First Party Logistics (1PL) DefinitionPosted in General Information - 3 Dec 2018, 10:41 AM
First party logistics service provider is an entity that goes with an independent system. It runs its own logistics operation and it is not a secret that a company requires logistics to run a business activity. Logistic services can be classified into several points such as storage and forwarding. Logistics operation might look the same according to some individuals. However, the system varies. One of the common terms are named first party logistics or better known as 1PL. To shed light upon it, check these details out!
How the First Party Logistics is Defined
1PL service provider commonly has an immediate relationship with the customers. The goods producer takes control over the services of logistics by getting most out their company unit.
Instead of outsourcing logistics activities as well as transport from external parties—the third-party logistics company, for instance—, the provider goes with its department. Put the matter another way; first party logistics company comes with its technical resources. The stock of the assets includes internally-owned transport vehicles, trailers, trucks and not to mention the warehouses.
The clear advantage of being a provider of first party logistics is that the body has more opportunities in organizing the transport to the picked destination. In addition to that, not only the manufacturer has a go with its own logistics operation, but it’s also free to store and distribute the products to the consumers. For sure, its regulation might be applied.
Is the Term Simply Applicable to the Goods Producer?
The party does not only belong to the goods producer or manufacturers but also others. Don’t you know that exporters, importers, retailers, as well as traders can be called first party logistics service provider as long as they run their own logistics operation? Apart from those parties, government departments can be categorized in this term.
Advantages and Drawbacks of First Party Logistics Company
The clear benefit that the first party logistics provider has to offer is that the customers are highly convinced with the products that the manufacturers produce. Besides, the individual processes—from delivering to shipping—can be guaranteed by the 1PL. The drawback is when it comes to narrow specialization; it is found that this typical approach might not completely be effective. It’s truly the opposite of the third-party logistics company which is more specialized.
To conclude, the service provider of 1PL can be identified as an independent entity, allowing the whole processes of storing goods and delivering them to be single-oriented. It means that other parties don’t involve in the business process.