The models at a glance
| Model | Who does the logistics work | Typical example |
|---|---|---|
| 1PL – first-party | You, with your own staff, premises and vehicles | A manufacturer that runs its own warehouse and delivery vans |
| 2PL – second-party | An asset-based carrier for one specific service, usually transport | A haulier or parcel carrier moving your goods |
| 3PL – third-party | An external partner that runs warehousing and fulfillment for you | A 3PL receives, stores, picks, packs and ships your orders |
| 4PL – fourth-party | A coordinator that manages several logistics providers and often the whole supply chain | One party coordinating carriers, warehouses and systems across countries |
| 5PL – fifth-party | Network-level, data-driven management of many providers and supply chains | Optimisation platforms coordinating several 4PL/3PL networks |
1PL – doing it yourself
You own or lease the warehouse, employ the staff and often run your own vehicles. It gives full control but ties up capital and makes it hard to scale up and down. Most companies start here.
2PL – buying transport
A 2PL moves goods with its own assets – trucks, ships, aircraft. You still run the warehouse; the carrier takes the goods from your door to the recipient.
3PL – outsourcing warehousing and fulfillment
A 3PL takes over the physical warehouse work: receiving, storage, picking, packing, dispatch and returns, usually with integrations to your webshop or ERP. You keep ownership of the goods and your customer relationships. This is what Karlholm Logistics does – see 3PL in Sweden and What is 3PL?.
4PL – coordinating several providers
A 4PL usually does not run the warehouse itself. It manages and integrates several logistics providers on your behalf – for example multiple 3PLs, carriers and customs brokers – and is accountable for the overall supply chain design and performance.
5PL – managing networks
5PL is the least standardised term. It usually describes technology-driven management of large logistics networks, often aggregating demand from many shippers to optimise transport and warehousing at scale.
Which model fits you?
- Small and growing companies often move from 1PL to a 3PL when warehouse work starts competing with sales. See why growing ecommerce businesses outsource logistics.
- Companies entering a new country often use a local 3PL plus their own customs broker and carriers, rather than a full 4PL. See Nordic fulfillment for international brands.
- Large multi-country supply chains may benefit from a 4PL that coordinates several 3PLs.
Frequently asked questions
Is a 4PL better than a 3PL?
Not in itself. A 4PL coordinates several providers and makes sense for complex, multi-country supply chains. Many companies only need one 3PL that runs their warehouse well.
Does a 3PL own the goods?
No. In a 3PL model you keep ownership of the products and the customer relationship; the 3PL runs the warehouse work on your behalf.
Are the definitions standardised?
No. 1PL–3PL are used fairly consistently, while 4PL and especially 5PL are defined differently by different consultants and providers. Always check what a provider actually includes.
Short definitions in the glossary: 3PL – Third-Party Logistics · 1PL – First-Party Logistics · 2PL – Second-Party Logistics · 4PL – Fourth-Party Logistics · 5PL – Fifth-Party Logistics
This page gives general information about logistics terms. It is not legal, customs or tax advice, and it does not describe the terms of any specific agreement with Karlholm Logistics.