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3PL vs 4PL: What is a 4PL & How They Differ From 3PLs

What is a 4PL?

Fourth-party logistics (4PL) providers, also known as lead logistics providers (LLPs), embody a logistics framework that encompasses the functions of third-party logistics (3PL) providers while assuming broader accountability and responsibility across the entire supply chain.

This expanded role is evident in their management and oversight of parts of the supply chain, which include the transportation of goods, fulfilling orders to the final consumer, and the orchestration of multiple 3PLs.

The 3PLs in a 4PL’s network operate independently, each with its unique operational systems and set standards for security and customer service processes.

Characteristics of a 4PL

In the realm of logistics, engaging with a 4PL provider like Polo 4PL involves outsourcing logistics management and services typically handled by a 3PL. This includes overseeing responsibilities both upstream and downstream in the ecommerce supply chain, such as managing freight forwarders and supervising last-mile logistics.

A 4PL entity such as Polo 4PL assumes responsibility for coordinating with various 3PL providers and executing logistics tasks such as transportation, inventory management, and technological infrastructure. Similar 4PL entities in the industry include Shopify Fulfillment Network, Deliverr, and ShipHero.

4PLs and Supply Chain Management

Within supply chain management, a 4PL serves as the pivotal point for operational assistance and communication among vendors, streamlining logistics procedures for merchants by assuming a strategic and operational position.

This approach alleviates customers from the burdens associated with vendor relationship management, supply chain optimization, and logistics decision-making. Moreover, it promotes efficiency and fosters seamless coordination throughout the supply chain.

Asset Ownership by 4PLs

Typically, 4PLs do not own or lease assets; instead, they facilitate the coordination of transportation, warehousing, and shipping services through partnerships with logistics companies, including 3PLs, aiming to optimize the customer’s supply chain

By leveraging these partnerships, 4PLs can access a broader spectrum of resources and expertise. This approach enables them to offer comprehensive solutions tailored to their clients’ specific needs, ranging from transportation and warehousing to shipping services.

Furthermore, by collaborating with a network of trusted partners, 4PLs can ensure flexibility and scalability within the supply chain, adapting swiftly to fluctuations in demand or market conditions. This agile approach empowers businesses to streamline their operations, enhance efficiency, and ultimately deliver superior service to their customers.

Overall, while 4PLs may not directly own assets, their ability to orchestrate and optimize supply chain activities through strategic partnerships underscores their pivotal role in modern logistics management.

Differences between a 3PL and a 4PL

When businesses opt for direct outsourcing to a 3PL, they entrust the entire fulfillment process management to the 3PL partner. In contrast, engaging with a 4PL introduces an intermediary layer between the merchant and the 3PL, with the 4PL taking charge of managing the relationship with the 3PL on behalf of the merchant.

Noteworthy distinctions encompass various facets such as order fulfillment, supply chain optimization, and customer communications. A 4PL offers a more comprehensive oversight of the supply chain, extending beyond direct fulfillment to include areas like technology and transportation. In comparison, a 3PL tends to focus primarily on executing direct fulfillment tasks.

Choosing the Right Logistics Model

The choice between a 3PL and a 4PL model depends on the business stage and needs. Startups might start with in-house fulfillment, while rapidly growing businesses may lean towards a 3PL for scalability. Enterprises may consider a 4PL for comprehensive supply chain management, though this could mean less control over operations.

Polo 4PL, similar to ShipBob for 3PL services, offers comprehensive solutions for ecommerce businesses seeking efficient supply chain management. Polo 4PL coordinates with global logistics platforms, providing a seamless, one-stop solution for businesses aiming to optimize their logistics operations without the direct oversight required by traditional 3PL models.

In conclusion, whether a business should partner with a 3PL or engage a 4PL like Polo 4PL depends on the specific needs, growth stage, and desired level of involvement in the logistics process. Both models offer unique advantages for managing ecommerce logistics efficiently.

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