How to Best Understand 4PL Logistics

ByShaun Snapp

Executive Summary

  • Definition of 4PL Logistics, 4PL Services or 4 Party Logistics, etc..
  • 4PL Logistics Definition
  • What Are the Characteristics of a True 4PL?

Introduction to 4PL

4PL has many different names. This includes 4PL, 4PL Logistics, 4PL Services, 4 Party Logistics, and so on. The concept is evolving and many entities that don’t meet the definition of 4PL have co-opted the term for marketing reasons.

However, 4PL means something quite specific. And while many would like to have the mantle of being a 4PL, few could ever actually appropriately meet the definition.

See our references for this article and related articles at this link.

Definition of 4PL Logistics, 4PL Services or 4 Party Logistics, etc..

4PL Logistics is a non-asset based entities that provide value to shippers.

This can be through a variety of methods, but is normally through some combination of the following:

  • Organization
  • Coordination
  • Technology Capabilities.
  • Supply Chain Knowledge and Skills

They can add value through superior capabilities in logistics that their shippers possess. This can be their

  • Ability to group shipments into order to gain in economies of scale and negotiating leverage with shipper
  • Technology relating to coordination and organization such as track and trace.

What Are the Characteristics of a True 4PL?

The companies that can provide the 4PL concept are few and far between. The area is still developing, but to meet the 4PL logistics definition, a company would need to be the following characteristics.

Characteristic #1: Must Be Non-Asset Based

They must not own or lease assets.

Characteristic #2: Must Have Strong IT Capabilities

They must demonstrate the highest level of proficiency in IT.

Characteristic #3: Must Focus on Customer Service

They must be able to provide updates at any time to their shippers.

Characteristic #4: Must Have Strong Integration Capabilities

They must have strong capabilities in data integration and front end development or front end modification. Without this, it would be difficult for a 4PL to add sufficient value to the process.

Characteristic #5: They Must Enable Visibility Through Their Website

A genuine 4PL will provide websites, where customers log in, that encapsulate and hide the complexity of the integration behind it, to allow customers to manage their freight empowered by the 4PL’s infrastructure. This is one of the lessons of Google, as is chronicled in the book — What Would Google Do?

They must allow customers to log into their website and to engage in some degree of self-service.