The agreement also becomes more formalized with mutual commitments from bothparties. In such partnerships the partners attempt to keep their autonomy, whileat the same time collaboration is vital to develop more efficient results.Sometimes, the agreement specifies that the external service provider fully orpartly takes responsibility over personnel, equipment and plant of the clientfirmhSimilar to the above definition, Hertz and Alfredsson simply stated that logisticsoutsourcing involves “an external provider who manages, controls, and deliverslogistics activities on behalf of a shipper”. The purpose is that both partiesdevelop a mutually beneficial and continuous strategic relationship and all or apart of the logistics activities are performed in a satisfactory way for thepartners, with the guarantee of the quality of performance and benefits involved.Nevertheless, to understand the concept of logistics outsourcing, there are fivelevels of logistics outsourcing, as follows: 1) In-house logistics or in sourcinglogistics, or reverse outsourcing: means that the firm operates its logisticsactivities in-house. 2) Logistics service provider (LSP), or asset-based logistics(2PL): means the management of traditional logistics functions, such as transportand warehouse. 3) Third-party logistics (3PL/TPL), or forwarding logistics, orcontract logistics: This can be also a close relationship between a firm and alogistics provider not only to operate the logistics tasks but also the sharing ofinformation, risks and benefits under long-term contract. 4) Fourth-partylogistics (4PL/FPL), or supply chain logistics, or lead logistics provider (LLP):4PL has been viewed as a single contact that manages and integrates all kinds ofresources and directs 3PL function along the supply chain with the sense ofstrategic advantages, and long-term relationship. 5) Fifth-party logistics (5PL):means serving the electronic business (e-business) market. Those 3PL and 4PLproviders manage all the parties in the supply chain on electronic commerce (e-commerce). They key to success in this area is the information technology andinformation systems.Clarification of definitions of third-party logisticsIn addition to the definitions of logistics outsourcing as given above, the termthird party, as well as that of fourth party, can be quite confusing, thusLynch (2000), refers to the outsourcing of logistics activities to firms thatare capable of providing the services, rather than to third-party or fourth-partylogistics providers (3PLs and 4PLs respectively).Nevertheless, the use of the term third-party logistics (3PL) is risingconsiderably and therefore further discussion is needed. However third-partylogistics are better defined and exemplified as follows: “A 3PL is a relationshipbetween a shipper and third party which, compared with basic services, has morecustomised offerings, encompasses a broader number of service functions and ischaracterised by a longer-term, more mutually beneficial relationship” (Murphy and“A 3PL is a logistics service provider,Poist, 2000, pg. 122). usually asset-based, which focuses on specific elements of the supply chain in order to optimisethe physical movement of goods from the point-of-origin to the end-user” (Stockand Lambert, 2001, pg. 5).According to the definitions above, the 3PL provider specialises in a range oflogistics services with the purpose to sell or perform these services to firmsthat are involved in manufacturing and distribution activities (Baziotopoulos,2008). For example, small trucking companies are not 3PLs; however, some 3PLs owntransportation and other assets to perform logistics needs while others do not.While many definitions suggest that 3PL involves the provision of multipledistribution activities, they often do not include the concept of longer term,mutually beneficial relationships between the parties. Therefore, while logisticsactivities, in particular, transportation and warehousing, have been outsourced tothird parties, generally on a transaction-by-transaction basis, the characteristicof the 3PL is that it, by contrast, is focused on a “formal, contractual, long-term relationship between the provider and the user” (Murphy and Poist, 2000, pg.122).