The complexity of global trade has given rise to various types of logistics operators, each with a different level of involvement in the supply chain. Understanding these categories, from 1PL to 5PL, is key to optimizing your operations and choosing the ideal partner.
What is a logistics operator?
A logistics operator is a company that designs, manages, and executes the logistics process chain for the client who requests it. It uses its own physical infrastructure and the technology, in-house or subcontracted, necessary to carry out the work.
Ultimately, this entity manages the entire movement of goods for a client who wants to outsource this process.
But it’s not just about moving goods, as we’ll see later. It involves covering all phases of the process: from collection, transportation, storage, stock control, or inventory management, until the moment the goods reach the hands of the end customer.
What is the role of logistics operators in international trade?
Logistics activities form a link between production and markets, separated by time and distance. International logistics covers the planning and management of activities within logistics administration and the supply chain. These include purchasing, production, transportation, storage, handling, and distribution.
For a company to grow and be fully efficient in the production, management, and marketing of products, proper logistics management is essential. Customs procedures are one of the requirements a company must meet to export, and to achieve this, there are a series of regulations and laws that directly affect it.
As you can see, the scope of logistics at an international level is much broader and more complex than that developed at a national level. Therefore, collaboration with a logistics operator is even more important when moving goods between different countries.
Types of Logistics Operators in the Global Market
Logistics operators are commonly classified into five main categories, known as 1PL, 2PL, 3PL, 4PL, and 5PL, where the number indicates the level of supply chain outsourcing. Each type has different responsibilities and levels of involvement in a company’s logistics management:
1. First-Party Logistics
This is the phase of logistics with the longest tradition of outsourcing: freight transport. In this sense, it encompasses the transport agencies responsible for distributing the contracting company’s products. This relieves the company of the need to purchase and maintain the transport fleet, as well as manage drivers.
However, the bidding company’s logistics department retains operational duties and has its own warehousing facilities and handling systems.
2. Second-Party Logistics
In this case, the companies that offer these services are already classified as logistics operators. In addition to transportation, they also handle product storage and their own warehouse vehicles.
This type of logistics provider bases its strength on economies of scale and operates at a broader level than the previous providers, but still offers standard services. They are usually national logistics operators.
Internally, the contracting company coordinates the organization of the transport fleet and the preparation of orders in the warehouse.
3. Third-Party Logistics
This type of logistics operator goes further in service integration and provides a transport fleet, storage facilities, and also addresses the organization of transport operations and warehouse management.
In this sense, by integrating more phases of logistics, these operators’ services are more personalized and tailored to the needs of the contracting company and its clients. Therefore, agreements between third-party logistics providers and the contracting company are usually long-term, allowing the 3PL to learn and optimize the part of the supply chain it handles.
The contracting company maintains internal overall control of the entire flow of goods.
4. Fourth-Party Logistics
Fourth-party logistics providers (4PLs), also known as lead logistics providers (LLDs), are providers that manage the entire supply chain of contracting companies (beyond just warehousing and transportation).
However, these types of logistics providers do not have their own assets, such as warehouses or fleets, as their “management” refers only to the processes of planning, coordination, consulting, and monitoring supply chains.
Therefore, in order to carry out the physical and practical tasks of logistics, 4PLs outsource to 3PLs, who provide the 4PLs with all the necessary logistics infrastructure, including personnel and technology.
5. Fifth Party Logistics
Fifth-party logistics providers (5PLs) are the final and most advanced link in logistics outsourcing. These providers are characterized by having sufficient capacity to manage multiple supply chains globally. In this sense, the contracting companies assume no responsibility for their logistics, as they delegate 100% of their supply chains to 5PLs.
To achieve this, 5PLs are responsible for management, planning, and strategic decision-making at the macro level regarding the logistics of the supply chains under their control, from manufacturing processes to reverse logistics. However, for the operational development of these tasks, 5PLs in turn outsource to 4PL and 3PL logistics providers.
Thus, 5PL providers are companies that must maintain a perfect relationship between all the operations that must be executed to achieve fully optimized logistics.
Partida Logistics, your strategic partner for a tailored supply chain
Understanding the different types of logistics operators is essential for any company looking to optimize its global supply chain. Whether your business requires a specialized transportation service (1PL), a comprehensive warehousing and distribution solution (2PL), advanced value-added outsourcing (3PL), or even the strategic management and coordination of all your logistics without your own assets (4PL), at Partida Logistics we offer the flexibility and experience you need. Our team of experts in customs management and international trade can advise you on the level of outsourcing that best suits your needs, ensuring that your international operations are efficient, profitable, and compliant with all regulations. With Partida Logistics, you don’t just move goods; you optimize your logistics strategy to achieve your goals in the global market.
