Transportation logistics involves an entire industry dedicated to managing the global distribution of goods from raw form to the finished product. The magnitude and complexity of trading goods in 2012 dictates that all steps in the chain of supply and demand be highly organized and efficient to maximize a company’s distribution capabilities efficiently.
Transportation logistics does not allow for error or loose ends. Whatever modes of transportation are used, it makes sure that trains,trucks, ships,and planes arrive at the right destination and on schedule. It fine tunes transportation protocol when the crossings of borders is necessary, and compensates for typical incidents that could happen along the way. Because transportation logistics has proved to be so essential in the network of distribution, additional measures needed to be taken by companies to keep pace with global trading and distribution activities.
Calculating expenses related to transportation logistics is not an easy task. An estimated $6.4 trillion was the total global expenditure in the year 2000 for logistics by all modes of transportation―a fraction of what it would cost now in 2012 to follow the same standard distribution procedures. The main challenge of transportation logistics pertains to the transportation industry itself in the following ways:
•Each mode of transportation is a separate segment, with a distinct way of handling business procedures, and growth potential.
•Some segments are significantly fragmented.
•The logistics sector, being a relatively new industry, is widely known as taking on the white collar aspect of logistics, being even more unique from the rest of the industry.
The method of intermodal transport where two or more modes of transport are integrated has seen some success especially with the rail and trucking industry. It has been a light at the end of the tunnel for some time as a more cost-effective and environmentally friendly approach to moving bulk commodities. However, progress in this direction on a large scale is still very slow. This is why many companies opt to use a 3PL―it has a wide range of services that sets it apart from being strictly just another transportation or warehousing company and may include:
*Brokerage in customs
*Bill payment and auditing
*Labeling and packaging
As global trade becomes a bigger factor in e-commerce and communication distribution, customers expect faster deliveries and more sophisticated services, such as light manufacturing and assembly and radio frequency identification (RFID) capability. Customer demand puts intense pressure on 3PLs to develop expanded service methods to deliver time-critical, time-advantage products with four-day shipping standards rapidly becoming the norm.
Implementing advanced technology gives a logistics provider a considerable edge over competitors and allows them to offer multiple services. Companies outsource 3PLs as a strategic partner to execute transportation logistics because:
•Outsourced services are more cost effective than maintaining internal logistics.
•Companies would rather concentrate on developing their internal competencies.
•Companies don’t have the in-house resources or expertise to manage complex supply chains, such as Just-In-Time Manufacturing, especially as their customers and suppliers become more global oriented.