What is a Logistics Company and What Do Logistics Companies Do?

May 15 , 2022 | CATEGORY : SERVICES

By definition, a logistics company controls and streamlines various processes of moving goods, including warehousing and transportation, from the point of origin to the point of consumption based on specific customer requirements. Logistics, therefore, involves a complex set of processes that require a high degree of coordination in acquiring, storing, and transporting resources and goods on a global scale.

The importance of logistics became increasingly relevant in a pandemic-struck world. As the safety concerns and restrictions induced by COVID-19 have exponentially increased the dependency on logistics companies. Growing through several challenges the logistics companies are still ensuring timely deliveries, even at the farthest destinations, and are continuing operations amid supply chain disruptions to meet the growing demands, even post the covid pandemic.

Strategies and execution of logistics

Every aspect of logistics, transportation to packaging, inventory management, and warehousing needs smooth functioning and all are interlinked together. It works as a relay team to ensure coordination in-between functions.

Multiple functioning within the purview of logistics

Orders are received and processed via the company’s logistics management system and goods are stored at the warehouse.

The order passes through packaging that ensures secure packing and proper labelling of goods before it is sent out for transportation.

The logistics team ensures that the goods are ready for dispatch right from the point of their origin to their destination. Vehicles are inspected to ensure there are no pre-existing faults or damages that might affect the condition of the goods being transported, especially on lengthy routes.

As businesses rely heavily on logistics, established providers typically offer different modes of transport to suit the nature and size of the order. It assigns tracking IDs to each order for scanning and processing more efficiently at every stage and allows users to access their order status.

Choosing the right kind of logistics service provider

Given the intricate nature of services that go into logistics, businesses often choose to outsource logistics specialists. However, logistics providers vary in their offerings understanding them in depth will help choose the right one that matches the company’s needs.

Different models of logistics companies

Freight brokers focus on single shipments, which act as an intermediary between suppliers and carriers rather than transporting freight. Typically, which have access to various small and medium-sized freight carriers and therefore, provide suppliers with many shipment alternatives.

Freight brokers can be -

  • Freight companies transport goods either through a single mode of transportation by surface, by air,  or by other multiple transport solutions.
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  • Freight forwarders do not actually move freights themselves but are facilitators within the supply chain, which work with their established networks to help tailor transport solutions according to the needs of their clientele, focusing on saving costs and time.
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  • Carriers handle freight directly which includes rail, trucking, air cargo, and ocean freight companies.
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3PL (third party logistics) companies

The 3PL logistics company handles end-to-end supply chain management operations including warehousing, inventory management, transportation, packaging, and freight forwarding service assistance. As the name describes, the third party refers to outsourcing all aspects of logistics. In e-commerce, 3PL companies act as fulfillment centers providing customization, last-mile delivery, and coordinating returns and replacements. It focuses on cost savings and timely deliveries with access to an extensive network of carriers.

Role of logistics in an increasingly connected world

In the present-day scenario, the need for logistics is becoming more pervasive. The global logistics market attained a value of almost USD 9,525.1 billion in 2021. Aided by advancements in computing technologies, the market is projected to further grow at a CAGR of 5.7% between 2022 and 2027 to reach a value of about USD 13,326.3 billion by 2027.

Given the increasing dependency on logistics to keep businesses and the economy moving, logistics companies cannot afford any downtime and are increasingly relying on technology to adapt and evolve their operations.

For instance, technology interventions can take operational efficiencies to the next level, addressing complexities in logistics through:

  • Real-time monitoring systems integrated with machine learning (ML) and artificial intelligence (AI) enable milestone-based tracking of shipments that have radio-frequency identification (RFID) tagging.
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  • Route management systems optimize shipment routes resulting in cost, time, and labor efficiencies.
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  • IoT-based systems reduce gaps in supply and demand with an optimal view into the availability of goods
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  • Robotics and automated forklifts help in moving heavy objects and goods, especially within a large warehouse
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A crucial part of the supply chain, logistics has been driving operational efficiencies and enabling businesses to stay competitive for decades. Through efficient and capable logistics, companies benefit from lower costs of operations which includes raw materials, inventory management, and warehousing to designing effective customer fulfillment strategies through delivery, to long distances reaching the last mile. With the help of technology solutions, logistics has become a key function enabling new business models and creating opportunities for new markets.

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