A Rundown On Logistics Vs Transportation

Jul 13 2020 Published by under Uncategorized

Two of the most important sectors that help move a country’s economy are logistics and transportation. Both are important cogs in the wheels of economy since they help bring in and distribute goods and materials. For example, if there is shortage of wheat and rice in Malaysia or Vietnam, other South Asian nations can help in providing supplies to satisfy the need.

Logistics and transportation are two words closely related to each other. As a matter of fact, with the example given previously, both processes are done hand in hand. But the question is can one really survive without the other? Or is there no absolute difference between the two and that both logistics and transportation are referring to the same entity?

Transportation refers to the means of distributing goods, supplies, resources, information, people, and energy from the original point to the destination point using any of the five modes of transport: animal-drive, air, road, rail, and water, or a combination thereof. Since transportation is concerned only with moving the supplies, someone has to take care of handing, packaging, managing the time the goods are fetched and delivered, and maintaining coordination, especially when inter-modal or a combination of two or more transport modes is used. That’s when logistics comes in.

Logistics is defined as the process of managing goods, supplies, resources, information, people, and even energy from the source to the user. Any country can testify how important logistics is for its health. Logistics is not just a company that gets your airmails delivered promptly. Logistics is found in every department of a government, from the military to health agency, from education to infrastructure agency, and of course, the time-conscious world of commerce. This application of logistics is more popularly known as business logistics.

Business logistics, unlike military logistics where the concern is focused more on speed and quantity, is more concentrated on delivering the exact item, at the ideal time and place, at an ideal price, using an efficient amount of energy, man power, and financial resource. It is the business of most couriers in the world.

While most couriers have their own vehicles, such as air planes, ocean jets, trucks, and ferries, it is not really necessary for business logisticians to have their own means of transportation. In cases like this, trucking or shipping service providers are hired to distribute the commodities.

For example, in sending goods to a country where air travel is not available, the courier gets the services of a shipping company, and additionally, a trucker to help in delivering the goods once the ship has arrived. The courier has the responsibility to choose which ship and truck provides the fastest yet efficient handling of the supplies. A courier might also need a place of storage or a warehouse company, especially when there is a need to stock the goods while waiting for the trucker. Most shipping companies, however, do have their own warehouses.

Just lately, truckers and shipping companies have begun adapting logistics as part of their business operation. This raises the question then as to which service to avail of when sending goods. Should one go for logistics or transportation companies?

Whether one chooses logistics over transportation, the answer will have no difference. See, even transport companies employ logistics to their business operations. Both indeed must go hand in hand in order to achieve secure and efficient delivery goods.

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Transportation And Logistics

Jul 13 2020 Published by under Uncategorized

Transportation refers to the physical distribution of finished goods, from the place of production to the place of final consumption. It also includes the transportation of raw materials to the place of production. Logistics aims at reducing the cost incurred during transportation by employing scientific methods and customized software.

Transfer of raw material and finished goods can be done through roads, railways, airways, sea routes, canals and high capacity pipelines. The selection of a particular medium depends on the nature of the product and its shelf life. Perishable goods like flowers, fruits and vegetables need a faster medium of transportation like air and road. Ships are used to transport items like metal, crude oil etc.

The reduction of transportation costs is calculated by selecting the shortest distance between two points and the time taken to travel. Goods are now tagged with Radio Frequency Identification (RFID) tags to keep track of their location. Even trucks are fitted with GPRS systems to help drivers find the destination in time.

Logistics companies use transportation software to make the most efficient use of their existing fleet of trucks, ships, and cargo planes. They also help other companies by providing them with technical expertise and customized systems that improve efficiency. Transportation is important especially for large multinational companies. Products of these companies traverse large distances over land, sea and air to reach their place of consumption.

