The terms “transport” and “logistics” are frequently used in business, often causing confusion due to their overlapping nature. While seemingly interchangeable, they represent distinct aspects of the supply chain. This guide aims to clarify the core differences between logistics and transport, highlighting how Logistics Transport plays a crucial role in international trade and the broader economy. We will explore:
- The fundamental distinctions between transport and logistics.
- The integration of logistics within the framework of international transactions.
- A detailed overview of various transportation methods, including their advantages and disadvantages.
- Essential terminology for navigating the logistics and transport sectors.
- Career paths available within these dynamic industries.
Finally, we will consider the significant impact of global events, such as the COVID-19 pandemic, on the logistics transport landscape.
Let’s begin by differentiating between transport and logistics.
Transport vs. Logistics: Unpacking the Key Differences
The transport industry is specifically concerned with the physical movement of goods. This involves utilizing various modes of transport – such as road, sea, and air – to relocate products from one point to another. In contrast, logistics encompasses a much wider range of activities. It’s a holistic approach to managing the entire flow of goods, information, and resources from the point of origin to the point of consumption. Logistics transport, therefore, is a critical component within the larger logistics framework.
Logistics activities include a comprehensive suite of processes, such as demand forecasting to anticipate needs, specialized export packaging to protect goods, precise carton labeling for efficient handling, and robust order management systems. It also covers meticulous inspection procedures, the strategic management of transportation itself, navigating complex customs clearance processes, efficient warehousing solutions, and effective distribution networks. In essence, the activities directly related to physically transporting goods internationally are a subset within the extensive domain of the logistics industry.
The logistics industry is fundamentally about strategic planning and execution. It focuses on effectively managing product movement, alongside the crucial data and documentation flow necessary for seamless and cost-effective cross-border trade. Logistics transport is the operational arm that executes these plans.
The Role of Logistics in International Transactions
The following diagram illustrates the flow of data and documentation that underpins international shipments, starting from order placement to final warehouse delivery.
The logistics process commences the moment a purchase order is placed.
Personnel involved in sourcing, traffic management, import operations, and production contribute essential data regarding terms of sale, product classification for customs, required documentation, optimal routing strategies, precise labeling specifications, and necessary testing protocols. Each of these elements is vital for ensuring the efficient flow of cargo and must be clearly communicated to the vendor.
Once the products are ready for shipment, the vendor is responsible for providing an Advance Shipping Notice (ASN). This notification is often facilitated through a freight forwarder, acting as an intermediary. The freight forwarder liaises with the appropriate carriers to secure necessary space on vessels, aircraft, or trucks and the equipment needed to load the cargo securely.
Simultaneously, import personnel must gather all necessary documentation to streamline the import process. Shipment details are communicated to a customhouse broker who specializes in navigating customs procedures and, when necessary, interacting with other government agencies to ensure compliance.
Furthermore, shipment information must be relayed to the import trucker and the destination warehouse to coordinate final delivery. Warehouses need to prepare adequate storage space for incoming shipments and provide receiving confirmations back to payment coordinators to finalize transactions. Subsequently, warehouses manage the domestic distribution of the products.
The precise timing and accuracy of this information exchange are paramount. Delays or inaccuracies in data can lead to significant disruptions and increased costs throughout the supply chain. Effective logistics transport management relies on the seamless flow of information.
Exploring Different Transportation Methods in Logistics Transport
Malcolm McLean, recognized as the “Father of Containerization,” succinctly defined freight as “something that you add to the cost of your product. If the cost of freight is too high, the product won’t move. Freight is important.” This highlights the critical role of cost-effective logistics transport in international trade.
There are four primary modes of transportation utilized for moving consumer goods in international trade: sea (vessel), road (motor freight), rail, and air. The choice of transportation method is determined by a combination of factors, each weighted differently based on the specific needs of the shipment:
- Cost: The price charged by the carrier for transporting the shipment.
- Speed: The estimated transit time required for delivery, reflecting the urgency of the shipment.
- Security: The level of protection against theft or damage during transit.
- Capacity: The volume of cargo that can be transported.
- Flexibility: The availability of services and the degree to which shipment schedules can be customized.
- Environmental Impact: Consideration of the carbon footprint and sustainability of the chosen method.
Let’s examine each of these transportation modes in detail:
Motor Freight (Road) ⛟
Motor freight, a key component of ground transport, involves moving cargo by trucks. In international trade, this commonly utilizes semi-trailer trucks in North America and cab-over trucks in Europe, designed to haul containers mounted on chassis. When efficiently managed, and trade routes permit, truckers can deliver a full container and return with another load, optimizing transport efficiency.
