The acronym 4PL stands for “4th Party Logistics” and describes the relationship between the parties to a goods transaction.

For example, if the manufacturer of a product is the first party, its buyer is the second party. If only these two parties are involved in the transaction, either the supplier will deliver the goods or the buyer will collect them. If both parties do not have their own transport capacities, they commission a third party, a so-called freight forwarder or 3PL. This party then takes over the transport of the goods for a fee.

In the case of transport from or to overseas, the supply chain usually consists of the services of numerous individual parties which are hired by a 3PL. The 3PL acts as a reseller, similar to a wholesaler. The aim of a 3PL is to maximise profits with the best possible utilisation of both its own and outsourced services and capacities.

Working with Prologue Solutions as a proven 4PL offers you not only tangible, but also measurable added value. You benefit from various factors that have a significant and lasting positive impact on your logistics processes and logistics costs, both individually and in combination.

If you would like to know more about our business model as a 4PL and why this could be of interest to you as an importer, please contact us: to our contact form

Prologue Solutions CEO Patrick Merkel sees enormous potential in partnerships and comments on the motivation to participate in Flowfox as follows: 

“Digitalization in logistics, but especially in shipping, lags far behind in comparison to other industries. Manufacturing industry 4.0 is in full bloom, while today’s shipping industry has not experienced a revolution since the container was invented. Shipping industry 2.0 would be an industry with new and revolutionary standards in data exchange and digital workflow automation, similar to the second industrial revolution in the 1930s driven by standardization, unleashing unimagined possibilities. We believe that Flowfox technology will make an important contribution to this overdue development in the shipping industry by allowing shipping companies to set new standards and automate their business over the last mile in a revolutionary way.”

Hello Patrick. Could you start by giving us some insight into your professional life? What do you have on your desk this week that is particularly on your mind or affecting you?

My central focus at the moment is mainly Prologue Solutions GmbH in Hamburg. That is why my family and I moved to Germany in 2019, after nearly 12 years in Hong Kong. What has kept us occupied the most at Prologue since 2016 has been everything to do with digitalization. We started some concrete projects as early as 2018 that have now gradually been implemented since summer 2020. This is as much about our internal processes as it is about partnering with customers, business partners, and service providers throughout the world. We are already able to offer our partners a high degree of digitalization and process automation.

How are you responding to the current challenges at Prologue?

As a fourth-party logistics provider (4PL), Prologue plays an overarching role in our customers’ supply chains; crisis management is also one of our tasks. One of the central pillars of our business model is partnering with transport carriers, i.e. shipping companies, for instance. Prologue works with long-term contracts in which all our customers’ volumes are pooled. This puts our customers and us in a situation similar to industrial or trading companies with their own large freight volumes. So the price increases on the spot market are not a real problem for us. The greatest difficulty is the out-of-balance distribution of containers among shipping companies. Empty containers do not arrive in time at our customers’ suppliers, which sometimes leads to considerable delays. At the same time, in the United States, the container ships are jammed in the ports which, due to the great volume, are falling behind with the unloading and onward transport. Our teams in Hong Kong and Hamburg are currently working day and night together with our business partners’ regional offices and local carriers to minimize these impacts on our customers. Our booking platform, which we have been rolling out step-by-step since 2018 for all ports and carriers worldwide and are continuing to develop together with the French supplier, is of central importance. Without the constant overview of the daily booking situation, we would have sunk into chaos long ago.

In turbulent times such as these, there is a lot of talk about the importance of resilient supply chains. What is meant by the term resilience, and how can I make my supply chains more resilient?

A supply chain is resilient when it is crisis-proof. Crisis-proof means that a supply chain functions reliably even when it is exposed to significant external influences. Therefore, resilient supply chains are an impossibility. However, each company can ensure that its supply chain consists of as many dynamic components as possible and that they are as controllable as possible so that external influences can be effectively countered. The decisive factor is, therefore, the selection of suppliers and service partners. However, that only works in times of crisis if there is full transparency and functioning communication, ultimately ensuring the flow and processing of information. Only then will the processes remain controllable. Even the last defender must have noticed that this does not work with Excel spreadsheets and emails, or even messenger systems. Modern supply chain management systems or even better corresponding platforms are not only ideally suited for this, but, in my opinion, there is no alternative to them for successful supply chain management in the future.

