Any shipping logistics company that is developing a business model and strategic plan to ship goods from their plant location to another destination needs to determine what kind of logistics solution strategy they must employ to do the job efficiently and at the lowest cost savings. A clearing and forwarding agent has the background and experience to assist the supply chain solution company in choosing the right strategy.
There are five different levels of expertise found in the shipping chain, and logistics companies, levels 1PL, 2PL, 3PL, 4PL, and 5PL describe a hierarchy of services that are all dedicated to getting the customer’s goods from one place to another at the lowest cost.
1PL and 2PL
In the shipping chain, the first party logistics (1PL) is the manufacturer who produces the product. They are responsible for developing their business model and plan so that this approach can be consistent throughout the shipping process.
The second party logistics (2PL) is the asset based carrier responsible for moving the freight. The 2PL will have physical resources such as trucks, planes, or ships that will store and transport the goods. There can be several different 2PLs involved in the overall shipping journey which can include storage, drayage from the pier to the warehouse, and even drayage and cartage from the storage area to the door of the receiver. In many logistics plans, the clearing and forwarding agent plays a significant role in making sure this process for supply chain management is a smooth one.
When a first party in the shipment chain, the 1PL, hires a company to manage the services of the 2PL, this is known as third party logistics, or 3PL. The third-party logistics manager provides certain high-level services to the supply chain that need to be noted, and which sets it apart from the lower level participants.
The 3PL provider acts as a liaison between the manufacturer and the shippers to ensure that deadlines are met, and that shipments arrive safely and securely. They also manage the outsourcing of other companies and the distribution system of the manufacturer’s goods. Common functions included in the offerings of a 3PL logistics company are such services as transportation, warehousing, inventory management, packaging, cross-docking, and freight forwarding. The 3PL logistics company must communicate with the customer to make sure that the logistic strategy works hand-in-hand with the business plan and strategy of the 1PL provider.
It is sometimes hard to differentiate between a 3PL and a fourth party logistics services company because much of what they do is similar. Basically, 4PL provider acts in the role as that of a manager of a network of 3PLs. It is an independent company with no assets that is the main point of contact for the customer as they coordinate the various 3PL companies in the chain.
In general, the 4LP establishes a higher level of control over the supply chain operation and is seen as a higher-level consultant when deciding on aspects of the shipping activity such as storage, routes, and modes of transportation and logistics.
With the advent of technology and digitalization into the logistics of shipping, the 5th party logistics service companies play a major part in constructing, organizing, and implementing solutions for the use of technology on behalf of multiple clients.
The 5PL companies are focused on establishing a fluid collaboration between all of the 3PL and 4PL companies that might be involved in any shipping transaction. What usually happens is that the 5PL companies will combine the needs and demands of the 3PL providers into a bulk volume of services to provide a better shipping rate.
Here again, is where an experienced clearing and shipping agent will take the lead and secure the best results.
The experience and knowledge that is available at ASIANA USA shipping is at your fingertips with a call to 855-500-1808. We are an international shipping company for customs clearance, delivery of goods to the customer’s warehouse management, and like a 5PL company, we have updated information on the shipping business. Call us today!