What are Logistics Services? Types, Benefits, and Best Practices

keyKey Takeaways:
  • Logistics services cover all the elements of a supply chain that facilitate moving goods from origin to destination. They include warehousing, freight forwarding, courier, port services, and inventory management.
  • The benefits of logistics services are access to advanced technology, multiple shipping options, easy reversals, scalability, optimized supply chains, and industry expertise.
  • The 7 Rs (Right Product, Right Customer, Right Pricing, Right Quantity, Right Condition, Right Time, Right Place) are integral to smooth logistics operations.

Did you know worldwide retail sales are estimated to touch a whopping $32.8 tn by 2026?

Ever wondered what lays the groundwork for such massive growth?

It is none other than “logistics services”, the invisible architects of flawless supply chains, that eventually led to this forecast.

Statista’s research reveals the global logistics industry is to exceed a colossal figure of $14.8 trillion. It indicates how invaluable logistics is to modern-day commerce, set to grow by leaps and bounds in the years ahead.

If you are a business owner aiming to expand into new territories or a delivery manager looking to optimize your routing processes, this blog is for you.

It is an in-depth guide to all you need to know about logistics services. It elaborates on the types and business benefits of logistics. 

It further explores what a logistics service provider is, its types, and best practices (7 Rs of logistics). 

So, let’s begin:

What are Logistics Services?

Logistics services refer to moving goods and merchandise from their place of origin to their destination (or point of consumption). In other words, they constitute all the elements of the supply chain and involve both inbound and outbound logistics activities, including:

  • Transportation of products from a factory to the fulfillment center 
  • Warehousing, storage, and order processing
  • Packaging, shipment, and distribution
  • Order fulfillment, final delivery to the end customer, and reverse logistics (returns)

Examples of Logistics Services

Following are the examples of two types of businesses that utilize logistics services. 

1. Tech companies

Global tech giants often partner with third-party logistics companies to ramp up their deliveries. Teaming with a logistics provider company enables them to reach a broader carrier network and streamline their supply chain. 

For example, Apple teams up with logistics service providers to ship products across the globe.  

2. E-Commerce retailers

Ecommerce companies may deploy a mix of self-logistics and outsourcing of some operations for seamless supply chain management. For example, they can team up with a freight forwarding company to handle imports and exports. They can also hire a virtual warehouse service for effective inventory management.

eBay, for example, works with logistics partners, including FedEx, DHL, UPS, Shiprocket, and Aramex for warehousing and order fulfillment. It helps handle this company’s storage and ensures timely deliveries to customers. 

Be it an e-commerce retailer, small courier service, or local shop; integrating technology solutions can be a good idea. For instance, route planner software like Upper can help optimize delivery routes and contribute to cost savings on fuel consumption. 

Types of Logistics Services

Here are the prominent types of managed logistics services, explained in detail.

1. Warehousing

Warehousing - type of logistics service

Once a business manufactures goods, it needs to store them before their dispatch to customers based on orders. Companies that look to expand into new regional markets or have far-flung customers may find buying a new warehouse infeasible. 

This is where a warehouse service provider comes into the picture. It helps a business store goods closer to customers without an upfront investment in multiple warehouses. It also relieves retailers of warehouse upkeep costs. 

Some warehousing services also offer virtual warehouses that store multiple companies’ products in a single space. This concept of multi-tenancy is beneficial for those businesses that don’t have an inventory significant enough to store in an entire warehouse. It eliminates the unwanted waste of rent and utilities to support a half-filled warehouse. 

2. Freight forwarding

Freight forwarding - type of logistics services

Freight forwarding refers to moving freight from the point of origin to an order fulfillment center. It comes into play after the placement of a purchase order with a manufacturer, wholesale supplier, or distributor. 

Domestic freight forwarding involves shipping products by rail, trucks, or airways. A truck or train is the go-to choice for full truckload (FTL freight) or less-than-truckload (LTL freight) shipments. If you have to transport time-sensitive or high-value products, air freight shipping can be an ideal choice. 

International freight forwarding involves customs paperwork, duties, and multi-modal transport. It, therefore, adds extra layers of complexity. To avoid chaos, you can contact a freight forwarding company to handle paperwork and make arrangements to transport your goods. 

You can also consider a logistics service provider (LSP) to manage your international freight shipping operations. Choosing between a freight forwarder and a logistics provider depends on factors such as specific business needs and shipment volumes. 

However, logistics service providers aggregate a massive volume of shipments. It works as an incentive for partnering freight forwarders to ensure consistent, high-quality service, giving it a slight edge.

3. Courier services

Courier services - type of logistics services

Courier shipping offers logistics services for small or low-volume orders. A courier service provider picks up and delivers a package directly to the recipient. As a courier is a faster and safer shipping service, it is more expensive than regular posting services. 

