Transformation into 4PL: The case of local logistics service providers in Vietnam

Abstract

For a few decades, a new model of logistics service providers (LSP) has appeared and played the role of integrating all operations of the supply chain. This model is known as a logistics integrator, or fourth party logistics (4PL). 4PL has emerged as an ideal configuration for enterprises around the world to effectively utilize their resources and obtain cost reduction across the supply chain. With increasing competition among enterprises, customers' requirements for complicated services, and global supply chain management, the limitations of inbound services from LSPs have become obstacles to their development. As a result, transformation into 4PL is inevitable for LSPs in the global logistics market. This paper aims to analyze the role, characteristics, and benefits of 4PL. A model for transformation into 4PL for local LSPs in Vietnam is constructed to identify impacting factors. The results point out six factors influencing the transformation process, as well as three important capabilities of 4PL.