Utilizing road transport exclusively for international cargo movement is advantageous when shipments are less than a truckload or a full truckload, particularly for goods moving between countries within the same region or hemisphere, and when distances are manageable. This method can offer the most time-efficient transport as goods move directly from origin to destination without needing to be transferred to other modes.
Motor freight provides unparalleled flexibility as deliveries are not restricted to fixed terminals. It stands out as the only international transport mode capable of providing true door-to-door service without cargo repositioning. However, from an environmental perspective, motor freight is less sustainable, ranking second only to air freight in carbon emissions per ton-mile.
Advantages: Speed, Flexibility
Disadvantages: Cost, Capacity, Security (relative to rail and sea), Environmental Impact
Rail (Ground Transport) 🚄
Similar to motor freight, rail transport is viable for cargo moving between countries within the same region or hemisphere. Rail excels in transporting larger cargo volumes over greater distances, at higher speeds, and with enhanced security compared to road transport. It also offers lower costs and a reduced environmental impact per ton-mile. Rail logistics transport is often integrated into intermodal solutions.
However, rail lacks the flexibility of motor freight. Cargo must be delivered to and picked up from designated rail terminals, and routes are confined to fixed railway lines. Despite these limitations, rail is frequently used as a crucial element in intermodal cargo movements, combining its strengths with other transport modes.
Advantages: Cost, Speed, Capacity, Environmental Impact, Security
Disadvantages: Flexibility
Water Transport (Sea) 🚢
Container vessels are the backbone of global consumer product movement. The introduction of shipping containers revolutionized ocean freight, slashing handling costs by an astounding 98.5% and paving the way for the extensive globalization of mass-market consumer goods we see today. Remarkably, approximately 95% of all international cargo, by volume, is transported via ocean vessels, underscoring the importance of maritime logistics transport.
Ocean freight presents numerous benefits. It can accommodate both large and small cargo volumes. Smaller shipments from multiple shippers are consolidated into containers by freight forwarders to maximize efficiency. Larger shipments may occupy entire containers dedicated to a single importer’s goods. Containers come in various sizes, with 20-foot and 40-foot containers being the most common standards.
Sea transport is the most cost-effective shipping method and has the lowest environmental impact per ton-mile compared to other modes. Conversely, it has longer transit times, operates on fixed routes, and requires substantial handling infrastructure at ports.
Advantages: Cost, Capacity, Security (for large volumes), Environmental Impact
Disadvantages: Speed, Flexibility
Air Transport ✈
Air cargo transport is distinguished by its speed, but also by its higher cost and capacity limitations. Consequently, it is best suited for high-value, low-volume products and perishable goods that demand urgent, time-sensitive delivery. Cargo is transported via both dedicated cargo planes and passenger aircraft.
Air freight charges are calculated based on either actual weight or dimensional (volume) weight, whichever yields higher revenue for the carrier. This pricing structure discourages shipping bulky, low-weight items. Air transport operates between fixed airports and has the highest environmental impact per ton-mile of all transportation modes.
Advantages: Speed, Security (for high-value goods)
Disadvantages: Cost, Capacity, Flexibility, Environmental Impact
Multimodal or Intermodal Logistics Transport ⛟ ⛴ 🚃 ⛟ ✈
Intermodal transport refers to a system where a single service provider coordinates cargo movement using multiple modes of transport under a single “through bill of lading.” As mentioned, motor freight is unique in its ability to function independently. However, rail, sea, and air transport necessitate deliveries to fixed terminals for cargo loading and transfer. Shipments coordinated by separate entities are not considered intermodal.
Ocean carriers and freight forwarders often provide door-to-door cargo delivery services, seamlessly transferring goods between motor carriers, vessels, rail networks, and even air transport as needed. Intermodal freight solutions are prominent in “land bridge” services offered by ocean carriers. In these scenarios, ocean carriers deliver goods to a specific port and then manage container movement inland via motor freight or, where infrastructure allows, rail freight.
Conversely, they can pick up goods from inland points and transport the container to a port for export. This is particularly common for shipments originating from or destined for remote inland locations. However, multimodal services can be limited or unavailable in less developed and landlocked countries.
Small package carriers like FedEx or UPS consolidate smaller packages into larger shipments and manage multimodal movements for clients shipping smaller cargo quantities.
International Logistics and Sourcing
To gain a deeper understanding of each primary mode of international logistics transport and their commercial practices, further learning is recommended.
