 3PL to find ways to streamline their client’s supply chain.
Differences Between a 3PL and a 4PL
Manages entire supply chain including fulfillment, transportation, and technology.
Focuses on order fulfillment: prep, pick, pack, transfer, and shipping.
Partners with merchant only when supply chain issues arise.
Partners with merchant for every step in the fulfillment process.
Manages communication on behalf of the merchant to various vendors and 3PLs.
Assigned account manager to the merchant and 24/7 customer support.
Enterprise business level (large corporations)
Rapid growth business level (startups, small businesses, niche companies, medium-sized corporations, large corporations)
While there are advantages in entrusting your business to a 4PL, in terms of scalability, a 3PL would be better suited. The 4PL is more strategic in its supply chain operations, but a 3PL is always there to support you in all aspects of the fulfillment process. Likewise, at ShipSage, our account managers are equipped to guide you through business growth. Our customer support service is available to help you 24/7 with your business needs. ShipSage pricing models can accommodate any business size and budget. Our service is simple to use, speedy and efficient, and provides scalable solutions. Leave your fulfillment to us!