The terms 3PL or "third-party logistics" refers to the outsourcing of some logistics functions (and 4PL or "fourth-party logistics" of all logistics operations). Handing over the entire logistics operation to a logistics specialist under 4PL arrangement would require a depth and comprehensive study and analysis of costs, benefits and other impacts.
The potential benefits are greater with 4PL arrangement in order to improve the company focus, high-quality logistics operation and higher ability to adapt market changes, but this involves greater risks of no direct control over the logistics functions and higher cost operations if the 4PL contractor could not or would not seek optimum efficiency in the processes and in dealing with the sub-contractors.
Therefore, 3PL is often regarded as the most suitable solutions where only certain functions are taken over by some specialized logistics services providers or a multipurpose logistics provider capable of taking over those outsourced functions. Some of logistics operations being outsourced through 3PL arrangement are: logistics supply base, warehousing, marine transportation, cargo shipment, freight forwarding, crew change service, waste management, customs broker and other logistics support services.
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