What is the difference between 3PL and 4PL?

The definitions of 3PL (= third party logistics provider) and 4PL (= fourth party logistics provider) differ.


We consider that:

  1. 1PL are shippers and/ or consignees, which have cargo to send/ receive from a point A to a point B on the planet, such as manufacturers, factories, trading companies, importers, exporters, wholesalers, retailers...etc
  2. 2PL are transportation companies, which actually own physical means of transportation/ storage, such as shipping line, airline, trucking company, railways, warehousing owners...etc
  3. 3PL are facilitators or consolidators such as freight forwarders or courier companies, which provide a one-stop-shop solution to 1PL (their clients), while mostly subcontracting to 2PL (their sub-contractors)
  4. 4PL are part of an emerging industry (blue ocean strategy) of advisory firms, which help all industries with advisory services relating to the industries of logistics, transportation, and supply chain management

3PL (third party logistics provider)

The term "3PL" was first used in the early 1970s to identify intermodal marketing companies (IMCs) in transportation contracts. Up to that point, contracts for transportation had featured only two parties, the shipper and the carrier. When IMCs entered the picture – as intermediaries that accepted shipments from the shippers and tendered them to the rail carriers – they became the third party to the contract, the 3PL. But over the years, that definition has broadened to the point where these days, every company that offers some kind of logistics service for hire calls itself a 3PL.

To put forward some standard definitions, we would adopt the definition of "3PL" found in the Council of Supply Chain Management Professionals’ glossary, which reads as follows: "A firm [that] provides multiple logistics services for use by customers. Preferably, these services are integrated, or "bundled" together, by the provider. Among the services… [3PLs] provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding."

4PL (fourth party logistics provider)

The term "4PL" has generated even more confusion. The term is generally considered to have been introduced by Accenture, which registered it as a trademark in 1996. Accenture described the 4PL (or fourth-party logistics provider) as an integrator, but today advisors, consultants, software companies and even 3PLs lay claim to being a 4PL. The trademark was later abandoned, and the term has become a part of the public domain.

Since the CSCMP definitions get a little fuzzy on 4PL, we would suggest using Accenture’s definition of 4PL, as follows: "A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.

Nicolas de Loisy

Advisory specialized in logistics, transportation, and supply chain management.