What does 3PL mean?

Heading "Logistics slang"

Let’s talk about the already known term «3PL» in Ukraine. It’s a very interesting topic because other than 3PL, you may hear similar terms like «2PL», «4PL», «5PL». Everything becomes clear as soon as we translate the acronym «PL» from English. Literally, PL means «side/part of logistics». It is the number of participating parties and their role in any cargo business that affects the capital figure:

  • 1

    1PL

    It’s a simple scheme and nowadays it’s quite rare. The business owner is only one person in this model.
    He is the producer of the goods himself (or buys them himself) and is responsible for their transport, registration, and even final delivery to the buyers

  • 2

    2PL

    Very common model among modern small and medium-sized businesses, where a second participant (contractor) is involved at a specific stage of their logistics processes and performs a certain function. For example, the business owner hired a transport company that delivers cargo to its customers in different cities or to its retail network

  • 3

    3PL

    This business model is very popular with e-commerce representatives. But it’s not just for online stores, it’s also for distributors, catalog companies, etc. A third party appears in the chain between the business owner and its supplier that performs an important function in the entire process of its sales - warehouse logistics. This complex includes a lot of services, the main ones include cargo/goods storage in the warehouse and further processing of them according to the customer orders (sorting, packing, dispatch, returns work, etc.). Thus, the customer (business owner) shifts on the shoulders of this third party all operational processes, costs, responsibility, and problems related to its cargo/goods from the moment they are delivered to the warehouse.
    The acronym «3PL» first appeared in 1980, when it became necessary to legally reflect in the contract between the business owner and his supplier an intermediary in this supply chain

  • 4

    4PL

    The modern world does not stand still, so the world trade leaders have expanded 3PL and started to shift more functions to their outsourcing: direct interaction with their suppliers, contractors, and partners, management of all supply chain processes - from shipment to final delivery to buyers, customs and documentary support, etc. according to the needs of their business

  • 5

    5PL

    Now imagine, when sales assistance is added to all of the above functions. For a business owner, it is «all-inclusive». Such a contractor will create a sales platform (for example, a website), will take over calls from buyers (call-center), will develop appropriate software to record sales, and will manage stock balances in the warehouse

At the first stage in the supply chain, all PL-directions work with the goods (pallets, containers, etc.) and after their actual delivery to the warehouse, the goods can be disbanded in other formats.
By the way, the contractor company that takes part in the logistics process is usually called an operator or provider. For example, NP Logistic is a professional 3PL operator!