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What are 1PL, 2PL, 3PL, 4PL, and 5PL in logistics?

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Companies in various sectors must optimize their delivery processes and streamline production capacities to meet customer demand for goods and products. This is especially important for large companies, where adapting to the changing conditions of the global economy often requires additional efforts in organizing supply chain logistics or ensuring logistics management processes.

Party logistics (PL) defines and differentiates several levels of logistics management. Based on the specific needs of a particular company, there is the possibility to partially or fully entrust logistics management to external logistics control. Party logistics transportation systems distinguish five levels of service logistics: 1PL, 2PL, 3PL, 4PL, and 5PL.

What is 1PL (First-Level Service Provider)?

A first-level service provider (1PL) is a manufacturer or distributor (physical/legal entity) that delivers its goods directly to customers or retailers, i.e., the delivery process is ensured without intermediary involvement – for example, a local honey producer who delivers the produced honey jars to their retail locations.

What is 2PL (Second-Level Service Provider)?

A second-level service provider (2PL) is a cargo carrier that, according to the specific characteristics of the cargo, ensures cargo transportation and is responsible for providing the appropriate mode of transportation, delivering goods from point A to point B. For example, a transportation company whose services are used by a local manufacturer to deliver products to retail locations.

What is 3PL (Third-Level Service Provider)?

A third-level service provider (3PL) is an intermediary between the manufacturing company and the carrier (2PL), delivering goods to the required route endpoints. A 3PL company uses outsourcing services, ensuring supply chain monitoring and overseeing cargo transportation, but delegates its logistics and transport to an external service provider.

What is 4PL (Fourth-Level Service Provider)?

A fourth-level service provider (4PL) uses external services for logistics operation management, objectively managing and optimizing communication and precision in all aspects of the supply chain. 4PL can provide high-level data analysis, including costs and competitors, which helps the client company make appropriate business development decisions.

What is 5PL (Fifth-Level Service Provider)?

A fifth-level service provider (5PL) is the most comprehensive form of supply chain management, with 5PL introducing its solutions and developing new company growth strategies. Operating as a strategic partner for the company and involving multiple outsourcing services in each supply chain segment, 5PL fully manages the company’s logistics processes and assumes binding responsibilities.

1PL to 5PL comparison

PL LevelIncluded services
1PLFirst-party logistics includes companies that are senders and recipients of goods or cargo. This is a straightforward system, and the company has complete control over the delivery process.
2PLSecond-party logistics includes cargo transportation, i.e., dispatch services. The forwarder chooses an appropriate mode of transportation to deliver the company’s cargo to the recipient using a suitable vehicle.
3PLThird-party logistics services include receiving, storing, packaging, and dispatching. Sometimes, 3PL offers value-added services: assembly, inventory, and goods return management and installation.
4PLFourth-party logistics, in addition to managing 3PL, includes advanced IT solutions, procurement, and financial elements, including data analytics, objective logistics strategy development, and project management.
5PLFifth-party logistics includes fully integrated logistics solutions, optimizing all supply chain stages. 5PL introduces its solutions in ordering, warehouse, and transport management systems through analytics.

In evaluating each company’s need for logistics management and the provision of related party logistics services, we invite companies to recognize the binding party logistics models that match specific company goals and help develop business ideas in the long term.

Madara Jātniece

Madara Jātniece

Madara works with local and international clients, constantly identifying new opportunities for collaboration related to transportation services and the logistics solutions offered by SIA "RITLOGISTIKA".

+371 2566 8333