3PL vs 4PL: Key Differences, Benefits and How to Choose the Right One

If you're running a business, you might have heard of the terms 3PL vs 4PL. At first glance, they sound like logistics jargon. But knowing the difference can seriously impact how smooth (and affordable) your shipping and fulfillment run.

Let's break down what 3PL and 4PL really mean, how each one works, and how to figure out which is best for your business.

Key Takeaways

• 3PLs and 4PLs are two different fulfillment options for businesses. However, that doesn't mean the other one is better than the other.
  
  
• A 3PL handles warehousing, packing, and shipping your orders.
  
  
• A 4PL manages your entire supply chain, including 3PLs.
  
  
• Your choice depends on how hands-on you want to be, your business size, and your budget.
  
  
• Most Canadian eCommerce sellers find that 3PLs are the more practical, cost-effective solution.

What is a 3PL?

A third-party logistics provider, or 3PL, is a company that takes care of the behind-the-scenes work. This includes storing your products, packing orders, and shipping them out to your customers.

It's perfect for sellers and businesses who want to offload day-to-day logistics but still stay in control of the process.

Think of it like this:

You focus on growing your brand and making sales. Meanwhile, your 3PL partner handles the fulfillment and shipping.

How Does 3PL Work?

Here’s how a typical 3PL provider setup looks:

1. Receiving. The 3PL warehouse receives the inventory you sent them. Then, the staff check it in and prepare it for storage.

2. Warehousing. They will store and sort your products safely in their warehouse, allowing orders to be dispatched quickly. It makes the logistics operations smoother and more efficient.

3. Inventory Management. This logistics service allows you to track your stock through a dashboard. You will know what's in, what's low, and when to restock.

4. Order Processing. Once a customer places an order, the 3PL service picks and packs it right away.

5. Shipping. Its logistics process includes shipping the customer's orders with one of its courier partners. The fees often come at discounted rates.

6. Returns Management. Returns are common in business. So, if a customer sends something back, your 3PL partner can handle it and do the restocking.

7. Reporting and Analytics. Partnering with a 3PL has other advantages. For one, you get access to data on orders, delivery times, inventory turnover, and more.

Also Read: Top 3PL Companies in the US (2025)

What is a 4PL?

A fourth-party logistics provider, or 4PL, takes things up a notch. Instead of handling just the shipping part, they oversee your entire supply chain, from sourcing to delivery.

They usually don't own warehouses or trucks themselves but manage other logistics partners (like 3PLs) on your behalf.

Simply put:

A 4PL provider is your logistics manager or consultant. They make sure everything flows smoothly behind the scenes.

How Does 4PL Work?

Here’s what a 4PL does:

1. Develop Strategy. As your lead logistics provider, they will help you build a game plan for how your supply chain should run.

2. Select Provider. A 4PL process involves helping you select the best 3PLs, carriers, and suppliers to partner with.

3. Integration and Coordination. A 4PL acts as a single point of contact to ensure all systems and partners work together smoothly. It integrates all logistics functions—warehousing, freight, customs, etc.—into one ecosystem.

4. Implement Technology. The 4PL company sets up platforms so you can monitor what's happening in your supply chain.

5. Optimize Supply Chain. The logistics company finds inefficiencies and identifies ways to save time and money.

6. Manage Performance. Apart from helping you develop plans, the logistics service provider also tracks how everyone's doing. They make sure KPIs are being met.

7. Collaboration and Innovation. Your 4PL partners help you keep improving your logistics strategy over time.

Key Differences Between 3PL and 4PL

So, what's the difference between these two? Let’s compare how 3PL and 4PL stack up in the supply chain and logistics:

Order Fulfillment

A 3PL handles direct order fulfillment. In contrast, a 4PL manages fulfillment through 3PL partners.

Supply Chain Optimization

A 3PL focuses on individual logistics tasks. On the other hand, 4PLs oversee and improve the supply chain operations.

