Logistics Services

Logistics services include:

• Transport from the factory to the fulfillment warehouse.
• Warehousing and order fulfillment.
• Outbound shipping and order delivery to customers.

That is a simplified overview of logistics services. When you drill down, there are different options, choices, and dynamics at each of these stages in the supply chain. You can choose different types of logistics services to meet the needs of your eCommerce company.

What Is the Role of Logistics?

There are several factors in the process of getting a product from the manufacturer to the customer. First, it may go to a warehouse, where it waits for an order to send it. Whether it spends time in the warehouse or not, though, the next step is a truck or plane, which takes it to a retailer or postal carrier so that it can get in the hands of customers. However, transportation can be tricky, especially if the weather disrupts the process. Logistics providers oversee all of this, coordinating transportation services to keep products rolling forward. If a client doesn’t have enough product to fill an entire truck, for instance, a logistics company may arrange to combine that customer’s shipments with another customer’s, strategically routing the truck picking both orders up to avoid delays.

There are four main interrelated layers of logistics services:

First Party Logistics (1PL) Concerns beneficial cargo owners, which can be the shipper (such as a manufacturing firm delivering to customers) or the consignee (such as a retailer picking up cargo from a supplier). They dictate the origin (supply) and the destination (demand) of the cargo, with distribution being an entirely internal process assumed by the firm. With globalization and the related outsourcing and offshoring of manufacturing, distribution services that used to be assumed internally tend to be contracted to external service providers.

Second Party Logistics (2PL) Concern the carriers that are providing a transport service over a specific segment of a transport chain. It could involve a maritime shipping company, a rail operator, or a trucking company that is hired to haul cargo from an origin (e.g. a distribution center) to a destination (e.g. a port terminal).

Third Party Logistics (3PL). Concerns freight forwarders that could have stakes in a specific transport segment and its physical assets, but who are offering comprehensive freight distribution services along transport chains. These services can involve warehousing, transloading, terminal operations, and even forms of light manufacturing such as packaging and labeling. A 3PL thus tries to organize the tasks related to physical distribution, so that parts and finished goods can be carried from their origin to their destination.

Fourth Party Logistics (4PL) Concerns independent and neutral actors such as specialized consulting firms that are organizing and managing complete supply chain strategies for their customers. They can be involved in outsourcing decisions, supplier selection, and the routing of cargo to support supply chain management. This often involves agreements (subcontracting) with 3PLs and 2PLs. Many 3PL firms also offer 4PL services.

Each layer involves increasing levels of service and supply chain integration. With service integration, a number of more comprehensive logistics services are provided. At the same time, supply chain integration involves a growing number of steps managed by the logistics service provider. For instance, a 3PL could be booking transport and warehousing services, creating a supply chain between a manufacturer and the distribution center of a purchaser. Several firms, many global in scope, offer a variety of logistical services spanning 2PL, 3PL, and 4PL layers.

Call us on 888-666-2202 to book your logistics service.