The shipping logistics industry ranges between $8 trillion and $12 trillion every year. The U.S. attributes up to 10% of its annual GDP to the logistics industry.
Although it’s a vast industry, it can be pretty complicated, especially depending on the industry that your business is in. To stay competitive, you have to constantly be on top of changing customer expectations and trends.
This guide will tell you everything you need to know about shipping logistics for distribution.
Keep reading to learn more.
What Are Shipping Logistics?
Shipping logistics refers to the strategies and systems used to transport products through the supply chain. It begins with the manufacturers and ends at the customer’s doorstep.
Let’s break this term down further.
Shipping refers to the movement of products from one place or another. This can include:
- Managing documentation
- Tracking and handling
- Setting up delivery times
Logistics, on the other hand, refers to the systems that manage how all of these actions take place. Every step, including how products are stored and transported to the final destination, is included in logistics.
Each part of shipping logistics is crucial for getting products where they need to be. As the old saying goes, “a chain is only as strong as its weakest link.” By successfully managing the shipping logistics process, you can reduce costs and meet your customer’s expectations, all while working at maximum efficiency.
For example, if you run a manufacturing business, you’ll need logistics processes to get everything where it needs to go. These processes will help you purchase raw materials, store them, and transport them.
Logistics allows your business to coordinate the schedule of all equipment and materials and ship them to their final destination.
What Are the Three Types of Logistics?
Shipping logistics can be broken down into three different categories. These include:
- Inbound logistics
- Outbound logistics
- Reverse logistics
Each one of these has an important role when it comes to logistics management, the system of overseeing all supply chain processes from start to finish.
Let’s take a deeper look into each type of logistics.
Inbound Logistics
Inbound logistics is the process in which a business receives goods from its manufacturer, supplier, or point of origin. You receive the products at your warehouses, fulfillment center, or retail business.
Getting the products from point A to point B look very different depending on the industry your business is in, but let’s take a look at some of the essential processes that most industries share.
Sourcing and acquisition: This is the process of finding and vetting vendors to purchase products and raw materials. It involves asking for price quotes and negotiating.
Purchasing: Depending on the goods that your business buys and sells, purchasing can be complicated. For example, perishable goods are much more complex to transport. You also have to order the perfect amount. Too much, and you won’t meet customer demand. Too little and you might have to store too much and have spoiled goods. Logistics plays a big part in ordering the perfect amount at the perfect time.
Transportation management: This process consists of contacting transportation carriers, working with vendors, and choosing the type of shipping you need for your supplies. A transportation management system (TMS) helps businesses plan and optimize the shipping of products and supplies.
Tracking: Tracking helps check the details of orders and manage the progress of all shipments.
Receiving: This is the process of ensuring all deliveries match the order. Your team does this with a physical inspection by your receiving team. They will verify the condition of the product and ensure that they’ve received the correct quantity.
Handling: After receiving the goods, handling means moving them into your storage space in the correct location so that it’s ready for later use.
Storing and warehousing: This ensures the products are safe, organized, and ready when needed.
Distribution: This refers to the process of moving the goods to other places, like different departments in the company or even different branches or locations.
Outbound Logistics
While inbound logistics brings products and materials to your business, outbound logistics refers to the systems that move your final products to the customer.
Routine activities for commercial shipping include:
- Packing
- Shipping
- Fulfillment
- Delivery
- Customer service
Here’s a more detailed look at some outbound logistics activities.
Warehouse management: Although they differ in quantity, all companies must keep an inventory to ensure they can meet customer demand. This activity ensures that all products are organized and stored to ensure top quality.
Usually, there is an overlap in inbound and outbound logistics when it comes to warehouse management, but outbound logistics is responsible for getting the product to the customer.
Inventory Management: This is the process of identifying where to store inventory and in what condition to ensure the delivery process is as efficient as possible.
Shipping: Shipping is the process of transporting the product to the customer. It can take place by rail, marine, air, and roadway.
Delivery: This is the process of ensuring that all orders arrive at their destination on time and in top condition. This is often outsourced to other companies.
Reverse Logistics
Once your product reaches its final destination, the logistics process isn’t over. Customers need to have a way to return the items for several reasons. Reverse logistics allows customers to get the products back to you to get a refund or exchange.
This can include aspects of both inbound and outbound logistics. Some activities might include:
- Giving customers return labels
- Processing refunds
- Shipping other products for exchange
When products arrive at your warehouse from a customer, your team needs to examine them to see if they can be added back into the inventory. Defective products are sent for or are even recycled.
What Is Freight Transportation?