Customer Communications

3PLs communicate directly with your team. However, a 4PL model communicates differently. You will talk to them, then the 4PL partner will discuss with the rest of the parties involved.

Areas of Focus

A 3PL handles day-to-day logistics like warehousing, fulfillment, and shipping. Meanwhile, a 4PL takes a strategic approach. It oversees the entire supply chain and manages multiple partners to optimize performance.

Relationships

With a 3PL, you work directly with the service provider to manage tasks like shipping, warehousing, and fulfillment. A 4PL, on the other hand, acts as a supply chain integrator. They manage all the vendors and logistics partners on your behalf so you don't have to coordinate everything yourself.

Resources

A 3PL typically owns or leases physical assets, such as warehouses, trucks, and fulfillment centres, which it uses to handle logistics operations. However, a 4PL doesn't rely on its own assets. Instead, it leverages the resources, networks, and technology of multiple providers to coordinate and optimize the entire supply chain.

What Makes Them Different from 1PL, 2PL, and 5PL?

To really understand 3PL and 4PL, it helps to know how they fit into the bigger logistics picture. Here’s how they compare to other logistics models:

• 1PL. A first-party logistics (1PL) model is one in which a business handles everything in-house. It manufactures, stores, and delivers products directly to your customers with your own team and equipment.
  
  
• 2PL. A second-party logistics (2PL) is a service provider that offers just one part of the logistics process. It could be a trucking company or a freight airline that transports goods from point A to point B.
  
  
• 5PL. A fifth-party logistics (5PL) provider goes even further than 4PL. These providers manage supply chains at a network level to optimize multi-business operations. They're typically used by large enterprises with highly complex logistics needs.

Which Type of Logistics Model is Best for Your Business?

If you're still unsure whether to get 3PL or 4PL, here's how to figure it out:

Business Size and Complexity

If you're running a smaller eCommerce business, a 3PL is usually all you need to handle fulfillment efficiently. However, if you have a larger operation with multiple suppliers or international shipping, a 4PL might be worth considering for added coordination and strategic oversight.

Control and Involvement

If you want to stay more hands-on with your logistics, a 3PL is the way to go. Meanwhile, if you'd rather hand it off and let someone else manage everything, a 4PL is worth exploring.

Scalability

Multiple 3PL providers can scale with your order volume and support growth. However, 4PL services take it a step further. They can scale your business and help you optimize as you expand into new markets or bring on additional suppliers.

Cost

One of the key differences between a 3PL and a 4PL is cost. 3PLs are typically more affordable and flexible. 4PLs offer greater strategic value but usually come at a higher price.

Technology Integration

3PLs offer tools to help you track and manage orders. On the other hand, 4PLs take it further by bringing everything together into one big-picture view of your entire supply chain.

Range of Services

A 3PL handles the core logistics, like packing, shipping, and returns. Meanwhile, 4PLs cover not just that. It also includes strategy, coordination, and optimization across your entire supply chain.

Final Thoughts

A 3PL handles the core logistics, like packing, shipping, and returns. Meanwhile, 4PLs cover not just that. It also includes strategy, coordination, and optimization across your entire supply chain.

Choose Stallion As Your 3PL Partner

Are you in need of a reliable 3PL fulfillment partner in Canada? Stallion makes shipping and logistics simple for online sellers like you.

We handle:

• Shipping within Canada, to the US, and internationally
• Warehousing
• Order fulfillment
• Discounted shipping rates up to 75%
• Returns management

You'll also get access to an easy-to-use dashboard for tracking, inventory insights, and automation tools.

How about you?

You can focus on growing your store!

Let Stallion take care of the heavy lifting. Start today and see how easy fulfillment can be.

Claudine Joy Rada

Candy Rada is a dedicated professional with tons of experience in content writing for the shipping industry. As a literature degree holder, she excels in creating engaging content with strategies that enhance brand visibility. She enjoys playing with her cats, reading dystopian books, and joining trivia games in her free time.