What is the difference between logistics and transportation?

The terms transportation and logistics are often used interchangeably, however, they actually refer to two different industries. Transportation is a subsection of the much broader logistics industry which incorporates more than the transportation and delivery of goods; it also includes the storage, handling, inventory, packaging, and various other aspects.

Logistics, put more simply, refers to the flow management of goods and services.

Both transportation and logistics are essential parts of the supply chain.

What is transportation?

Transportation is defined as the movement of people, animals and goods from one location to another.

Transportation is a function within the logistics industry operations. It is focused purely on the definition and deployment of transportation modes, such as sea, road and air. Transportation services are divided into three aspects: infrastructure, vehicles and operations.

When planning the shipment process, the method of transportation is a significant consideration. You need to determine the costs, how important is it to get the shipment to the end-user in what period, the value of the goods, as well as their size and weight.

As new technologies are discovered and improved, there has been an enormous transforming in both the transportation and logistics industries. Technological advancements have led to the creation of the smart transportation industry which has allowed real-time monitoring of flow, resources and transparency across multiple points. Technology is providing a seamless exchange of operational information with key performance indicators that have streamlined and organised the industry.

What is logistics management?

Logistics management is obtaining, producing, and distributing materials and products in the right qualities and quantities to the end-user. Logistics deals with managing and implementing procedures for efficient storage and transportation. Services and related information from the source to the consumer will be sent through various channels to meet all customers’ requirements.

Logistics has added benefits and functions that are different from transportation services. Logistics managers need to make decisions based on packaging, documentation, insurance, storage, importing and exporting, regulations and possible freight damage. They also work on collaborating, claims, managing vendors and partner and risk mitigation.

Tips for effective logistics management

Successful and effective logistics management is complex and involves many elements. Some of the key factors include:

Planning – Proper planning is essential in a logistics management system. This involves everything from the products, infrastructure, vehicles and logistics operations, and how all of them will work seamlessly together.

Automation – Plays a major role in increasing the efficiency of a transportation company. Automation has a vital role in optimisation and has changed the landscape of the logistics industry for the better.

Team – The team you establish is an essential aspect of a logistics organisation. The team is responsible for growth. From the delivery person to the warehouse manager, logistics means training employees and having a logistics manager with interpersonal skills who can pull together every aspect of the logistics chain.

Warehouse Management – These types of logistics operations are dependent on the type of goods as well as the logistics manager handling the operation.

Analysis, feedback and measurement – For a logistics network to function effectively, it needs to be optimised on a regular basis. Whenever new strategies are deployed, proper analysis ensures a positive output.

What is the difference between logistics and transportation?

Looking at the above definitions, we can already start to see some of the clear differences between logistics and transportation. Logistics requires planning and management, whereas transportation is a mode by which to execute the planning when freighting goods from point A to B.

Transportation is simply a subsection of logistics and is just one of the parts of the puzzle that make up logistics management – these include:

• Transportation
• Packaging
• Documentation
• Insurance
• Storage
• Importing and exporting regulations
• Freight damage claims
• Managing vendors and partners
• Risk mitigation
• Containerisation – lifecycle management
• Selecting the right freight class – freight management
• Working with others in the supply chain

In this highly competitive market both information and physical products must move efficiently and at lower cost, paired with improved service. Successful supply chain management and logistics are often the difference between surviving and flourishing in the current marketplace. Improvements in the supply chain, including logistics, will see immediate benefits in terms of lower costs and optimised delivery.

Summary

It is important to understand the difference between logistics and transportation to maximise your return on investment. Advancements in technology have had a significant impact on both industries and we expect further advancements to drive innovation within both logistics and smart transportation.

Here at NEC New Zealand, we work with logistics and transportation companies, especially within the smart transportation space, so get in touch with one of the team today if you would like to learn more.