How Does Transportation Affect Logistics?

What is transportation?

Transportation is one of the largest industries in the world. It refers to the movement of products and raw materials from one destination to another. This process begins with the supply chain to the shipping of the finished product to the consumer.

Transportation is a key element in the logistic chain. It joins together those components that are considered to be separated. Transportation systems connect supply chain components and must be properly managed and controlled for transportation and logistics to work together successfully. This means complete visibility and strong communication between all members of the chain.

The success of any supply chain can be judged by its transportation management. Transportation and logistics can account for as much as 7-14% of sales, depending on the industry.

So how does transportation affect logistics?

How Does Transportation Affect Logistics?

Effects of transportation on logistics

Transportation affects logistics in the following ways:

Transportation costs are influenced by a corporation’s plants: Warehouses, vendors, retail locations, and customers or consumers.
Mode of transport affects inventory requirements: High-speed or high-priced transportation systems may require smaller amounts of inventory, while slower, less-expensive transportation systems may require larger amounts of inventory.
The selection of a low or high-speed mode can alter the delivery schedule or how freight is packaged.
Carrier classification rules and transport modes can influence the packaging.
Contract negotiations may change how transportation modes operate.

You may interest: Airlines in Vietnam with air freight transport

5 types of transportation today in Vietnam

Roadways: Highly flexible, can be applied to door-to-door service. Roadway transport assists in delivering goods to locations that are far from ports, stations or loading points.
Railways: Plays an important role in transportation. Railway transportation can deliver large volumes of goods, with stability and lower costs compared to roadways.
Air transport: Advantageous for high-value shipments, as it is commonly recommended to ensure quality. The fast delivery speed has minimized risks in transportation, thus, improved the overall quality of logistics services and reduced the cost due to the loss of goods in the supply chain.
Water transport: This is the most common type of transportation used in logistics as it has numerous advantages: large capacity, low transportation costs, etc. Water transport is mostly used in international trading.
Pipe conveyance: This is a specific type of transportation, only suitable for special types of goods such as liquefied petroleum gas, oil and gas… to serve special subjects such as chemical manufacturing companies, multinational companies, and corporations.

5 types of transportation today in Vietnam

Transportation strategies in logistics

Transportation costs and customer responsiveness are the two most important elements that need to be optimized. In order to achieve these goals, there are certain conditions that firms may have to fulfill in making effective transportation decisions:

Align transportation strategy with competitive strategy.
Maintain an appropriate combination of in-house transportation and outsourced transportation to meet the company’s goal.
Be compatible with e-commerce.
Use information technology to decrease transportation costs and increase response in transportation networks.