In a few days, it will once again be Chinese New Year. Why is this such an important date for the logistics world?

For the Chinese, Chinese New Year (the first new moon between January 21 and February 21) is the most important time of year. Chinese New Year, or CNY for short, is traditionally celebrated with the whole family. Officially, there are six public holidays, but offices and factories are usually closed for several weeks. During this time alone, up to 400 million people who work in the cities as migrant workers travel back to their home provinces. In 2019, the Chinese government registered more than 2.9 billion travel movements during this period. Therefore, it is crucial to place orders with Chinese producers in good time so that deliveries can be shipped before the CNY holidays begin. This is especially important for the retail trade, which has to ship its goods for the spring season at this time. Year after year, this leads to a massive increase in freight traffic in the period between Christmas and Chinese New Year.

Thank you for the interview!

Spending on clothing fell by 7.5%. Household goods fell by 1.7% and transport and traffic by 3.5%. Education, culture, and entertainment fell by 19.1%, and spending on health fell by 3.1%.

Another event to strike at the very core of Europe is the influx of migrants from Afghanistan, the Middle East, and Africa: Does society want to integrate migrants, or is sealing them off the better strategy? The burgeoning xenophobia in many countries is also used as an argument against globalization.

However, the issue of how to deal with migration has nothing to do with the issue of globalization. And vice versa: abandoning globalization will not stop the flow of migrants. The cost of a humanitarian solution to migration, on the other hand, can only be financed if Europe and Germany continue to be able to make savings in the global competition between economic areas.

In 1949, Germany opted for a broad federalist structure when redesigning its government. This decision can certainly be seen in the context of the history of Germany since Napoleon, including the history of the Holy Roman Empire of the German Nation. In the age of global economic and political structures, federalism in its present form should be put to the test. What has already been said for the EU also applies to this democratically federal structure: Majority decisions are normally not accepted by the opposition at any level; therefore, it takes a very long time to prepare policies. Plus, their implementation fails or is delayed due to stakeholders’ objections. A good example here is the course of the coronavirus crisis. Initially, the Chancellor was able to implement a clear package of measures to deal with the crisis; however, two weeks later, the states were divided about the adequacy of the measures. Moreover, there are countless examples of large-scale projects that have been implemented with great delays or have failed due to the complexity of the decision-making structures. The “Digitalization in the Education System” project alone illustrates this, especially since the coronavirus crisis revealed the actual situation. A comparison with Asian countries shows exactly where we stand. We are too slow.

We are talking about billions in public funds, which should now finally provide relief in many cases (digitalization in health care, education, public administration, transport and traffic, security, fiber optics as an infrastructure measure, hydrogen technology for climate protection, research funding, etc.) as a package of measures. Obviously, the crisis was needed to convince the various groups of stakeholders that there is a considerable need for action. Also because of the coronavirus, but above all due to our position in the global market.

We need more speed and timely investments in key areas in order to maintain our unique position as a successful national economy internationally.

The exporting country initially benefits from producing commodities domestically and employing the working population in factories. Especially in China, it was observed how quickly the country learned and went from simple production facilities to highly qualified manufacturing. Moreover, Western business partners were generous with their technology, which they ceded to China as know-how in the build-up phase. Meanwhile, China has long since left that initial phase behind. The level of technical equipment in today’s factories is much better than the level that the German footwear and textile industry, for example, had at the time of the exodus from Germany. The companies produce at a level that we have never achieved at this stage in Germany. As wages rise in Europe, jobs have increasingly shifted to China, India, Vietnam, etc. That applies to all industries. In the meantime, there have even been relocations from China to other countries because China also wants to secure the unit cost advantages of lower wages in other countries. China created tax incentives for domestic industry to that end.

While simple jobs moved abroad, Germany specialized, realizing unit cost advantages from this specialization and the associated division of labor. Employment shifted from wage-intensive to specialized enterprises, made possible by the existing education system and infrastructure. Germany, in particular, benefited from the unit cost advantages thus gained and invested in higher-quality production (automation and automation technology), climate protection, and innovation. At the same time, China’s bad environmental record is part and parcel of German consumers’ savings. For decades, the price advantages of imported products came at the expense of the environment and the prosperity of the citizens in China, India, or Vietnam. At the same time, we also exported our development and social costs to China. Our exports of goods to China amounted to 96 billion euros in 2019.