With the growth and acceleration of the global economy, the freight transportation industry faces greater challenges and demands. Extensive research on transportation and logistics is carried out on a regular basis. A new research is studying the natural ability of ants to find the shortest route between two points. Institutions like the American Society of Transportation and Logistics help companies improve their supply chain and reduce their transportation costs.

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Transportation & Logistics – Top 7 Reasons to Use a Freight Forwarder

Jul 13 2020 Published by under Uncategorized

The other day I met a business owner and we begin to discuss the differences in LTL Carriers, 3PL’s and Freight Forwarders. I had asked him who he had better experiences with, and without hesitation he responded, “Freight Forwarders have been much easier for me to work with, although I use all three at my company.” He listed 7 reasons as to why Freight Forwarders have been better of a fit in his supply chain:

Flexibility- Freight Forwarder’s provide a service typically using an Agent network. Many cringe when the word “agent” is thrown around in terms of Logistics, because of the bad reputation that they have received throughout the years. Many customers think that if you are using an Agent network it increases the chances of product being loss, damaged, or stolen- not true. What many don’t understand is that the Agent concept has been around for quite awhile. All carriers have some type of relationship with agents, even the larger carriers such as UPS and Fedex have an agent network in place in some parts of the country. What truly separates companies are their bonds and communication with their agent alliance. When you examine the “good” forwarders they have sound, strong bonds with their agents, and ironically sometimes even better than if they were dealing internally within their own company. To understand this fully you have to realize that these agents survive by looking to provide exceptional service to their carrier partners. The better job they do the more business they will receive. So they want to impress, they want to be accurate in their pickup and deliveries, but it’s the carrier’s job to make sure their(agents) are kept on their toes in terms of performance, accountability, and reliability.

Manageability- Typically when working with a LTL carrier or a 3PL their sometimes tends to be a “loss” of control for customers. If a shipment happens to go astray it often times takes an act of congress to recover and redeliver it to the proper address. A good Forwarder has the ability to use their network to retrieve, recon sign and redeliver to the correct address often times without missing a beat. Many clients strictly use F.F. simply because of this added benefit. The ability to “Quarterback” your shipments the whole way through lies with a Freight Forwarder. LTL companies have too many hubs and processes to deal with which doesn’t allow the flexibility and manageability that a Forwarder can demonstrate on a single shipment, and often times customers find this out the hard way.

Versatility- Options! Options! Options! During today’s economic times customers are finding that having a company that can provide them with viable options allows them the ability to maintain control, reduce costs, and increase efficiencies in their supply chain. When you are looking for your Forwarder examine the services that they can offer and relate them to your business needs. A good forwarder can take the primary shipping role or be used as a supplemental asset when the need arises. Allowing your business to adapt quicker and be more responsive to customer needs as they develop.

Versatility- Often times many companies will state that they are in fact a One Stop Shop, but if you ask enough questions you can determine if this in fact is true. Do they have the real time tracking and tracing capabilities? International? Warehousing and Distribution capabilities? Reporting capabilities? As your business grows these could be things that could help make the difference in your business progress. These help add to being able to allow a customer to grow their business with the least amount of financial output.

Vested Interest in Your Business- When a carrier can become an extension of your business, when they think about ways that you can improve your supply chain more than you do, that’s what a great carrier is made of. So often in business companies spend 90% of their time looking for the company with the cheapest cost whether then the company that can add immediate and consistent value to their supply chain.

All carriers strive for this, but not all reach this point. Reason being is that it takes the WILL to want to be the best carrier, and to want to help your customer beyond single shipments given to you on an Ad Hoc basis, a good freight forwarder weeds through the “stuff that doesn’t matter” to get to the core of the clients goals. How can they make your business run smoother is their main concern. And please understand that this doesn’t always mean being the CHEAPEST carrier in the door, but what it often refers to is being able to look at a company’s Logistic setup and determining can they add efficiency, and reduce cost as a whole.

