There are a lot of logistics solutions out there, including:
- On-demand logistics
- Lead logistics providers
With so many options, it can be hard just to know the difference between them — let alone to know which one you should use.
In this article, we’ll dive into lead logistics providers as an outsourced logistics solution, breakdown the pros and cons of different LLPs, and share some of the top logistics companies to consider.
What does lead logistics mean?
The term “lead logistics” is typically only used in the context of the phrase “lead logistics provider”.
That said, lead logistics is the direction and management of an entire supply chain. It refers to the efforts and processes involved in leading a whole multiphase supply chain, from raw material sourcing to last-mile delivery and every step in-between.
What is a lead logistics provider?
A lead logistics provider — abbreviated as LLP, or also known as a 4PL — is a logistics service provider that both provides an end-to-end logistics solution and manages all parts of a business’s supply chain, including procurement, transportation, inventory management, delivery to the customer, and more.
Essentially, businesses partner with LLPs to fully outsource not just common logistics functions, but logistics management as well.
One hired, LLPs connect businesses to 3PL partners that deliver logistics services, and then the LLP will take on the role of managing those supply chain relationships and processes on behalf of their employer.
Why companies would need a lead logistics provider
When an ecommerce company is just starting out, it is totally viable for them to handle all the supply chain related decisions and activities in-house.
However, as the business scales, it can get more and more difficult to manage everyday functions and operations while still making time for strategic activities (marketing, product design, etc.).
In these cases, it is very common for businesses to outsource their inventory storage, order fulfilment, and shipping to a third-party logistics company (or 3PL).
3PLs work with their customers to provide them with the most viable fulfilment inventory management, warehouse operations, order placement and delivery solutions, and increases operational and cost efficiency.
For small to midsize businesses, a 3PL is typically the best bet. The right 3PL (especially an established, tech-enabled logistics partner with expertise, resources, and logistics management capabilities) will scale with your business through many stages of growth.
4PLs are really only necessary if your business is functioning at the enterprise level — that is, if it has reached a scale where it is no longer possible or practical to manage your own logistics, or where your supply chain is too large or complex to be handled by anything less than an expert.
In these cases, outsourcing to a LLP enables a company to focus on core functions and strategic priorities, and leave the supply network in the hands of experts.
Even though hiring a LLP adds an extra layer of separation between the company and their supply chain, it works better for organisations who have a long term commitment and business strategy in mind.
“I’d moved my fulfilment operation from apartment to apartment and to different warehouses, so when I saw my products in the ShipBob fulfilment centre, it was like my wildest dreams were being realised. Our order volume has increased by 1,150% in the past year!
I’m incredibly grateful to have found a partner in ShipBob, knowing they can sustain my growth versus holding me back.”
Nichole Jacklyne, Founder of Slime by Nichole Jacklyne
Pros of lead logistics providers
If it’s the right fit for your business, an LLP can be an incredibly valuable asset. Here are a couple of the benefits of outsourcing to a 4PL.
Most 4PLs partner with 3PLs and other service providers across the world, which can help enterprises diversify their network to build a bigger presence globally.
4PLs also have the necessary economies of scale and connections within the global supply chain industry to support growth at scale and expansion through supply chain optimisation and strategic guidance.
Supply chain efficiency
Just like 3PLs, 4PLs can improve the supply chain efficiency of a company by reducing costs, speeding up processes, and freeing up time for the business to focus on other priorities.
A good LLP will have the expertise to optimise supply chain management as well as supply chain functions for efficiency and continuous improvement.
Cons of lead logistics providers
While LLPs might be a good supply chain solution for larger, enterprise-level businesses, they usually aren’t the best choice for small- to midsize DTC brands — especially if yours is just starting out. Here are just a few of the reasons why some businesses shouldn’t partner with a 4PL.
Giving up control
When you pass off almost your entire supply chain management to a 4PL, you give up complete control over it. Because the LLP takes over the entire supply chain management process and acts as the single point of contact, your involvement in your own businesses’ logistics becomes almost nil.
For larger businesses, a hands-off approach can work; but for new ecommerce brands, it denies you the level of customisation and control that helps guarantee quality assurance and builds your customer base.
Moreover, these companies sometimes have a bias for certain suppliers that is beyond performance capabilities and might affect your overall working.
Hiring a 4PL can be very costly. The jump in cost from a 3PL to a 4PL may not affect larger companies (as they are making enough revenue to offset it), but smaller companies likely cannot afford it.
In addition, while LLPs might lead to cost optimisation in the long run for large businesses, small to midsize companies might not achieve that cost optimisation because of reduced purchasing capabilities, and because the savings they reap are less than what they’re spending on the 4PL.
“We love that ShipBob allows us to keep low overhead by not having to do shipping ourselves. Having the ability to outsource that to a third party logistics company that could provide us affordable pricing, customer service, and a software platform that was really intuitive that was linked to our website and all the rest of our platforms, giving us all those real time insights — it was a game changer.”