Germany exported goods and services throughout the world in 2019 in the value of around 1,328 billion euros. Imports amounted to 1,105 billion euros, which means that the surplus is 223 billion euros. That means that, as a ‘small’ economy, Germany plays a clearly unique role in the competition, which will hopefully remain the case for us. Our prosperity is heavily dependent on this positioning in the world market. Only China had a higher trade surplus than Germany in 2019 at 421.9 billion (USD). Russia ranked third with a surplus of around USD 165 billion.

The incentive for China and others to buy goods and services from Germany lies in the innovation, reliability, and quality of the products and services. Without the reciprocal incentives (price, innovation, reliability, quality), there would be no international exchange of goods!

The world gross national product (GDP) amounted to USD 84.84 trillion in 2018. European countries (including the UK) contributed 22.62 trillion. The U.S. contribution was 20.9 trillion, and China’s contribution was 14.2 trillion. Statistically, China has the highest purchasing power parity (PPP) at USD 27.4 trillion. According to the World Bank’s database, the United States has a GDP PPP of 21.4 trillion; for comparison purposes, the German national economy has a PPP of 4.5 trillion. European countries expect high single-digit contractions in GDP due to the coronavirus crisis – China estimates a contraction of only 2%.

Simply put, gross national product is an aggregation of investment (private investment and government spending), consumption, and export surplus (or deficit).

• According to a report by The Balance, in the United States, consumption is close to 70%, investment (private and public) is around 35%, and the export surplus is –5%.
• According to Index Mundi, in China, consumption is approximately 39%, investment (mostly public) is around 59%, and the export surplus is +2%. The government contributes a great deal to growth through its infrastructure investments. Therefore, consumption still has great potential.
• No general overview is available for the EU countries. For the Federal Republic of Germany, consumption in 2018 was about 54%, investment was about 39%, and the export surplus was approximately +7%.

Among the provinces, the Hong Kong Special Administrative Region (SAR) has seen the greatest reduction in retail sales. Retail sales in October 2019 were already severely affected by the political unrest in the region, with a 24% decrease in sales on account of the lack of tourists and the reluctance of the local population to buy, as they were avoiding Hong Kong Island and Kowloon due to the demonstrations and intermittent riots on the weekends. With the outbreak of the pandemic, the government implemented distancing rules, strict quarantine for suspected cases and commuters to and from the mainland, as well as a ban on meeting in groups of more than four people, etc. Since February, only Hong Kong citizens have been allowed to enter the Special Administrative Region. As a result, retail sales have plummeted by 44%. The e-commerce infrastructure in Hong Kong is not as developed as in mainland China due to its short geographical distances.

It seems that China has so far overcome the pandemic better economically than Western countries. The high penetration of the Internet in all areas of life (trade, schools, entertainment, coronavirus monitoring) has had a stabilizing effect. The measures in Jilin province, where there are still restrictions, as well as the government order on May 12 requiring all citizens in Wuhan to be tested, show that the crisis has not yet been completely overcome.

China experienced a boom in the use of new technologies (robotics, drones, self-driving vehicles, etc.). Suddenly, contactless was no longer an economic issue but a necessity. We have also seen a similar development in Germany, resulting in cashless payments, digitalized processes, and an increase in e-commerce. Suddenly we are even used to masks in public.

The lockdown started to be gradually lifted on March 26 and, in just a few days, all the major malls were back to business as usual. It was once again possible to bring home deliveries to the door. However, it took several months for customers to return to their typical behavior. After SARS, it took about five months until the circumstances and sales returned to ‘normal.’ There is also a certain probability that customers will simply retain certain practices, especially in Germany.

No one wants to take the risk of forecasting the specific economic damage at this time. Some experts predict the gross national product of China will decrease by at least 2%. Trade, tourism, and exports are the three main affected areas. CNBC reports a 3.5% increase in Chinese exports in April but a 14.2% year-on-year decrease in Chinese imports, highlighting the expected economic impact in Europe.

I hope our everyday life gets easier with no increase in new infections.