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Third-party logistics, or 3PL, is used when referring to a fulfillment center or fulfillment warehouse. Companies that provide 3PL services offer many of the same services that order fulfillment companies do. These services include:

FTL and LTL freight shipping

Inventory management

Kitting and customization

Picking and packing

Reverse logistics (returns)

Shipping and receiving

Warehousing

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the manufacturer can handle its shipping and warehousing needs.

1PL companies will have a dedicated fleet of trucks.

Few companies these days rely on such a model because outsourcing improves flexibility.

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the provider only handles the transportation aspect in the supply chain.

Examples of this approach include shipping and trucking companies.

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This category manages both outbound and inbound transportation requests in addition to warehousing.

It is common for these providers to lease warehouse space and they also do not own a fleet of trucks.

Instead, they outsource these aspects to other carriers for purposes of shipping and freight. This approach is popular today with both small and larger businesses.

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Under this arrangement, the companies do not have any physical assets to be used for moving products.

Instead, they play a consulting role in managing the process for their clients. They will contract 3PLs, freight companies, and other companies to deliver the necessary support.

Some clients consider them to be a fulfillment concierge, based on their expertise in assembling and managing an outsourced supply chain.

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the provider combines the shipping needs of multiple 3PLs.

That allows for leveraging market dominance to negotiate favorable carrier rates.

For example, some companies use 5PL to run all aspects of the supply chain.

The provider sources services and negotiates appropriate contracts on your behalf under this arrangement.

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Some of the expected developments in the near future:

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Some of the expected developments in the near future:

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Sixth-party logistics (6PL): These are expected to provide ecologically sound supply chain management. The key performance indicators in this niche will focus on the use of resources and the renewability of activities. Additionally, they may also consider equitability in supply chain management. It is anticipated that the providers will have to meet high standards of environmental and social accountability.

Seventh-party logistics (7PL): This is a combination of 3PL and 4PL services including full-service fulfillment, warehousing, and transport services all-in-one. The 7PL provider has the strategic management expertise of a 4PL provider; with the additional advantage of owning and controlling certain physical assets such as a warehouse which would be typical of a 3PL provider.

8PL and beyond: Beyond 7PL, the configuration of supply chain management reflects the priorities and the specific business model of the client. A high-level committee would be expected in an 8PL setting. The committee would then analyze industry practices to propose interventions that bridge the gaps. The 9PL level is all about identifying crowd-sourced solutions that meet last-mile delivery requirements. Examples include Lyft or Doordash. Meanwhile, the 10PL providers all use artificial intelligence such that the supply chain becomes self-aware and can run itself.