Cost Savings- As I mentioned in the previous paragraph a good freight forwarder will make it one of it’ main goals to save their customer money, but interestingly enough many times the savings doesn’t come from just giving the customer dirt cheap rates. As a matter of fact if you speak to a top forwarder they will often times tell you that their pricing is fair to moderate? Reason being is that many times being able to provide a solution to an issue might take employing more resources and increasing cost on the front end to achieve for example expedited transit, better customer satisfaction and more efficiency. For example a company shipping from California, who is trying to beat their competition to the punch on the east coast might need to implore the use of a warehouse and distribution facility let’s say in Chicago. Adding this resource will give more control, shorter transit, and a more competitive drive for the Cali Company, and of course as I mentioned earlier increasing customer loyalty.

Quick Thinking- One freight forwarder I spoke with presented an example of how he added value to a new customer by just being inquisitive. The customer had been using UPS ground shipping out product weighing somewhere in the area of 50 lbs. for 10 boxes going to one location, cumulative weight of 500 lbs. Many companies who might have run across something like this would have run away because of the name recognition and reputation of the boys in brown. But not this owner, he realized that he would be able to put together a very strong program for the client based on the cumulative rate of 500 lbs. versus UPS rating the shipment on a per box basis. The bottom line was that he was able to save the customer 30% on his shipments with a much faster transit time.

I always preach that in this day and age the most important thing for a business to understand is their own “business needs…” If they understand the time sensitivity of their product, marketplace, and the needs of their industry they will be able to pick the right company for their logistical needs.

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Transportation and Logistics – Accessorial Fees Can Sink a Business

Jul 13 2020 Published by under Uncategorized

If you are a new shipper in the LTL (Less-than-truckload) world, it may seem like big maize at times, without a starting or ending point. There may seem like an overwhelming amount of information that a shipper needs to know, ranging from learning the NMFC classes, to the specifics, like who is the best carrier to haul your freight, and what price will they charge. This is just a glimpse of the Freight World. Seasoned shippers, who have been in the business for 20 plus years, often find themselves being introduced to things that they didn’t know, or thought they knew, and were totally wrong. The Freight World is a dynamic, fast moving industry that warrants attention to details by Logistic Departments. With this being said, one of the trickiest topics to grasp, especially when a company first starts shipping freight, is Accessorial Charges.

Many shippers don’t really think about the consequences of not doing their due-diligence to research what type of equipment is needed for their shipments. They often think that these charges are “small things” when you look at the big picture. The typical thought process from the shipper is, “I’m not worried about it, because the carrier will take care of it.” This mind-set can be dangerous, because if these charges aren’t calculated at the onset of pricing out a shipment, there is a good chance that the cost of the accessorial might cause the shipper to lose profits. Too many of these can cause a negative effect to the bottom line for a company. Carriers use what’s called a Supplemental Bill. The name speaks for itself, as the shipper or bill to party, will get an additional bill after the shipment with the new accessorial charges, if it’s not included on the original bill. Lesson here, is that they will always bill you these charges. This becomes a cash cow for carriers, and allows them to boost their profit margins significantly. The following are a few of the “small things” that a shipper might run into and if not taken care of correctly can add up into “big costs.” Each of these accessorials, at a minimum depending on which carrier is chosen, starts at $25/$50.00 and goes up.

Appointment Notification Prior to Pick Up or Delivery

Inside Delivery

Residential Pickup/Delivery

Hazardous Materials Fee

Sort and Segregation by Driver

Convention or Trade Show Deliveries

Non Commercial & Job Site Deliveries

Border Crossing Fees

Re-Weigh and Re-Classification

Billing Change (especially when proper BOL not used)

Inside Pick Up or Delivery

Church Delivery

School Delivery

Construction Site

In conclusion, the shipper needs to do their JOB on the front end to ensure that unforeseen charges aren’t a surprise to either party. Also, it is highly recommended that before the shipment leaves the warehouse that it is determined who will be responsible for paying these charges.

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