Contract Logistics

Contract logistics refers to a long-term business cooperation between a sender of goods and a service provider. As a supplier, the service provider (forwarding company, parcel service, other service provider) takes on logistics tasks based on a contractual agreement. The term contract logistics comes from the underlying contract of this business transaction.

In contract logistics, not only the transport, transshipment and storage, but also other, more complex services can be outsourced. These include, for example, additional services such as consignment tracking, assembly and order picking. In principle, individual activities or entire processes can be outsourced.

With progressing digitalisation and increased customisation requests from customers, contract logistics is a good choice for outsourcing tasks. The level of service and added value for the customer are increased and costs and resources are saved.

Forms of contract logistics

Depending on the number of companies involved in the logistics process and the complexity of the outsourced tasks, there are different levels of outsourcing. They are classified in the so-called logistics provider levels. For example, 3PL (third-party logistics service provider) is often used synonymously with contract logistics.

  • 1PL (first-party logistics provider)°Classic carriers who carry out all regional, operational tasks in the transport and logistics service area entirely on their own.
  • 2PL (second-party logistics provider) Forwarders who take over transport, transshipment or storage services. E.g.: forwarding companies, shipping companies, shippers, parcel services.
  • 3PL (third-party logistics provider) The sender commissions a nationally and internationally active service provider for most of his logistics activities.
  • 4PL (fourth-party logistics provider)/lead logistics provider (LLP) Service providers who collect all logistics activities and hand them over to third-party logistics service providers. They are viewed as system integrators who stand between their customers and other logistics service providers to ensure the coordination and organisation of the entire supply chain.
  • 5PL (fifth-party logistics provider) Logistics service providers who deal with the supply chain management of entire supply chains. These service providers plan, procure and develop entire strategic and innovative logistics solutions and concepts.
Contract Logistics