What’s the Difference Between a 3PL and 4PL Provider?

  • September 11, 2022
  • Blog

For years, third-party logistics (3PL) companies have helped businesses scale their operations globally and reduce warehousing and distribution costs. 3PL companies handle essential logistics functions, like supply chain management, warehousing, freight consolidation, and order fulfillment. By outsourcing to a 3PL provider, businesses of all sizes can access professional freight forwarding capabilities without paying for an in-house logistics team.

However, as technology has evolved, a new role in supply chain management emerged: fourth-party logistics or 4PL. While 3PL companies typically handle the warehousing and distribution of a company’s freight, 4PL companies occupy a more digital role. 4PL providers rely on data and technology to advise companies how to maximise logistics management and meet business goals.

 What Does a 4PL Provider Do?

Both fourth and third-party logistics companies play a vital role in freight forwarding for businesses. A step removed, 4PL companies can help maximise the effect of 3PL companies by helping clients understand freight sourcing, transportation expenses, carrier performance and other key data points.

 A 4PL provider analyses data about:

  • Freight sourcing and supplier base
  • Logistics
  • Transportation expenses
  • Carrier performance
  • Business planning and project management
  • Capacity utilisation
  • Inventory planning and management
  • 3PL management

Advantages of 4PL for Businesses

Data from 4PL providers can help businesses understand and communicate the logistics process. First, this benefits stakeholders and customers. Increasing visibility into the supply chain can streamline shipping and gives businesses the ability to provide real-time updates about shipping statuses. Second, this enables large and small businesses to make more informed decisions about warehousing, distribution, freight, and information technology.

Disadvantages of 4PL for Businesses

Unfortunately, sharing logistics between a 3PL and 4PL provider can complicate business processes. Adding another step to the supply chain gives businesses less control over fulfilment and logistics and outsourcing to two separate companies can increase costs.

So, how can businesses take advantage of the benefits of 4PL without negative repercussions?

Find A Freight Forwarding Company That Does Both

Businesses should find a full-service 3PL company that also provides technology solutions to streamline the entire supply chain. There’s no reason to outsource logistics management to a 3PL and 4PL provider separately when you can streamline processes even further with a company that provides both.

Luckily, 20Cube Logistics provides 3PL and 4PL services tailored to address our clients’ needs. We handle day-to-day supply chain management and provide comprehensive data to optimise processes and decision-making.

Our MyHub management system tracks more than 25 key milestones in the shipping and logistics process, empowering you with the data you need to make smarter decisions about your supply chain. This data includes information about:

  •     Purchase orders
  •     Cargo ready dates
  •     Compatible shipping options for your bookings
  •     Production and shipping statuses and alerts
  •     Confirmations of departures and arrivals
  •     Customs clearance
  •     Tracking for split orders
  •     Proof of delivery
  •     Vendor management
  •     Compliance management
  •     Logistics documentation

 The advantages of digital logistics can help you realize both direct and indirect cost savings. To learn more about outsourcing your logistics needs with our 3PL and 4PL services, set up a consultation with 20Cube.