What is a 1PL, 2PL, 3PL, 4PL, 5PL? Functions and examples

Los logistics operators they play a fundamental role in the supply chain, since they are responsible for manage, coordinate and streamline the flow of goods and services from origin to final destination. Its function can range from basic tasks, such as warehousing and transportation, to the comprehensive management of all the logistics of a company, including technology, consulting and process optimization.

Depending on the degree of integration and control that the logistics operator has over a company's operations, we can distinguish:

1PL Logistics Operator (First Party Logistics - First Party Logistics)

La First Party Logistics (1PL) It is the model in which a company manages its own logistics activities without the intervention of third parties. This means that the company is directly responsible for transporting, storing, distributing and managing its products from their origin to their final destination.

This model is primarily used by companies with great operational capacity who can afford to invest in their own logistics infrastructure.

Key Features of 1PL

Total self-management: The company owns and manages its own logistics resources, such as truck fleets, warehouses and distribution centers.

High initial costs: Requires significant investment in infrastructure and logistics personnel.

Examples of Companies Using the 1PL Model

Coca-Cola:

• The company manages its own distribution network with factories, warehouses and a fleet of trucks to take its products to the points of sale.

Zara (Inditex Group):

• It controls its own supply chain with its own logistics centers and direct distribution to its stores in different countries.

Nestle:

• The company manages its own production and distribution chain in several markets, ensuring the efficient supply of its products.

Advantages of the Model 1PL

Greater control over the supply chain.

Long-term cost reduction (by eliminating intermediaries).

Better time management and quality of service.

Optimization of infrastructure and logistics personnel.

Disadvantages of the Model 1PL

High initial investment costs in infrastructure and vehicles.

Complexity in logistics management (need for experts and advanced technology).

Less flexibility to adapt to market fluctuations

Logistic Operator 2PL (Second Party Logistics)

La Second Party Logistics (2PL) refers to when a company outsourced specific logistics services to a specialized supplier. In this case, The company continues to manage its logistics, but outsources key functions to specialized operators to improve efficiency and reduce costs.

This model is common in companies that do not want to invest in their own logistics infrastructure, but that need to ensure an efficient distribution of their products.

Key Features of 2PL

Outsourcing key services: Companies specialized in transportation, storage or distribution are outsourced.

Focus on operational efficiency: It allows companies to optimize their logistics without making large investments in their own infrastructure.

Functions that a 2PL Logistics Operator can perform

1. Freight transport.
2. Storage and stock management.
3. Loading and unloading management.
4. Management of customs and international procedures.
5. Multimodal transport (combination of different types of transport).

Examples of 2PL Companies

DHL Freight (land transport):

• Companies that need to move goods nationally or internationally can subcontract to DHL for ground transportation.

Maersk (maritime transport):

• Many manufacturing and foreign trade companies use Maersk to ship goods through containers by sea.

UPS Supply Chain Solutions (storage and distribution):

• Companies that don't have their own warehouses can use UPS fulfillment centers to manage inventories and distribute products.

FedEx Logistics (air transport and cargo solutions):

• Companies that require urgent shipments hire FedEx to make international deliveries by air transport.

GLS, SEUR or MRW (transport and parcel delivery):

• E-commerce or retail companies use last-mile transportation services from operators such as GLS or SEUR to deliver products to customers.

Advantages of the 2PL Model

Lower investment in infrastructure.

Flexibility and scalability.

Access to specialized expertise.

Expansion to new markets.

Disadvantages of the 2PL Model

Less control over the logistics chain.

Possible delivery delays.

Variable costs depending on the volume of operations.

Risk of loss of key information.

Logistics Operator 3PL (Third Party Logistics)

La Third Party Logistics (3PL) It is a model in which a company outsource the complete management of your logistics to a specialized supplier.

Unlike the model 2PL, where only specific functions are outsourced, in 3PL the logistics operator becomes a strategic partner, managing a significant part of the supply chain, allowing companies to focus on their core business while leaving logistics in the hands of experts.

Key Features of 3PL

Total outsourcing of logistics: An external supplier is responsible for the storage, transportation and distribution of products.

Integrated management: The 3PL operator coordinates multiple logistics functions within the supply chain.

Functions of a 3PL Logistics Operator

1. Transportation and Distribution Management.
2. Storage and Inventory Management.
3. Order Preparation (Pick & Pack).
4. Customs Management and International Trade.
5. Analysis and Optimization of Logistics Processes.

Examples of 3PL Companies

Amazon FBA (Fulfillment by Amazon):

• Companies and online sellers use Amazon's 3PL service to store their products in their fulfillment centers and manage shipping, returns and customer service.

DHL Supply Chain:

• Provides storage, distribution and customized logistics solutions for multiple industries.

UPS Supply Chain Solutions:

• Manages the logistics of retail, e-commerce and manufacturing companies, offering transportation and storage.

XPO Logistics:

• Specialized in storage and transport logistics for industrial and retail companies.

CEVA Logistics:

• It operates globally offering transportation, distribution and storage solutions for technology, automotive and consumer goods companies.