While a courier service is mostly for the final product delivery to customers, it may also offer shipments with special requirements. For instance, if products are fragile or need specific temperature conditions to maintain quality, a courier shipment may come in handy. 

A courier company also provides detailed tracking, regular updates, and custom delivery times. These services give customers higher visibility and control over deliveries that help enhance their experience and build trust in your business.

4. Port logistics services

Port logistics services

Port logistics covers the set of processes and activities related to planning, management, and coordination required for ocean freight shipping. In other words, it is pivotal to organizing and controlling the efficient flow of goods in port facilities. 

Following are a few steps in port logistics operations:

  • Dealing with the reception of goods, including vessel unloading and customs documentation verification.
  • Storage and handling of cargo in ports, involving sorting, labeling, and organizing it in designated storage areas.
  • Transporting goods to and from ports via rail, road, or intermodal logistics, as appropriate.

These port services encompass a jetty, pilotage, harbor tug, port yard, warehousing, vessel provision, berthing, and navigation assistance. In addition, port services inspect goods that arrive or depart, facilitating superior quality control and identification of damaged products. 

Port logistics is integral to every step in the supply chain, from cargo reaching a port to storage, handling, and distribution. As seaports are crucial connection points between countries and continents, port logistics contributes to effective global supply chain management.  

5. Inventory management and planning

Inventory management and planning

Inventory management logistics services form a vital part of supply chain management that contributes to a business’s success. Logistics inventory planning is key to establishing a fine balance between production and consumption of the finished product. Further, it facilitates the seamless movement of inventories along a supply chain while enhancing customer satisfaction. 

The four stages of logistics inventory management are:

  • Procurement and warehousing: Sourcing consumable raw materials from vendors and storing them to support the manufacturing process. 
  • Work-in-Progres (WIP) Inventory: Sending raw materials through manufacturing to utilize and modify them into final products.
  • Finished goods: Conducting proper quality checks and making products available for sale. 
  • Maintenance, Repair, and Operation (MRO) Products: Developing and improving products for future resale while minimizing damage and repair costs.

A well-structured inventory management framework paves the way to superior quality control, speedy order fulfillment services, and high operational efficiency. 

Best Practices (7Rs) of Logistics Management for Your Business

The Seven R’s of logistics contribute to ensuring the smooth functioning of all operations involved in shipping goods.

1. Right Product

Make sure the product you design, manufacture, or select meets your customers’ expectations. You should also evaluate the potential issues that may surface during transportation due to a product’s weight, shape, fragility, and distance. It will help standardize the product’s measurements, simplify packaging, and streamline warehousing, handling, or transportation. It can help save both the time and resources required for shipping your goods.

2. Right Customer

Customer satisfaction is pivotal for a business and lies at the heart of supply chain operations. So, it is essential to conduct thorough market research to determine your target customers. You can then create a suitable marketing strategy to raise awareness about your products and strategies. Accordingly, you can create a marketing strategy to broaden your client base.

3. Right Pricing

Setting the right price plays a significant role in determining profit or loss. You must research market trends to establish competitive prices for your goods. You can also set a price value to track your income or expenses and deploy a reliable system to store and update accurate pricing information.

4. Right Quantity

It is important to deliver products in the right quantity when it comes to logistics services. Supply chain managers are responsible for identifying the right amount of goods (or economic order quantity) to deliver. Selecting the appropriate freight amount helps you optimize your inventory levels to avoid stockout/overstocking situations and maintain profit margins.

5. Right Condition

Achieving the safe delivery of proposed products is a vital step in logistics services. You should create a distribution strategy that helps preserve the product quality until its final delivery to your customer. It also considers maintaining special temperature or pressure conditions for specific goods to maintain their quality.

6. Right Time

The proverb ‘Time is money’ holds true for logistics services. It implies that your entire logistics process can fail if your timing is not right despite everything else in place. Therefore, you must have products readily available to deliver as and when customers place orders. You can also use routing software like Upper to optimize your routes and ensure on-time deliveries. It will help keep your customers happy and build long-term relations with them.

Ensure On-time Deliveries with Efficient Routing

7. Right Place

You should develop a delivery system equipped with live tracking to keep both your team and customers updated about the location and achieve timely product delivery. Moreover, the demand for your goods may vary geographically and demographically. Therefore, it is also important to identify areas where customers for your products are higher and focus marketing efforts there.

6 Business Benefits of Using Logistics Services  

Given the types of logistics service providers, let’s now understand the benefits they provide.

