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What Is a 4PL in Logistics?

October 30, 2023 Kevin Baxter

Logistics Management 4PL

The abbreviation of 4PL in logistics describes a fourth-party logistics provider. The distinction of a 4PL is that rather than handling some shipments here or there for companies, the 4PL handles just about the entirety of a shipper's freight operations. In other words, that description sounds a lot like a Managed Transportation Service offering. A 4PL can be a non-asset logistics service provider from either the freight or warehousing (or both) sides of the logistics and supply chain industry.

3PL vs. 4PL

When it comes to the difference between a 4PL and a 3PL, the more common term is the latter, which refers to third-party logistics providers. A 3PL refers to a company that offers outsourced logistics and supply chain service solutions for shippers, a similar definition to 4PL. The distinction is that a 3PL is often used a la carte, as in, companies that use one can select from freight brokerage, transportation management, managed TMS, warehousing, cross-docking, inventory management, packaging and freight forwarding services - and add or subtract those services as their requirements dictate.

A 4PL is similar to a consultant, brought in to manage - or in essence be - a company's freight and logistics shop, meaning that business will not have any of those resources (people, equipment, etc.) in-house. The 4PL may use multiple 3PLs, carriers and other types of service providers to accomplish their freight movement tasks, as they do not have their own assets. When it comes to 3PLs, some are also non-asset providers, while others have some of their own containers, trucks, warehouses, etc.

On the 4PL side, they oversee every aspect of a shipper's supply chain to ensure successful movement throughout, serving as the single point of contact along the way, whereas 3PLs typically (though not always) serve more of a supplemental role. The overall management function of the fourth party logistics provider is the reason for its other moniker of lead logistics provider (or LLP in case you were looking for another abbreviation).

Of the two "PLs," 3PLs are by far more prevalent, as there are more than 20,000 in the U.S. as of last year. Also notable, a recent Armstrong & Associates study indicated 90% of Fortune 500 companies use at least one. That isn't to say that the 4PL market is small or stagnant. In fact, while a 2021 survey showed about 10,000 companies used a 4PL, that number is expected to double by 2030 with the retail market leading the way due to a heavy focus on fulfillment.

If you're looking for a 3PL - or interested in having your entire shipping operation managed by a well-regarded, well-connected, experienced logistics service provider - just let us know, and we'll work with you to determine the best direction for your business. For more information about InTek, or logistics and supply chain issues in general, check out our Freight Guides. And while we weren't focusing on intermodal in this piece, that is a bit of our specialty - and Feedspot agrees, naming our blog one of the 10 Best Intermodal Blogs

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