Embodiments provide a packet forwarding method and a network device, which are applicable to a system that includes a source node, a destination node, a first device, and a second device, where L1, L2, L3 and L4 are established, and the packet forwarding method includes: receiving, by the second device through a universal tunnel, a packet to be sent to a destination node, where the packet carries service data and one of identifiers of the L1, the L2, the L3, and the L4; according to the identifier carried in the packet, querying a preconfigured logical channel mapping in the second device, determining that a forwarding channel is the L4, and sending the service data in the packet to the destination node through the L4. By using the technical solutions, the number of ICB PWs can be reduced.