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What is the difference between Logistics vs. Transportation?

July 10, 20180Logistics TechnologyTransportation Management

Logistics-vs.-Transportation-1200x927.jpg

What is the difference between Logistics vs. Transportation?

July 10, 2018 0Logistics TechnologyTransportation Management

Being that we work in this space, this is a question we often encounter and we hope to shed some light on the question in the following paragraphs.

People uninitiated to the logistics ecosystem often get things wrong about the segment, especially with whitewashing the logistics market to being about transportation in its entirety, when it cannot be farther from the truth. Essentially transportation is a cog in the well-oiled machinery of logistics – an integral part of the logistics process, but not its be-all end-all.

Simply put:

Logistics involves the elaborate flow of goods from the production house to the consumer’s table. This includes warehousing, inventory management, packaging, and transportation – and with the emergence of e-commerce, last-mile delivery also takes center-stage. Every single product that a consumer buys from the store or orders online reaches him due to the efficiency of the logistics processes behind it, making this a primary driver behind the GDP of an economy.

The U.S. for example, spent an estimated $1.48 trillion in the transportation and logistics industry in 2015, making up 8% of its GDP that year. The logistics expenses are even higher in developing nations like China and India, to the tune of about 14%. Logistics efficiency is crucial to the growth of a country, as successive governments look to optimize supply chains across different segments to make it faster, cheaper, and tighter.

Digitization

Logistics transparency and visibility is now in vogue, as businesses look to bring together different stakeholders in supply chains to create a seamless system which would be accountable from start to finish. Blockchain is a popular concept, with different logistics and transportation companies jumping in the bandwagon to create pilot programs and look to see if the technology could be put to use in exerting greater control over logistics chains.

Transportation companies, especially trucking fleets are increasingly looking to digital freight marketplaces (we’ve even created our own form) to improve their bottom line. Traditionally, the road freight industry had been stuck to using conventional practices of calling up or emailing freight forwarders for securing loads. Brokers had been the linchpin between shippers and carriers. With digital freight marketplaces, the ecosystem is thrown open, and in some cases shippers can sidestep brokers to provide shippers and carriers a way to connect.

Warehousing has also undergone sweeping changes over the last decade, partly due to the advent of e-commerce into the mainstream rhetoric. Rising consumerism and the expectations of consumers towards same-day delivery has strained supply chains, and have incinerated sluggish warehousing practices. Automation is of relevance today, as AI-assisted robots take control of warehouses, which can be seen all across China today.

Recently JD.com, a logistics major in China unveiled its new warehouse which can send out 200,000 packages every day and employs just four people, with them assigned to service the robots that run the place. Technology is revolutionizing the way we look at logistics, and the evolution of warehousing could be the start to the dominion of automation in the supply chain.

The transportation industry is also waking up to the reality of autonomous trucks as established OEMs and startups are pushing boundaries like never before. Drones are changing the way we look at transportation, and if legislation is brought in to suit the times, before long it could be a whole different industry.

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