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Booming SoCal Industrial Market Gives Birth to 4PL Users

Carrie Rossenfeld Industrial

The logistics market in Southern California is stronger than ever and looks to continue along that path. According to a report from CBRE Research, the Greater Los Angeles, Orange County, and Inland Empire markets have seen leasing activity increase increased 37% from 2013 to 2017, and 2018 is on track to eclipse 2017, a representative of the firm says.

Due to the market’s strength, a new type of logistics service has emerged as the most active user, driven by the changing competitive landscape, the rep says: third-party logistics users (3PL) have transformed into fourth-party logistics (4PL) users that combining elements of warehousing, distribution, and transportation management to fulfill online orders.

The report says that adding 4PL capabilities “fosters a collaborative relationship among logistics providers in the local market, allowing improvement for efficiencies and profits.” Apparently, 3PLs are utilizing services by 4PL providers to benefit clients, a practice that is reducing shipping costs and helping coordinate supply-chain logistics, which leads to faster and more seamless deliveries to consumers, according to the report.

In Southern California, 4PL service providers work in a few different ways, the report explains. “In a single interface between the client and multiple logistics-service providers, an e-commerce giant can position itself as a 4PL provider by using its shopping engine and supply chain services. It can fulfill orders for clients and partner with other providers to manage an end-to-end supply chain and deliver goods same day or next day,” according to CBRE.

The report also says that in a different scenario, a leading 3PL company can offer 4PL services via proprietary software, which can serve to reduce cost, maximize throughput and shorten delivery times. “Another 4PL provider might combine key functions, and a 3PL company could act as a separate partner in a long-term contract between the primary client and one or more partners,” the report states.

CBRE also says that there’s a cost savings for all of this for shippers and e-commerce companies in that 4PLs offer the ability to work smarter and more efficiently without the increased cost of purchasing services from multiple logistics-service firms. “The rise of 4PL services is expected to speed up over the coming years in response to the increase of online purchases and higher consumer expectations, putting pressure on supply chains,” the report says.