SEE HOW THIRD PARTY (3PL) AND FOURTH PARTY (4PL) LOGISTICS WORKS IN MARITIME INDUSTRY.

Third Party (3PL) and Fourth Party (4PL) Logistics

OUTSORCING - paved way to 3PL & 4PL

—  Outsourcing is one of the important features of SCM . It is the usage of other agencies to carry out non-core activities of an organization.

—  First , the parent organization separate the value adding and non-value adding activities. They concentrate only on value-adding core functions and leave the other activities to those who have the expertise.

—  In other words ,  do what you are best at and leave all other non-value-added activities to more suited players. This is the concept behind 3PL & 4PL.

            Third Party Logistics or 3PL

—  3PL and 4PL are terms coined by Accenture, an international research and consulting firm to describe the outsourcing of certain key business fulfilment tasks to other companies.

—  The outsourced functions include service managements in - demand, supply, transportation , materials , production, green supply chain and financial supply chain

—  Outsourced tasks such as warehousing, picking, packing, shipping and inventory management helps to manage the supply chain more efficiently and effectively.

—  Some 3PLs might also help with the administrative side of these tasks, such as invoicing and accounts receivable.

—  Logistics planning, customized logistics  solutions, warehouse management, Inventory Management , shipment consolidations , carrier selection, rate negotiations, fleet management, LIS , tracking/tracing ….etc….. are the functions carried out by 3PL firms.

ADVANTAGES OF 3PL

ü  Cost Reduction

ü  Maximizing Revenues

ü  Facilities

ü  Cost control

ü  Working Models

 

WHY 4PL ?

ü  3PL often lack broad set of skills, integrating technologies, strategies and global reach.

ü  To build up this, 3PLs go for collaborations with consultancies and technology providers

ü  Corporations outsource their entire set of supply chain requirements to one organization, who will assess , design, make and run integrated comprehensive supply chain solutions.

ü  This evolution is Fourth – Party Logistics or 4 PL.

Fourth Party Logistics or 4PL

ü  In 4PL, logistics is controlled by a service provider that does not own the assets to carry out logistics activities but outsources to subcontractors, the 3PL

ü  Globally, about 75 % of the Fortune 100 companies and about 45% of Fortune 500 firms have now gone in for 4PLs.

ü  A 4PL provide effective transport along with an entire distribution system, high reliability, transparency, quality, efficiency and design new distribution scenarios

ü  A 4PL company serve as consultants who manage the relationship between the principal company and one or more 3PLs to make sure all operations are running smoothly.

ü  They can carry various levels of responsibility, from advice on choosing the best companies, right up to the day-to-day management of essential logistical tasks being performed for the principal company.

ü  4PL caters to various clients, economies of scale is attained as the investment is spread across clients.

STAGES  OF 4PL SOLUTIONS

ü  Reinvention - Align business strategy with supply chain strategy

ü  Transformation – Focus on improving supply chain functions. (sales, ops, distribution, customer support )

ü  Implementation – Implement recommendations for efficient use of SCM

ü  Execution – Takes operational responsibility for multiple supply chains functions and ops.

3PL / 4PL COMPARISON

—  3PLs adopt a scientific approach to logistics, to optimise cost and improve service levels and response. They also help clients achieve efficient inventory turnover and working capital management.

 

—  4PLs facilitate single-point reference for all logistics needs, possess knowledge of logistics to obtain most efficient and effective solutions, have manpower resources of higher quality to supervise vendors and ensure continuous process improvements and, above, all an IT base to network customer systems.

 

SEE THE DIFFERENT BETWEEN A LINER AND TRAMP SERVICES.

What is the difference between a Liner & Tramp services ?

Who is a Liner ?

A shipping company who transports goods in containers by sea , with a fixed route and schedule (timetable) , and with a high level og cargo safety is called a Liner. This is similar to an air line or bus line(service), on a route with fixed stoppings as per predetermined timetable. These services will continue to run irrespective of whether the airoplane/bus is full or empty as they have to strictly keep their timings and route. Similarly cargo liners too have to stick to the fixed schedule and route irrespective of whether the vessel is full or not.

What is Tramp service ?

The dry bulk and liquid cargoes are generally refered as 'Tramp Trades' and the vessels used to transport these cargoes are called 'Tramp Ships' . Tramp services will not have a fixed route . The ships goes from one port to other depending up on the cargo availability. Tramp services could be compared to a taxi service which is hired to go from one place to another for a single travel. After completing that trip, next employment must be seeked.

What is chartering ?

Chartering is a term used in shipping for hiring a ship. Depending on the type of ship and the type of charter, normally a standard contract form called a charter party is used to record the exact rate, duration and terms agreed between the shipowner and the charterer. There are various types of chartering , they are

1. A voyage charter is the hiring of a vessel and crew for a voyage between a load port and

a discharge port.

2. A time charter is the hiring of a vessel for a specific period of time;
3. A bareboat charter is an arrangement for the hiring of a vessel whereby no administration

or technical maintenance is included as part of the agreement.

4. A demise charter shifts the control and possession of the vessel; the charterer takes full

control of the vessel along with the legal and financial responsibility for it.

MUST READ! HOW MARINE INSURANCE WORKS.

First of all, you should know the meaning of marine insurance, the main types of  marine insurance, importance or advantages of marine insurance, the risk covered by marine insurance and how marine insurance cost. there are several questions and answer which will helps you to get the general concept of marine insurance as shows below;

Q1.      Who Needs Marine Insurance?

A1. Anyone who Imports, Exports or Moves Cargo from one place to another or who stands to lose financially if the goods are damaged or lost

Q2.      Why Should Cargo be Insured?

A2.      Because it is only too easy for Cargo to be lost or damaged in transit, whether you own the goods or have a financial interest in them. A loss could be Financially Crippling

Q3.      What are the types of covers available?

A3 There are three internationally recognized Clauses under which cover can be granted. These clauses are known as “Institute Cargo Clauses”

Q4.      What risks are covered under Institute Cargo Clauses (A)?

A4. This is the widest possible cover, which covers all risks of loss or damage to the subject matter (Cargo) except a few standard Exclusions.

             

Q5.      What risks are covered under Institute Cargo Clauses (C)?

A5. This is the most restricted clause and covers only loss or damage reasonably attributable to:

•         Fire

•         Explosion

•         Vessel being stranded or sunk

•         Overturning or derailment of the land conveyance

•         Collision of the vessel

•         Discharge of cargo at port of distress

•         General Average Sacrifice

•         Jettison

Q6.      What risks are covered under Institute Cargo Clauses (B)?

 A6. This Cover is similar to “C” Clause, but in addition covers :

                              •         Earthquake, volcanic eruption or lightning

•         Washing overboard.

•         Entry of sea, lake or river water into vessel, craft hold conveyance, container, lift van or place of storage.

•         Total loss of any package lost overboard or dropped whilst loading/unloading from vessels.

 N.B: you have any Idea about ''INSTITUTE CARGO CLAUSES A, B, and C''? if you do not  stay there. 

thank you. by Frank Kamina.