3PL vs. 4PL: Which Logistics Model is Right for Your Business?

These days, it’s rare for businesses to operate entirely independently. Even retailers that operate primarily online need to coordinate with payment processing companies, shipping carriers, suppliers, and so on. These vital tasks are expensive, time-consuming, and require specialized equipment, training, and personnel. 

This is why so many businesses outsource these tasks and instead focus on their core operations. A manufacturer, for example, may outsource shipping and logistics to focus on its manufacturing process. That’s part of why we’re seeing a growing demand for 3PL logistics (third-party logistics) and 4PL logistics (fourth-party logistics) companies. 

Today, we’ll be discussing both 3PLs and 4PLs. As a business owner, how do you decide between 3PL vs 4PL? What are the benefits of each, and what are the major differences between the two?  

What is 3PL? 

We’ve talked about 3PLs in depth here before, but here’s a quick refresher. In business, “logistics” refers to how a company handles and allocates resources. Translated, it relates to how they package, ship, source, and store their products. A third-party logistics provider aims to take care of these things for a business. In short, 3PL providers handle order fulfillment. 

For example, an e-commerce shop may use a 3PL company to store their products in warehouses. When they receive an order online, the 3PL is in charge of picking, packing, and shipping the product to the customer on behalf of the e-commerce shop. 

What about 4PL? 

Unsurprisingly, there are quite a few similarities between 4PL vs 3PL. However, they differ in two significant areas: scope and scale. You can think of 4PLs as being one step up from 3PL. Instead of handling just a few things, a 4PL provider coordinates practicall…

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