Learn more about International Logistics and Sourcing
Glossary of Logistics Transport Terms
Understanding key terminology is crucial for professionals in logistics transport and related fields. Even those who indirectly interact with these industries will find these terms valuable. Below is a list of essential terms with definitions available upon clicking each term:
Conveyance
EDI – Electronic Data Interchange
ASN – Advance Shipping Notice
Commercial invoice
Demurrage
Detention
FCL/FTL
LCL/LTL
CY – Container Yard
CFS – Container Freight Station
Certificate of Origin
Bill of Lading
Inspection Certificate
Insurance Certificate
Incoterms® rules
World Customs Organisation
ATA Carnet
Export quotas
Tariffs
Customs classification
Letter of credit
Careers in Logistics Transport
Whether you are considering a career in logistics transport or are already working in the field, a wide array of positions and specializations are available. Here are some common roles:
Traffic Manager: Traffic managers are experts in analyzing import and distribution routes and product volumes. They develop strategic transport plans and procure transport services. They work directly with carriers and intermediaries like freight forwarders, supervising traffic coordinators who handle transactional shipment arrangements. They provide vital information and support to production, costing, warehousing, and sales departments.
Import Manager: Import managers specialize in analyzing product orders to ensure proper product classification, communicate necessary import documents and certifications to suppliers, and facilitate smooth customs clearance. They select and manage relationships with customhouse brokers and supervise import coordinators who handle transactional customs entries. They provide essential support to production, costing, warehousing, and sales departments.
Import Finance Coordinator: Import finance coordinators manage financial transactions related to imports, processing letters of credit, documentary presentations, or wire transfers as per purchase agreements. They collaborate closely with production, warehousing, and finance departments.
Freight Forwarder: Freight forwarders act as transportation intermediaries, reselling cargo space on air, ocean, and ground carriers. They serve as “travel agents” for merchandise, assisting clients with cargo consolidation from multiple suppliers. Many freight forwarders also offer order management and IT services.
Customhouse Broker: Customhouse brokers are intermediaries who assist importers with customs clearance processes. They complete and file necessary entry forms and help importers with accurate product classification. In countries like the United States, Canada, and Australia, customhouse brokers are licensed professionals. In the European Union, clearing agents perform similar functions but are not licensed.
Warehouse Manager: Warehouse managers oversee all warehouse operations, including receiving, storing, staging, and distributing goods. They are involved in implementing warehouse management systems and managing inventory organization and tracking.
Export Packers: Export packers provide crucial services to shippers, optimizing freight loads through packaging redesign and offering specialized packing services to secure products within containers. They also ensure compliance with stringent vendor requirements for carton labeling, especially for direct-to-retail distribution center deliveries.
The Impact of COVID-19 and Future Trends in Logistics Transport
The COVID-19 pandemic has profoundly impacted international logistics transport, causing unprecedented disruptions to global supply chains. This has triggered a series of recurring events in freight markets worldwide.
In ocean freight, an initial drop in demand in early 2020 was quickly followed by a surge in demand, driving ocean freight prices to record highs. The global container pricing surge in recent times has been unprecedented.
Air freight markets, heavily reliant on passenger flights for cargo capacity, were severely affected by a 75% reduction in international passenger flights in 2020 (IATA). This resulted in similar price increases for air cargo. These volume surges were further compounded by labor shortages at ports, warehouses, and in the motor freight industry.
The combined effect of these conditions in early 2021 led to growing congestion at ports, a situation that has persisted. On the US West Coast, an average of 30 ships might wait at anchor for about a week before berthing. This delays vessels and equipment, disrupting their return to origin points for reloading. Carriers have responded by canceling port calls, further exacerbating the cycle.
The pandemic is likely to accelerate the adoption of automated systems throughout the supply chain. Increased diversification in sourcing and the development of stronger regional self-sufficiency are also anticipated.
The logistics transport industry and governments must collaborate to mitigate severe port congestion. Demand spikes, accidents, or weather disruptions can create bottlenecks that take months to resolve, leading to lost sales, escalating prices, and consumer dissatisfaction.
International Logistics and Sourcing
To deepen your understanding of international logistics transport and sourcing, consider exploring further resources.
Learn more about International Logistics and Sourcing
Additional Resources
Logistics Performance Index: Published by the World Bank, this bi-annual survey ranks countries across six key logistics performance areas, providing an overall ranking for over 160 nations.
Pier2Pier.com: Pier2Pier.com is a subscription-based website offering a range of valuable resources, including (with a 3-month free trial):
- 3D Load Calculator: Estimate cargo load capacity by entering carton dimensions.
- Carrier Website Links: Direct access to major carrier websites.
- Transport Route Search: Find vessel routes and transit times by entering origin and destination ports.
- Educational Tests: Resources for industry knowledge assessment.
- Industry Publication Links: Access to leading logistics and transport publications.
