Procurement terms: 0-9

A first party logistics [1PL] provider is the company that is shipping the goods or the company that is receiving the goods.  As an example, company A stores and ships the finished goods to company B, who stores and ships the goods to their customers.  In this example both company A and company B are first parties in the logistics supply chain.

Second party logistics [2PL] providers are the carriers that ship and store goods on behalf of their customers. A 2PL provider is an asset-based carrier, which is the owner of the transportation being employed. Typical 2PL providers are shipping lines that own, lease or charter their ships; or trucking companies that own or lease their trucks. As an example, company A commissions company C to transport its goods to company B. In this scenario, company C is the 2PL provider. See also 2PL Logistics, 3PL Logistics, 4PL Logistics and 5PL Logistics.

Third party logistics [3PL] providers are integrated, comprehensive logistics providers whose services can include packaging, warehousing, inventory management, transportation, cross-docking and freight forwarding. 3PL providers include freight forwarders and courier companies that own or lease their assets. For example, company A outsources its outbound logistics to company D; who manages the inventory, picks and packs deliveries and ships the goods on behalf of company A, to its customer, company B. In this example, company D is the 3PL provider. See also 1PL Logistics, 2PL Logistics, 4PL Logistics and 5PL Logistics.

Fourth party logistics [4PL] providers; consultants who provide agnostic advice to clients about the optimum design of their supply and demand chains. 4PL providers diagnose the supply chain needs of their clients, and design solutions based around the integration of the capability and technology of a variety of potential providers. The difference between 3PL and 4PL is 3PL service providers can own assets and operate supply chain solutions, while 4PL providers are agnostic about what is the optimum solution and provide independent advice with operating the final solution. For example, company E recommends to company B that it outsources its logistics to a 3PL. With assistance from company E, company B selects company F to be its 3PL. In this example, company E is the 4PL provider. See also 1PL Logistics, 2PL Logistics, 3PL Logistics and 5PL Logistics.

Fifth party logistics [5PL] providers are non-asset based, service providers that integrate 3PL logistics services through technology platforms to coordinate activities, secure e-Commerce efficiencies and, aggregate the demands of 3PL providers to negotiate favourable rates with airlines and shipping companies. As an example, company A outsources its outbound logistics to company D; company B outsources its outbound logistics to company F, and company G coordinates e-Commerce efficiencies between companies D and F, enabling volume aggregation to secure the best rates on shipping terms from key 2PL providers. In this scenario, company G is the 5PL provider. See also 1PL Logistics, 2PL Logistics, 3PL Logistics and 4PL Logistics.