Nathan Garrison, Co-Founder and CEO of Sharkbanz
Going from managing logistics in-house or through a 3PL to completely giving up their entire supply chain management can be quite challenging.
If you are used to making your own decisions, having much of your involvement in your own supply chain taken away could make you feel sidelined in your own business.
Additionally, once you have used a 4PL, transitioning back to in-house logistics can be very tough, too!
The more you use an LLP and the more that LLP becomes a part of your standard operating procedures, the more dependent your business is on it. By transforming your entire supply chain, the LLP creates a new system that requires their influence and support to run effectively.
Unlike 3PLs that aid and support the fulfilment process but leave the majority of decision making to the businesses themselves, LLPs have much more control over a business’s overall logistics. For this reason, 4PLs are often referred to as a strategic partner and not just a service provider.
Top 5 lead logistics companies
Here are some of the top lead logistics providers for larger businesses.
Multimodal transportation and logistics management services
Multinational transportation and logistics company
UPS Supply Chain Solutions
Multinational shipping carrier and package delivery company
Global logistics company
J.B. Hunt (JBI, DCS, & ICS)
Transportation and logistics company
C.H. Robinson is a multimodal transportation and logistics services company that consults with businesses to help them re-engineer their supply chains. Their global suite of services accelerates trade to seamlessly deliver whatever products and goods their customers need.
With technology built by and for supply chain experts, they strive to bring faster, more meaningful improvements to freight shipping, warehousing, and customs and trade compliance, among other logistics functions.
XPO Logistics is a leading supply chain partner to companies across every major industry, with a focus on freight routing and transportation.
XPO offers transport services for truckload, LTL freight, last-mile delivery services, and global forwarding, as well as both inbound and outbound logistics services.
Their services are backed by supply chain technologies harnessing the power of AI to improve quality and increase procedural productivity.
UPS Supply Chain
UPS isn’t just one of the largest shipping carriers in the world, known to deliver packages for consumers as well as businesses.
It also offers a wide variety of logistics services for ecommerce companies, including warehousing, freight consolidation, transportation management, cargo insurance and more.
Expeditors is a global logistics company that designs custom supply chain solutions for commerce brands. Like other LLPs, they cover many supply chain bases such as transportation, order management, and customs and compliance, and service a variety of industries.
J.B. Hunt is a transportation and logistics company that strives to create the most efficient transportation network in North America.
They offer fulfilment and final-mile delivery for enterprise-level businesses, and their technology platform digital freight matching platform helps carriers and customers collabourate as they do business together.
Choosing a tech-enabled 3PL instead
For businesses of just about any size, a high-quality tech-enabled 3PL can provide end-to-end ecommerce solutions without incurring the heavy costs associated with a lead logistics provider, all while letting you maintain control over your business’s logistics.
ShipBob takes care of order fulfilment for you and provides you with a complete logistics solution, including built-in real-time inventory management software, order management, data reporting metrics, and more.
In this way we provide ecommerce companies of all sizes with the necessary infrastructure and expertise to facilitate growth.
ShipBob’s technology and dashboard allow ecommerce brands to easily integrate with leading platforms and sell through popular DTC and B2B channels. Our global fulfilment network with dozens of locations worldwide also allows these brands to expand into overseas markets with ease.
All in all, ShipBob does more than just provide a fulfilment service — it provides you with the expertise, network, resources, and technology to grow your business affordably, and scale with you wherever you go.
“For the first several months of our business, we fulfiled all of our orders ourselves. We’d have U-Hauls packed with thousands of products making endless trips from our large storage unit to the post office. It wasn’t a scalable, long-term solution that would facilitate our growth.
Because our business was growing at lightning-fast rates, we needed a solution that would provide flexibility and that we could communicate with easily to solve problems. ShipBob was that solution for us.”
Aaron Patterson, COO of The Adventure Challenge
Lead logistics FAQs
Here are answers to the most common questions about lead logistics.
Who uses an LLP?
Large growth organisations who wish to focus on core competencies by outsourcing their entire supply chain management use an LLP. An LLP provides end-to-end logistics solutions for these companies.
Is an LLP the same as a 4PL?
The term LLP and 4PL mean almost the same and can be used synonymously. But technically, while LLPs work on the principle of mutual benefit and are characterized by no ownership of assets, a 4PL often owns assets and directly provides supply chain operations.
What are the benefits of a 4PL?
A 4PL helps an ecommerce business outsource the management of their entire logistics operation. This increases their efficiency and cost optimisation, facilitates growth and expansion prospects through networking, and frees up more time for businesses to focus on strategic priorities.
Should I use a lead logistics provider?
While a lead logistics provider might take care of all supply chain management, LLPs reduce your control over your logistics operations. Using a tech enabled 3PL like ShipBob instead helps you outsource inventory storage, order fulfilment, and shipping while providing you the quality, time, and control your business needs to thrive.