In the 21st-century marketplace, it seems like everyone’s talking about shipping and logistics. eCommerce has created a huge demand for shipping services, and logistics are commonly cited as the key to successful supply chain management.
However, to someone new to the shipping and logistics, it may not be immediately apparent what the technical and practical meanings of these terms are. “Shipping” and “logistics” are often used interchangeably, despite the fact that they mean different things, and it can be challenging to sort out the many different definitions and terms associated with the field.
What are shipping and logistics? What are their differences and similarities? We’ll untangle some of these concepts—and, in the process, you’ll gain an understanding of how these key aspects of a business function.
What Is Shipping?
Shipping is the movement of goods from point A to point B. It’s a simple concept, but it can be executed via many different methods and strategies.
Shipping methods commonly in use today include:
- Road Freight: Shipping using semi-trucks, box trucks, and vans
- Air Freight: Shipping using cargo aircraft
- Rail Freight: Shipping using railroad cars
- Maritime Freight: Shipping using cargo ships
When cargo is transferred between these shipping methods, it’s known as intermodal shipping. Intermodal shipping is facilitated by the use of intermodal shipping containers—the large corrugated steel boxes that you’ll frequently see being transported by ships, trains, and trucks.
There are also many different types of specialty shipping that address the unique needs of each shipper. Types of specialty shipping include:
- Same-Day Shipping: Shipping that prioritizes speed
- Temperature-Controlled Shipping: Shipping that uses temperature-controlled methods, such as refrigerated trailers and warehouses to keep goods within a certain temperature range
- Hazardous Materials Shipping: Shipping that uses personnel, equipment, and procedures that are designed to facilitate safe handling of hazardous materials
Most people have heard of the major organizations that provide shipping in North America, such as the U.S. Postal Service, FedEx, and UPS. However, these organizations also provide a wider range of services known as logistics. Next, we’ll look at what logistics entails.
What Is Logistics?
Logistics is a large and crucial field that includes many different parts of the supply chain, such as:
- Shipping: The movement of goods from point A to point B
- Receiving: The process of transferring goods to storage using the correct procedures
- Warehousing and Storage: The storing of goods until they’re ready to be used or shipped to another point in the supply chain
- Materials Handling: A set of practices for moving, storing, and controlling goods such as inventory management
- Packaging: The process of placing goods in their retail or wholesale packaging
- Reverse Logistics: The process of returning goods back to the supply chain from their end-user destination
If you’re familiar with the concept of “all squares are rectangles, but all rectangles are not squares,” then you can understand the relationship between shipping and logistics. All shipping is a form of logistics, but logistics also extends beyond shipping into many other areas.
With so many different moving parts in the average supply chain logistics operation, it’s crucial that they all work together smoothly. How can shippers achieve that?
Coordinating Your Shipping and Logistics
To be successful, shipping must be coordinated with all other elements of the supply chain. Well-integrated and coordinated shipping functions smoothly with warehousing, receiving, and other key elements to form a system that fulfills its purpose.
Many businesses coordinate their shipping and logistics by working with a single logistics provider that handles all aspects of supply chain logistics. Businesses such as freight brokers are widely used for their networks of connections and their ability to create seamless supply chains that connect at all the right points.
A business’s shipping and logistics provider should also be able to provide access to key specialty logistics products, such as temperature-controlled shipping and hazmat shipping if necessary. When possible, it’s also a good idea for businesses to work with a logistics provider that specializes in the type of goods that your business ships.
It’s critical that businesses do the proper vetting on a potential logistics partner before working with them. A logistics company should be able to provide all of its relevant safety records and certifications. It’s also important to check that a logistics company is registered with the Federal Motor Carrier Safety Administration and that they have the appropriate surety bonds, such as a BMC-84 freight broker bond for freight brokers.
The Latest in Shipping and Logistics
What are the biggest stories in the intersecting world of shipping and logistics right now?
- Automation: Companies like Amazon are making big investments in automated logistics, and others are catching up as the industry sees the efficiencies made possible by technologies such as automated pick-and-pull. While drone delivery and autonomous tractor-trailers are still thought to be a few years off, investors and tech companies are furiously researching the technology to get a leg up on their competitors.
- Digital Platforms: Some of the world’s biggest shipping businesses are now embracing digital platforms that allow booking and shipment tracking to be handled entirely online. These platforms create new avenues for consolidation and management of shipping and logistics operations in ways that could create big efficiency gains for businesses of all sizes.
- Physical Assets: Even the most plugged-in logistics business still needs warehouses and trucks, which is why large logistics center developments are currently being built all over the nation.
Shipping and logistics are relatively simple concepts, but each can take years to master. Working with a qualified shipping and logistics professional will help ensure that a business is able to integrate these key functions to create a more efficient and productive logistics network.
Jason O’Leary brings 15 years of deep technology, product development, and marketing experience to Surety Bonds Direct. He has been leveraging Agile practices for well over a decade and is versed in various Lean practices as well. Jason has worked on substantial and complex systems dealing with secure information ranging from payroll & employee systems, to e-commerce, to travel-reservation APIs. A veteran of the San Francisco / Silicon Valley technology scene, Jason now makes his home in Charleston, South Carolina with his wife and 3 children.