1. Access to cutting-edge processes and technology

Logistics service providers deploy more advanced shipping technology than small-sized businesses use in-house. It constitutes next-gen transportation management planning/scheduling systems and warehouse or distribution center management software. 

Working with an LSP enables you to leverage this technology without investing in state-of-the-art infrastructure from scratch. It also helps improve the customer experience and satisfaction levels through reliable service. 

Besides, a logistics provider can offer high-end technologies such as the Internet of Things (IoT) to track goods in real time. They also provide analytics reports for valuable insights into operations, identify areas of improvement, and make processes efficient.

2. Multiple shipping options

A logistics company manages robust fleets of delivery vehicles comprising planes, ships, and trucks to transport goods. Therefore, they offer a great deal of flexibility in terms of the time and channel for freight shipping.

These multimodal shipping options enable you to determine the most affordable and speediest medium that meets company-specific needs for freight transportation. Thus, outsourcing logistics helps save time and cost while giving you more time to focus on critical business aspects. 

3. Hassle-free reverse logistics

Logistics service providers often have return-by-mail or drop-off locations to process return orders. This streamlined logistics process prevents shipping over long distances to a central return location, which is prone to delays. 

It helps save time and money processing returns and makes reversals convenient. When a logistics provider handles returns, it helps your staff focus more on making new sales instead of refunding old ones.

4. Scalability

As your business grows, orders may pile up beyond your staff’s capacity to handle them. It may render your own logistics operations unable to scale up to support your growing customer base. 

On the contrary, logistics service providers have the infrastructure to support increasing operations and customer demand as your business grows. It helps keep the stress and expense of hiring and training additional staff to meet the continuously rising demand.

5. Optimized supply chains

Optimized supply chains

For a business with an intricate supply chain or a far-flung customer base, logistics services can minimize waste and deliver value at each step of the supply chain. It helps make deliveries faster in the era where customers expect delivery in 2 days for most products. 

A logistics service provider can effectively allocate inventory among warehouses spread across a state, nation, or the globe. It helps optimize supply chain management to ensure quick and cheap delivery to customers irrespective of their addresses.

6. Industry expertise and experience

Many logistics service providers work with other freight companies to handle tasks like transportation and custom shipping. Partnering with logistics providers helps access bulk discounts and custom options to support all logistics needs.

It can help minimize costs and expedite order fulfillment, creating a win-win for you and your customers. Additionally, logistics service providers can provide time-tested advice and insights from their logistics networks to expand your business into a new territory or navigate market volatility efficiently.

FAQs

LSPs perform incoming merchandise (inbound) logistics, inventory management, warehousing, order tracking invoicing, picking, packing, label generation, shipping, payment/finance management, returns, and disposal.

No, they are not. Instead, transportation is just an aspect of logistics. It implies that logistics encompass additional services like warehousing, order fulfillment, and returns.

The elements of logistics include storage and warehousing, packaging, inventory, transportation, and information management. All these work in coordination to create a streamlined workflow for efficient movement of goods from manufacturers to customers.

Logistics faces challenges such as increasing transportation costs, regulatory compliance, fluctuating customer demand, bulk data management, and supply chain coordination. Adopting modern technology, building strong supply chain networks, and fostering collaboration with logistics partners can help overcome them.

Technology facilitates improved supply chain visibility through real-time tracking of goods at every stage of the supply chain. It also enables the automation of logistics processes such as order processing, inventory management, and shipment tracking, enhancing efficiency and accuracy. It also helps optimize routes and shipping methods for significant cost savings.

Logistics service providers (LSPs) offer a wider range of services than freight forwarders, including warehousing and returns. A logistics company usually maintains longer working relations with clients than a freight forwarding company. Also, logistics services fit extensive continuous shipping needs, unlike a freight forwarder that suits businesses with in-house logistics.

Finetune Your Logistics Management Effortlessly with Upper

Mona Haddad, Global Director for Trade, Investment, and Competitiveness at the World Bank, rightly says,

“Logistics are the lifeblood of international trade, and trade in turn is a powerful force for economic growth and poverty reduction.”

Managing logistics efficiently is indispensable for your business to succeed. A critical requisite of seamless logistics is optimal routing. It helps you deliver orders on time while minimizing fuel costs.

You should also get real-time visibility of your driver’s positions and delivery statuses to get complete visibility into logistics operations. Besides, it is vital to analyze and review their performance to identify scope for improvement.

Wondering how to do it all? Well, Upper’s route planner has got your back!

Not just that, it also provides the proof-of-delivery feature to let you collect digital evidence of every delivery and minimize confusion or complaints. With the scheduling feature, you can plan routes weeks or months in advance and avoid the routing hassle, especially in peak demand seasons.  

So, book a with us and transform your logistics.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.

https://www.upperinc.com/