The E&P TEAM  focus =>  We do not wish to be asset-driven, and seek to provide or prefer services based on:

Established standard 3PL-service(s) – ancillary to general freight forwarding

Contractually based longer-term relationships

“Bundled solutions” - not transactional-based quotations or RFQs

Focus toward a management role in 4PL-service specific activities

Project and Project Freight Logistics support and management

 Delineation and definition of product/service offering:

1PL:  Actual owner of the cargo doing the transport by itself, utilizing its own assets/transport fleet

2PL: A “for hire” transport provider - carrier, (eg. steamship line, trucking company, airline, railroad, barge operator, etc.).  The physical asset being owned by the provider of the service, inclusive of warehouse owner/operators, or any physical service provider along the supply chain.

3PL: The “non-asset” based logistics provider, hired by a consumer, customer, or user.  In historical terms, the 3PL has been known as the “broker/forwarder”, a niche market between the “user and the 2PL”, wherein a margin is made between the “buy and sell” price – usually that spread dependent then on its own internal operating costs.  The relationship has traditionally been transactional in nature, however in more recent times has gravitated toward longer-term contractual obligations. 

The spread/margin/yield of the 3PL is dependent on “buying power”, (traditionally based on volume and long-term relationships), from the 2PL-carrier(s), and is greatly impacted by its operating costs.  In historical terms – the larger the Company, the greater the buying power… which we believe is not necessarily true in today’s global market of “have freight will get the rate and travel”!  The 3PL’s profit margins are determined at a transactional level (per shipment, per kilogram, etc.), and not necessarily offered on the determinant basis of the 3PL’s operating costs – offering being “cost plus”.  Hence, in many cases, the relationship engendered between the 3PL and its customer, as well as the 3PL and the 2PL, are somewhat “adversarial”, as pricing is based on “agreed price per unit”, and there is no sharing of benefits which may be accrued when the 3PL obtains preferred rate pricing “per unit” from its contract suppliers (2PLs).

In general terms – the 3PLs are known in our vocabulary as brokers, forwarders, freight forwarders, freight agents, NVOs, NVOCCs, intermodal-marketing companies, project forwarders, logistics providers, spediteurs, and freight brokers; and, as per country requirements, customs brokers, agents, etc.  Sea freight/ocean freight forwarders may/may not have the same terminology and usage in the market, dependent on local laws and governmental restrictions.  In current terms the customer (client) views the 3PLs as “the carrier”, assuming the liabilities and obligations of those carriers – the 2PLs!

4PL:  A recently coined term, and there appear to be a number of variations and permutations to the basic concept, and a matter of “gray area open to interpretation and (personal) definition”.

An appropriate illustration of the concept is that the 4PL may be based on “partnership between the customer and the 4PL entity”.  The 4PL is contracted to manage transport and varied logistics, which are now outsourced for IMPEX, shipping, traffic departments’ functions.

Key word: “Management Outsourcing” of preferred logistics services!  Pricing and compensation are determined on an individual basis, are usually contractual and longer-term in nature, not transaction oriented or based, and can take several forms.   The constant in any 4PL-relationship is that it is based on a definitive (contract of…) agreement, specific goals and objectives are set forward, and compensation is consistent with achievement of those goals and objectives.

The actual logistics for which the 4PL is hired to manage may be singular in mode, more likely multi-modal, and possibly inclusive of storage, warehousing, distribution and relevant and ancillary services such as customs brokerage, duty drawback, etc. and may be outsourced to various 2PL and 3PL-service providers.

Some arrangements described as 4PLs are in reality only 3PLs, while other 4PL-mangement solutions may encompass “logistics management” oversight and ownership of the underlying 2PL and 3PL contracts. 

In effect, sometimes identified as “Management 4PL” contracts are made as drivers for 3PLs, and will cross and blur the line of responsibilities in the short-term, while a much versed and abused, though marketed term is “integrated supply chain management”, utilized by those companies wishing to bridge the service offerings beyond the standard 2PL and 3PL services. 

A true integrated supply chain management process encompasses “soup-to-nuts” procurement of materials, customer service, production-demand / planning-scheduling, replenishment, and other core activities.  Very few companies – even those touting 4PL-management contracts are true integrated supply chain managers across the core and ancillary activities necessary to drive the global supply chain.

The 4PL-Management concept applies across ALL vertical markets… however, appears to be intensely active and of great interest in Technology, Automotive, Consumer, Retail, etc. – those sectors wherein pricing of an “end-use product” is preparatory and succinct to P&L demands.   Sector applications to the Energy & Projects, as well as Governmental and AeroSpace sector requirements seek options for “logistics management solutions”, which allow those companies to focus on their core business strategies and acumen.

Our business plan appreciates business development in the E&P, inclusive of Project Freight Logistics and forwarding, combined with inherent 3PL activities and “outsource” requirements is new and unusual “to market”, but necessary in the long-term obligations for companies to provide maximum shareholder returns – R.O.I. and R.O.E. on an internal basis.