Third Party Logistics

A third-party logistics provider (abbreviated 3PL, or sometimes TPL) is a firm that provides service to its customers of outsourced (or "third party") logistics services for part, or all of their supply chain management functions. 

Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customers' needs based on market conditions and the demands and delivery service requirements for their products and materials. 

Often, these services go beyond logistics and included value-added services related to the production or procurement of goods, i.e., services that integrate parts of the supply chain. 

Then the provider is called third-party supply chain management provider (3PSCM) or supply chain management service provider (SCMSP). 

Third Party Logistics System is a process which targets a particular Function in the management. 

It may be like warehousing, transportation, raw material provider, etc.

According to the Council of Supply Chain Management Professionals, 3PL is defined as "a firm that provides multiple logistics services for use by customers. 

Preferably, these services are integrated, or bundled together, by the provider. Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding."

Types of 3PL providers

Third-party logistics providers include freight forwarders, courier companies, as well as other companies integrating & offering subcontracted logistics and transportation services.

Hertz and Alfredsson (2003) describe four categories of 3PL providers:

1. Standard 3PL Provider: This is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity.
2. Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
3. The Customer Adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company's logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small.
4. The Customer Developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.

Terminology

In the "PL" terminology, it is important to differentiate the 3PL from the:

1PL, which are the shipper or the consignee.

2PL, which are actual carriers such as Korean Air, Air France KLM, Maersk

4PL, which are consulting firms such as Bertelsmann and Accenture.

Companies such as Access America Transport, Landstar, Inc., Panalpina, Kuehne + Nagel, DB Schenker, YRC Worldwide, UPS, FedEx, DSV, DHL Express, Ceva Logistics, Expeditors International, Blue Water Trucking, and SNCF Geodis are 3PL.

3PL can also be 2PL at the same time in the following cases:

when a shipping line owns a freight forwarder,

when an airline owns a general sales agent (GSA),

when a freight forwarder owns trucks or a warehouse,

when a courier company owns planes.

For example, FedEx is both a 2PL (airline) and a 3PL (courier). DHL is both a 3PL (courier and freight forwarder), a 2PL (warehouse and trucks owner), and a 4PL (actual consulting divisions).