Is UPS Actually a 4th Party Logistics Provider?

ByShaun Snapp

Executive Summary

  • The 4th Party Logistics Provider Verbiage on the UPS Website
  • Why No 3PL Can be a Real 4th Party Logistics Provider
  • Why Asset Based Providers Want to Turn 4PL Into a Meaningless Buzzword
  • Note to 3PLs

Introduction

We came upon the UPS website and found several web pages, where UPS presents its 4PL services.

So we have to ask the question: Is UPS a 4th party logistics provider?

Well clearly, UPS have assets, which by definition would make them a 3PL and not a 4th party logistics provider.

However, they may offer some pure information services for supply chain, and in this sense, they could be a4th party logistics provider. However, we think it unlikely. The question is if its private incentives are to utilize its investment in its assets.

Let us look at the website verbiage on the UPS site.

UPS’s website where they tout their 4PL capabilities.

So let us review the items in an enumerated format.

  • Global Supply Chain Design and Planning
  • Logistics and Distribution
  • Customs Brokerage
  • International Trade Services
  • Freight Services

So there is no doubt that UPS has many offerings. And they offer much more than a traditional 3PL.

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

Why No 3PL Can be a Real 4th Party Logistics Provider

UPS is not alone in trying to brand itself as a 4PL. Many 3PLs have done this on their website. However, there is a problem because the definition of a 4PL is that you manage 3PLs or other transportation entities. Thus, a 3PL can not manage other 3PLs because it has a built-in bias….it wants to take the business from the other 3PLs.  This would be like two football teams “cooperating” with one another, while both teams want to win. There can be no cooperation because one side has to lose and one side has to win.

Why Asset Based Providers Want to Turn 4PL Into a Meaningless Buzzword

This is actually what we warned about in a previous post.

That is, if the term 4PL is allowed to be hijacked by marketing and PR departments of the 3PLs, then the word will cease to have any meaning. 3PLs don’t like the term 4PL because they see it as encroaching on their space. That is unfortunate because the supply chain business is in desperate need of pure information management companies and platform builders. UPS for all of its technological prowess will never be a technology company first, and they can’t be considered independent.

Note to 3PLs

There is nothing wrong with being a 3PL. UPS is one of the best, and they don’t need to pose as something for which they can’t meet the actual technical definition. Conclusion <p “>The definition of 4PLs is very simple. If a company controls assets, then they are a 3PL. If they do not then, they may be a 4PL. However, a 4PL has a different hurdle to clear. To be a 4PL, the company should show strong IT competence. They must have the ability to either build platforms or stitch together the platforms of other software companies. Anyone can hire some people and “manage freight.” A true 4PL needs to come to the party with enabling technologies.