GLOBAL SELLING BLOG
3PL vs 4PL: Understanding the differences between 3PL and 4PL
Discover the key differences between 3PL and 4PL logistics in this guide. Learn how each model operates and which one to choose for your business.
As operations grow, companies often turn to external partners to handle warehousing, transportation, and fulfillment. This is where third-party logistics (3PL) and fourth-party logistics (4PL) come into play. While both 3PL and 4PL involve outsourcing logistics functions, they differ in their level of control, integration, and strategic involvement. Understanding the difference between 3PL and 4PL logistics can help businesses choose the right model based on their size, goals, and supply chain complexity.
In this blog, we’ll explain what 3PL and 4PL mean, how they work, key differences between them, and which one may be the right fit for your business.
In this blog, we’ll explain what 3PL and 4PL mean, how they work, key differences between them, and which one may be the right fit for your business.
What is 3PL (Third-party logistics)?
Outsourcing logistics operations to a specialized external source is known as third-party logistics (3PL). These suppliers take care of specific tasks including order fulfillment, inventory control, picking and packaging, warehousing, and transportation.
E-commerce businesses, manufacturers, and merchants who wish to simplify operations and concentrate on their core skills frequently employ 3PL providers.1
E-commerce businesses, manufacturers, and merchants who wish to simplify operations and concentrate on their core skills frequently employ 3PL providers.1
Key features of 3PL providers:
● Handle warehousing, shipping, and distribution
● Offer freight forwarding and customs clearance
● Provide inventory management tools
● Enable order fulfillment services
● Integrate with e-commerce platforms and marketplaces
What is 4PL (Fourth-party logistics)?
A more complete option is fourth-party logistics (4PL), in which the provider oversees the whole supply chain, frequently including 3PLs. In addition to managing end-to-end logistics strategy, planning, technology, and operations, a 4PL provider serves as a single point of contact between 3PL providers and the business.2
Key features of 4PL providers:
● Centralized supply chain oversight
● Coordination of multiple 3PLs
● Strategic planning and consultancy
● End-to-end visibility and data analytics
● Risk management and optimization
3PL vs 4PL logistics – key differences
When evaluating the difference between 3PL vs 4PL logistics, it’s essential to consider how they function, their levels of integration, and the control they offer.
Feature
3PL (Third-party logistics)
4PL (Fourth-party logistics)
Primary focus
Operational execution of specific logistics functions (e.g., warehousing, transportation).
Strategic oversight, management, and optimization of the entire supply chain.
Scope of service
Typically handles a segment or specific tasks within the supply chain.
Manages the entire supply chain, often integrating multiple service providers.
Asset ownership
Often owns physical assets (warehouses, trucks).
Generally non-asset based; manages assets of 3PLs and other providers.
Client relationship
Transactional or tactical; service provider.
Strategic partnership; integrator and a single point of accountability.
Level of control
Client retains significant strategic control and supply chain design.
Client retains less control over supply chain management.
Technology
Uses its own operational systems for specific tasks.
Leverages advanced technology for visibility and integration across the supply chain.
Key objective
Cost reduction and efficiency in specific outsourced functions.
Overall supply chain performance, optimization, and value creation.
Point of contact
Clients may manage multiple 3PLs or vendors.
Single point of contact for the entire supply chain.3
3PL vs 4PL: Which one to choose for your business?
Choosing between 3PL and 4PL logistics depends on the size of your business, its complexity, and your supply chain goals. Understanding the difference between third-party logistics and fourth-party logistics helps make an informed decision.4
Choose 3PL if:
● Sections: The HS is divided into 21 sections, which broadly categorize goods.
● Focus is on reducing shipping and warehousing burden
● You want flexibility in scaling logistics services
● Budget constraints are a concern
Choose 4PL if:
● The supply chain involves multiple vendors or global operations
● End-to-end visibility is a priority
● Strategic supply chain optimization is needed
● There’s room for higher investment
Amazon sellers, for instance, may start with a 3PL partner for order fulfillment but graduate to a 4PL model as the business scales internationally.
Conclusion
The difference between third-party logistics and fourth-party logistics means that a 4PL engagement is typically a deeper, more integrated partnership. Companies should evaluate their long-term vision. If the goal is simply to offload tasks, a 3PL might suffice. However, if the objective is a complete transformation and strategic optimization of the supply chain, a 4PL is often the more appropriate choice.
Ultimately, the decision should align with your company’s growth strategy, resource availability, and the desired level of control over your logistics operations. Some businesses even evolve from using 3PLs to engaging a 4PL as their needs become more complex.
Ultimately, the decision should align with your company’s growth strategy, resource availability, and the desired level of control over your logistics operations. Some businesses even evolve from using 3PLs to engaging a 4PL as their needs become more complex.
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Frequently Asked Questions
1. Which one is cheaper, 3PL or 4PL?
3PL is generally cheaper than 4PL. Since 3PL providers focus on execution-level services like storage and delivery, they charge less than 4PL providers who offer strategic oversight and coordination.
2. How do 3PL and 4PL work together?
A 4PL provider may manage several 3PL providers as part of an integrated logistics strategy. The 4PL coordinates these partners, ensuring they align with the business’s supply chain objectives and performance metrics.
Published on November 6, 2024.
updated on June 24, 2025
Sources:
1. https://www.techtarget.com/searcherp/definition/3PL-third-party-logistics
2. https://www.shiprocket.in/blog/what-is-4pl/
3. https://www.invensis.net/blog/3pl-vs-4pl
4. https://www.shipbob.com/3pl/vs-4pl/
updated on June 24, 2025
Sources:
1. https://www.techtarget.com/searcherp/definition/3PL-third-party-logistics
2. https://www.shiprocket.in/blog/what-is-4pl/
3. https://www.invensis.net/blog/3pl-vs-4pl
4. https://www.shipbob.com/3pl/vs-4pl/
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
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