A critical part of shipping logistics is freight transportation. Freight refers to the transportation of goods on land, air, or sea. Companies pay third-party transportation services to transport cargo from one place to another.
There are four major types of freight transportation that can be used. The best one for your business depends on the inventory being carried, the types of products, the speed at which you need your products, your budget, and more.
Let’s look at the four different types.
Road Transportation
Road transportation is also often referred to as ground transportation. This type of freight transportation often uses commercial vehicles or trucks to get products from one place to another.
It is often used when the destination can be easily reached by a wheeled vehicle. Trucking logistics come into play when using road transportation.
Rail Transport
This form of freight transportation also travels by land but instead takes advantage of an extensive rail transport network. These can follow specific routes to get to their destination efficiently.
Ocean Transport
This type of freight transport allows shipped goods and merchandise to travel by sea (or other bodies of water) by a freight vessel. This is a common form of transport for importing and exporting goods that travel internationally.
Air Transport
As the name suggests, this type of freight transport moves through the air. It is one of the most efficient modes of transporting goods across long distances.
How to Improve Your Shipping Logistics
As you can see, shipping logistics involves hundreds of essential tasks that need to integrate seamlessly so that your products and materials can get where they need to go efficiently. Because of that, there are always ways to improve your shipping logistics.
Let’s take a look at a few ways.
Build Strong Relationships With Suppliers
Having a good relationship with your vendors and suppliers has numerous benefits. Over time, you can get better prices for your materials, saving you a significant amount. It can also lead to fewer delivery mistakes as they begin to understand your business better.
Combine Deliveries
Shipping isn’t cheap. Whenever possible, it’s a great idea to combine shipments to get the most out of your money. Less-than-load (LTL) freights often have longer delivery times and higher shipping costs.
You also have the option to work with a third-party company to help you combine your loads with other shippers for maximum efficiency.
Distribute Inventory
Depending on your company’s reach, it might be a good idea to set up a distributed inventory model. This allows you to set up product and fulfillment centers that are closer to your customers to cut time off deliveries and save money. You can also work with a distribution company to help you meet your company’s needs.
Implement a Warehouse Management System
Once your company grows, and your inventory with it, a warehouse management system (WMS) can help significantly. It manages storage tasks and streamlines systems, including:
- Receiving
- Inventory management
- Pricing
Some systems can even give you real-time insights into your logistics systems, giving you visibility into where bottlenecks lie and what can be improved.
Develop a Partnership With Freight Providers and Carriers
One of the best ways to learn the intricacies of shipping and logistics is to work hand-in-hand with a freight provider or carrier. By forming a partnership, you can find the best ways to streamline shipping, order fulfillment, and delivery.
Establish Distribution Centers in Strategic Locations
Placing warehouses and distribution centers in strategic locations can help lower transit times for all shipments and deliveries.
Although some might think this can only be done by billion-dollar corporations, even small businesses can imitate this strategy by outsourcing to third-party logistics companies (3PLs).
Use Automation to Improve Efficiency
Artificial intelligence is no longer an expensive, futuristic technology. Nowadays, AI for logistics is very accessible, even for smaller companies. This can include smart picking systems or AI-powered wheeled carts that allow warehouses to run more efficiently.
Constantly Improve Processes
Upgrading your shipping logistics processes is a never-ending task. It’s crucial never to settle. Because logistics consists of so many different tasks and processes, there are always things that can be improved so that you can lower costs or cut time on deliveries.
Assess your systems regularly to find inefficiencies and fix them.
Why Shipping Logistics is So Important For Your Business
Shipping logistics is a critical part of any business. There are several opportunities to help reduce overall expenses and meet the expectations of your customer base.
Nowadays, customers expect a delivery that is fast and free. To stay competitive with other businesses in your industry, it’s crucial to keep on top of shipping logistics because it now has a direct impact on customer experience.
According to research, more than 75% of respondents said that the top characteristic related to a positive experience with an online retailer was fast shipping.
Another important factor that customers expect other than receiving their products quickly is visibility. They want to know where their order is at all times and have it arrive when they schedule it.
This can be tricky, as last-mile logistics can be slow, inefficient, and costly. It is worth investing in optimizing this part of logistics to make sure your customers are satisfied.
Get Your Products Where They Need to Go Quickly and Safely
That’s everything you need to know about what shipping logistics entails. Although the overall process is similar for many companies, every business and industry has its own unique needs that need to be addressed by a trustworthy freight partner.
If you need to transport goods throughout the continental US, Alaska, Canada, and Mexico, look no further. Patriot Freight Group will take care of the complicated details that come with shipping logistics and get your goods where they need to go.
