There are various levels of logistics services including 1PL, 2PL, 3PL, 4PL, etc. Part of this arrangement is to deal with the complex requirements of the market today. New levels are increasingly being created to deal with business problems in the most efficient way possible. Currently, the most common categories include 3PL, and 4PL.
• First-party logistics – 1PL The term first-party logistics (1PL) describes companies that use their own capacities (trucks, warehouses, etc.) to store and deliver goods to their customers. They built up their own internal capacities to handle all transport, handling, and storage operations (trucks, warehouses, etc.).
• Second-party logistics – 2PL Service providers who provide transport, handling, or storage services for companies are referred to as second-party logistics (2PL) providers. A typical 2PL providers include freight forwarders, shipping companies, forwarders, and warehousing companies as well as providers of courier, express and parcel services (CEP services). Therefore, 2PL service providers often own and use specialized means of transport to cater to their specific transport work, take on the role of transport of a particular stage or provide a single shipping service in the logistics chain of a client company.
• Third-party logistics – 3PL The 3PL provider is wholly integrated into the processes of their customers, and is neither easily interchangeable nor replaceable, as the manufacturer/ trader usually dismantles its own infrastructure completely. They organize the flow of goods and information for their customers and take over their entire logistics processes. They also include further value-added services in their offerings warehouse and transportation services activities such as production or procurement of goods, order fulfillment, labeling, packaging, assembling, kitting, reverse logistics, information technology services, customs brokering, cross-docking, and forwarding. Long-term partnerships between the logistics service provider and the customer are often the result.
Sometimes 3PL take orders themselves and process them. A 3PL provider can handle invoicing and monitor payment. A 3PL company can also handle return acceptance and repairs. This allows companies to reduce their fixed capital considerably, as they do not have to buy and maintain their own warehouse or fleet. By outsourcing the logistics area, customers can focus on their core competencies.
• Fourth-party logistics – 4PL They are understood as asset-free system integrators who acts as a neutral intermediary between their customers other logistics service providers (3PLs) to ensure the coordination and organization of all business processes along the value chain. The particular task of a 4PL provider is, therefore, to take over the control and integration function within the supply chain without its own operating resources and to increase the efficiency of the supply chain.