Logistics Company

Feb 25

What Is The Difference Between 3PL, 4PL and 5PL?

For businesses looking to sent their products across the country, over the border or internationally, it is essential to understand how a freight forwarder works to deliver their products. 

Many companies sign contracts with freight forwarding companies in Edmonton without having a firm idea of how they operate. Then they complain they don’t know what is happening with their products. 

Do they store and manage their products? How do they send it? Most importantly, are they are 3PL, 4PL, or 5PL company? 

By understanding the difference of each process – 3PL, 4PL, or 5PL – you will find what works for your business. 

What Is 3PL? 

3PL stands for Third-Party Logistics and usually refers to freight forwarders in Edmonton that offer logistical services as part of their deals. As well as storing products and managing inventory, they work with multiple carriers to get products to their destination. An example would be:

 

Logistics Company Edmonton

 

A manufacturing company requires raw materials from China to create their products. They hire a freight forwarder in Edmonton that moves the raw materials, organizing to have the materials boarded on trucks, then placed on a boat bound for the port in Vancouver, before finally having them transported by rail to Edmonton. 

The example highlights how a 3PL logistics company in Edmonton will manage each step of the way to ensure you get your materials to your base or send products to their destination. 

What Is 4PL? 

It can be challenging to spot the differences between a 3PL and 4PL company. In simple terms, a 4PL company acts as a “consultant” of the network within a 3PL system. It is considered an independent company that monitors and works with various 3PL companies in the chain. 

As such, 4PL logistics companies in Edmonton have a higher level of control over the supply chain operation. They act as a consultant when organizing the storage, establishing the travel routes, and modes of transportation. 

What Is 5PL? 

While relatively new in the industry, 5PL companies are slowly gaining traction as a worthwhile provider. The idea behind 5PL companies is that they have a significant role in constructing, organizing, and implementing fluid solutions for the use of technology on behalf of clients. In essence, they oversee everything. 

They work on establishing a fluid collaboration between all of the 3PL and 4PL companies so that the transaction can be completed. What they usually do is combine the needs and demands of 3PL and 4PL providers and create a bulk volume of services to offer clients a better shipping rate. It is a company that brings together the work of both 3PL and 4PL companies. 

Find A Freight Forwarder In Edmonton That Works For You

At the end of the day, it is always important to do your homework. Talk to several providers and see how they operate their companies. By weighing all the options, you’ll find the right balance for your business. 

Ocean-Air Freight Ltd is your premier logistics and freight forwarder in Calgary. Since 1990, we have been providing individuals and companies with top-quality shipping and freight forwarding needs. We pride ourselves on our professionalism, experience and adaptability. We provide a range of services including air, ocean and surface freight for international, cross-border and domestic needs, cargo insurance, import and export needs, documentation and much more. From Europe to North America, we can handle all your deliveries and freight requirements. For the best freight forwarder in Edmonton, Calgary and Saskatoon, contact our logistics company in Calgary today.  

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