Purpose – This paper aims to study an advanced third/fourth party logistics (3/4PL) relationship in which the logistics service provider extended normal services by taking ownership of the goods during global distribution. It also aims to describe and analyze the approach to the legal rules a 3/4PL provider and its client company took in their contract, and present some remarks on the extent to which these contract solutions are legally sound. Design/methodology/approach – A cross‐functional (business law and logistics) approach is applied to a single case study. The main data source is a written contract, complemented by in‐depth interviews with the 3/4PL's managing director. A legal analysis is made from four perspectives of non‐mandatory and mandatory commercial legal rules. Findings – Issues between the offered service, the legal function and reaction in contracts are pointed out, e.g. doubts regarding the legal risk of sales uncertainty, the ownership of goods, the product liability, and the roles as commercial agent and as freight forwarding agent. These kinds of advanced logistics services are not clearly handled, e.g. in the standard‐form contracts for freight forwarding. Research limitations/implications – The research is limited to one case and to some aspects of Swedish commercial law, but put in an international perspective. It adds a legal perspective to previous studies on 3/4PL contracts, and it contributes to legal research by its analysis of how firms in real life react to law in their contracts. Practical implications – Practitioners can get inspiration from an innovative logistics service setup, but also realize what legal challenges to consider when they make their contracts. A tentative approach to aligning logistics' and lawyers' work is suggested. Originality/value – The paper combines legal and logistics research, and description/analysis of a 3/4PL case where ownership of the goods is transferred to the service provider.
International Journal of Physical Distribution & Logistics Management – Emerald Publishing
Published: Aug 3, 2012
Keywords: Third party logistics; Logistics service providers; Fourth party logistics; Legal analysis; Contract; Financial risk; Property law; Distribution management