The Importance of Transport in the Logistics Chain

To speak of transport in logistics is to speak of the movement of cargo in all its known forms: air, sea and land, by means of which inputs, raw materials and finished products are transferred from one point to another according to demand planning.

If these three forms of product transport are analyzed, it can be determined that air transport is carried out by cargo or commercial aircraft, maritime transport is carried out by cargo ships, both for loose cargo (breakbulk) or containers, and land transport through Freight trains and trucks of all types and sizes. All of the above forms constitute the movements of the logistics supply chain.

The use of the different types of transport will undoubtedly depend on three fundamental variables: the distance between the origin and the destination, the supply of transport and the final destination of the transport.

In the first case, the distance between the origin and the destination is key because it defines the type of service level desired and the choice of the form of transport.

This is because it is not the same as the distance being 100 kilometers on the highway (where the decision would undoubtedly be a truck) or having to dispatch products from Chile to the United States, where the maritime or air modalities could be chosen; the most likely reality is that it is bimodal, that is, that it adds a second type of land transport, be it rail or road, to reach the final destination. 

Secondly, the transport offer makes sense. This, because depending on the country the transport networks change. For example, in Chile, the most used is the highway, that is, by truck, and in a very minority, products are moved by train. But if we analyze the case of Europe, rail transport is very relevant in the movement between countries, as a fundamental backbone for the transfer of all kinds of products. Much of the above speaks of the countries’ policies and their geographic and economic needs.

The third point includes the final destination of the product, where the requesting country or city is essential to define the transport to be used.

Calculate Freight Without Losing Money

For example, if the port infrastructure of a country is more developed and all the shipping destinations converge there, no doubt maritime transport will have an important relevance compared to the rest; as well as if shipments are made between countries in Europe, rail and road transport will become primary, since most of these origins and destinations have this type of transport as the main backbone.

However, to reach the end customer, the most flexible transport is the truck.

It can reach all points on the land map, unlike ships, trains or planes.

In turn, in recent times, some distribution experiments have been carried out using drones. But, these are still infinitely far from the flexibility that trucks have in reaching the end customer, basically due to the weight and volume of the cargo.

Any of these types of transport will charge more or less relevance depending on the level of service that you want to provide to customers.

Necessary evil or Strategic Partner?

In many countries, carriers are seen as “a necessary evil” and not as a “strategic partner”. The truth is that it seems to be a mistake, because when the digital world imposes almost immediate dispatch times, transport becomes increasingly important and in all its forms, especially in the dispatch of finished products to end customers. 

But not only this transport must be efficient, because by speeding up the dispatch in this final stage it forces the entire chain to be more effective, both in the dispatch of raw materials for the production of products and the supply of inputs register.

The best solution in terms of costs and benefits is for companies to create alliances and make carriers “strategic partners”. This is relevant because it goes hand in hand with assuming that transportation is strategic. 

Today the only real differentiating element in today’s markets is service, and transportation is a vital piece of that achievement. Without this, the loss of the client is a sure fact.

Here is something new, the final people who have contact with customers are not the financial, nor the managers in general or any sales manager at the time of delivery, but rather the drivers and assistants in the office.

By being aligned with companies and providing good service in the field. They can induce or inhibit a new purchase in the future. This, because they are the final image of the delivery service, they stop being drivers or assistants to become part of the supplier company. Hence its great importance.

The “Customer Promise”

Many may believe that what is truly relevant or key, then, is that transport is fast, but no. What matters is that you are in line with the “Promise to the client”, that the client receives what has been promised.

After being clear about Mobile App, it is necessary to evaluate transportation costs, which are relative. Because when looking for the lowest transport rate there will always be someone cheaper than the rest, however, it does not help if this transport is late or simply does not comply when the client needs registration. 

This can be visualized in a very simple way, for example, if we have an origin and destination where “Carrier A” charges $ 100 arriving in 72 hours and “Carrier B” charges $ 200 arriving within 24 hours at the same destination, Where the client requires us to arrive in 18 hours.

The question that arises immediately is What is the best transportation rate in the supply chain? The answer remains open, however, when it is defined that the only differentiating element is the service, the rate or cost of transportation takes a back seat when it is the client who is at stake. 

There is no more convenient transportation fee if the client is able to assess it through their need.

Five Tips to Consider in Highway Transportation (Trucks)

Since the most used form of transport in the world to supply customers is the truck, the following five aspects should be considered when choosing such transport:

  1. Round Trip versus One Way: Hire as far as possible transports that have their own returns with other companies, so the trip will be round (Round Trip). Otherwise, that is to say, transport without return (one way), it is most likely that part of the return will be transferred to the rate, making transport costs more expensive.
  2. Contracts: Always generate contracts that guarantee the operation, especially that include cargo insurance, accidents and damage to third parties, in short, be backed up against any eventuality, since the load is of each company and can be involved in unwanted situations.
  3. Service Level: Periodically measure the level of service provided by transportation, generating satisfaction surveys that involve customers, distribution centers and commercial areas; This way, there will be monitoring that will ultimately benefit from an increase in the level of final service to customers.
  4. Re-adjustability polynomial: In order to avoid subjectivities and not pay “inefficiencies” in the transport rate, it is necessary, in conjunction with the principal company and by mutual agreement, to generate a polynomial that involves at least 3 aspects of the costs of transportation that influences the final rate, for example, oil, tires and the dollar.
  5. Image and security: Transport is always the final visible face with customers, they must meet good image standards, equipment cleanliness and above all security, in aspects such as driving hours, speed control via GPS and equipment loading and unloading when warranted, if possible generate all the safety conditions if necessary.