Advantages of the 3PL Model

Reduced operating costs.

Greater efficiency and specialization.

Scalability and flexibility.

Focus on the core business.

Access to advanced technology.

Disadvantages of the 3PL Model

Less control over logistics.

Variable costs.

Risk of supply chain failures.

It can be difficult to synchronize company systems with those of the logistics provider.

Logistics Operator 4PL (Fourth Party Logistics)

La Fourth Party Logistics (4PL) is an advanced model of logistics outsourcing in which a company hires a specialized supplier or consultant for you to manage and optimize your entire supply chain.

Unlike the 3PL, where the operator only functions logistics, in 4PL the supplier is responsible for coordinating different logistics operators (3PL, carriers, warehouses, customs, etc.) to offer a comprehensive solution.

This model is ideal for companies looking for fully optimized logistics management, with the use of technology, data analysis and artificial intelligence to improve efficiency and reduce costs.

Key Features of 4PL

Comprehensive supply chain management: Coordinates and optimizes all logistics processes.

Use of advanced technology: Integration of systems such as ERP, WMS and TMS for analysis and decision-making.

It has no physical assets: It does not operate its own warehouses or fleets, but rather manages 3PL operators and other logistics providers.

Optimization and strategy: Focuses on improving costs, delivery times and operational efficiency.

Consulting-based model: Provides strategic analysis and recommendations for the supply chain.

Functions of a 4PL Logistics Operator

1. Management and Coordination of Logistics Providers (3PL, Carriers, Customs, etc.)
2. Data Analysis and Supply Chain Optimization
3. Strategic Planning and Logistics Consulting
4. Technological Integration and Digitalization of Logistics
5. Risk Management and International Logistics

Examples of 4PL Companies

Accenture Logistics & Supply Chain Management:

• Offers consulting and supply chain optimization services for large companies.

DHL Supply Chain 4PL Services:

• Manages and coordinates multiple logistics providers for global companies, optimizing costs and delivery times.

XPO Logistics (4PL Division):

• Provides integrated solutions for the planning and logistics execution of large corporations.

UPS 4PL Solutions:

• Integrates the management of logistics operators and carriers into a single, optimized solution.

GEODIS Supply Chain Optimization:

• Specialized in logistics consulting and data analysis to improve the supply chain of its customers.

Advantages of the 4PL Model

Total optimization of the supply chain

Cost reduction and service improvement

Increased visibility and control

Long-term strategy

Increased flexibility and scalability

Disadvantages of the Model 4PL

Less direct control

High initial costs

Technology Dependency

Not suitable for small businesses

Logistics Operator 5PL (Fifth Party Logistics)

La Fifth Party Logistics (5PL) represents the most advanced level of logistics outsourcing, where an operator not only manages and optimizes the entire supply chain as in 4PL, but also integrates multiple logistics networks and advanced technologies for total automation and efficiency.

The operators 5PL focus on digitalization, artificial intelligence, big data and the optimization of global logistics, especially in sectors such as e-commerce, retail, manufacturing and international logistics.

Unlike the 4PL, where the supplier acts as a strategic supply chain manager, in 5PL the operator designs complete logistics ecosystems and uses state of the art technology to automate processes and optimize costs on a large scale.

Key Features of 5PL

Automation and total digitalization: Use of artificial intelligence, machine learning, IoT and blockchain to manage the supply chain.

Integration of global logistics networks: Coordinates multiple logistics operators (3PL, 4PL, carriers and technology providers).

Optimization based on Big Data: Analyze data in real time to improve efficiency, reduce costs and forecast demand.

Technology-based business model: It focuses on software, digital platforms and automation rather than its own physical infrastructure.

Functions of a 5PL Logistics Operator

1. Optimization and Management of the Global Supply Chain
2. Use of Artificial Intelligence and Machine Learning
3. Blockchain and Supply Chain Security
4. Sustainable Logistics Strategies and Green Logistics
5. Warehouse Automation and Last Mile

Examples of 5PL Companies

Alibaba Logistics Network (Cainiao):

• Cainiao optimizes Alibaba's entire supply chain using big data, artificial intelligence and advanced automation.

Amazon Robotics & Fulfillment Services:

• Amazon deploys robots, drones and artificial intelligence systems to manage logistics on a global scale.

Flexport:

• Digital logistics platform that combines technology, artificial intelligence and blockchain to optimize the international supply chain.

Kuehne + Nagel Integrated Logistics:

• It offers digital logistics solutions based on big data, machine learning and automation.

DHL Smart Logistics Solutions:

• Develops logistics systems based on IoT, automation and big data for global customers.

Advantages of the Model 5PL

Full automation of the supply chain.

Reduction of operating costs through the use of AI and Big Data to optimize each logistics process.

Greater security and traceability through the implementation of blockchain and intelligent systems.

Greater flexibility and scalability.

Sustainability and resource optimization.

Disadvantages of the Model 5PL

High initial investment in technology.

Technological dependence.

Less direct control over logistics

Complexity in implementation.

‍