Question

What is ‘own-account’ transportation?

Describe the different types of logistics service providers.

Describe the various factors that have to be considered when selecting logistics service providers. How in practice do you think consignors make decisions concerning choosing logistics services?

What is fourth-party logistics (4PL^®) and how has the concept evolved in recent years?

How might we distinguish 3PLs from other LSPs?

Answer 1

Answer.

own account transportation refers to the transportation the shipper uses his own vehicles to move the goods. For example, a big industrial company moving his goods with his own fleet of trucks. In other words, Own-account shipping is a means for firms to ensure the reliability of their shipments; third parties' obligations to other clients can cause delays, and urban shipping requires rapidity. It is a tool firms use to manage complex urban logistics without increasing transport costs exponentially.

Different types of logistic service provider:

First Party Logistics accounts for the two parties benefiting from the transaction - the manufacturer or supplier shipping the goods, and the receiver.

Second Party Logistics involves specifically the carriers of goods for the transaction, which can be rail, road, sea and/or air.

Third Party Logistics still primarily concerns goods transportation from a supplier/consigner to a buyer/consignee, but includes additional services involved in the supply chain. These services can include warehousing, terminal operations, customs brokerage, supply chain management, Logistics IT software products and analysis services and track and trace.

Fourth Party Logistics providers act as the head administrator for all aspects in the supply chain of a company. They manage any other contracted 3PLs and provide neutral management, feedback to the company about the state of their supply chain, recommendations and solutions to increase efficiency.

A 5PL will plan, organise and implement logistics solutions on behalf of the contracting company with a focus on utilising the most appropriate technologies. Essentially, a 5PL manages networks of supply chains with an extensive e-business focus across all logistic operations, other than 3PLs and the parent company.

* Factors to be considered when selecting logistics service provider:

Freight cost: because it will be based on the modes of location, shipment delivery. Percentage of timely deliveries to ensure that customers are satisfied with timely delivery of their orders. Percentages of loads that are accepted by primary and secondary carriers, because it also has impact on cost and customer satisfaction. Technological innovations, to enhance efficiency and productivity.

In practice consignors make decisions based on the factors such as, capability of the service provider to scale their operations to the growing needs. Innovative technology platform, comprehensive warehousing and transportation facilities, financially stability and payment history, proven track record and high quality industry reference. After analysing these factors consignor will assess the long term and short term strategic goals with relation to the supply chain requirements and then opt for logistics service provider.

While third-party logistics outsourcing is accepted business practice (though not without risk), corporations are now looking to outsource to a single partner who will assess, design, build, run and measure integrated comprehensive supply chain solutions on their behalf. This evolution in supply chain outsourcing is Fourth-party Logistics or 4PL.A 4PL provider is a supply chain integrator. The 4PL assembles and manages all resources, capabilities and technology of an organisation’s Supply Chain and its array of providers.

* Difference between 3PL and 4PL:

3PL provider is expected to provide all of the contracted services through its own resources. When the 3PL provider outsources any part of its duties to yet another party, the 3PL providers then becomes a 4PL provider. 4PL acts as a liaison between the client and multiple service providers, whereas a 3PL offers its own logistics services directly to the client.

References

* 1PL To 5PL: The Differences Between A 3PL Logistics Provider And Other Logistics Service Providers

Written by Thomas van Leeuwen | 16-Jun-2014

https://www.google.com/amp/logistics.bcr.com.au/blog/1pl-to-5pl-the-differences-between-a-3pl-logistics-provider-and-other-logistics-service-providers%3fhs_amp=true

* https://www.quora.com/What-are-the-various-factors-that-have-to-be-considered-when-selecting-logistics-service-providers

*https://supplychain.enchange.com/bid/24156/Fourth-Party-Logistics-4PLP-what-this-means-for-your-Supply-Chain

* https://searcherp.techtarget.com/answer/What-are-the-important-differences-between-3PL-and-4PL (Dave turbine)