23 November 2022
Staying competitive in today’s business climate depends on how well shippers can meet customer expectations while remaining cost effective and profitable. One of the key strategies for achieving these goals is proper freight management.
Whether you ship heavy freight, inbound using vendors, or outbound to customers, it is imperative that your organization’s freight logistics capabilities function smoothly and efficiently. If you’re looking to offset higher freight shipping costs or build a more efficient supply chain, this guide is for you. Read on to learn the differences between the different types of logistics and which shipping modes work the best for each load size.
Table of contents:
- Understanding freight, shipping, and logistics
- 3 Types of logistics
- Common types of freight modes
- Outsourcing as a freight management solution
- Managing freight logistics with technology
- Tips to improve your freight logistics
Understanding freight and logistics
The terms freight and logistics are related and sometimes used interchangeably.
Freight refers to any shipments over 150 pounds or exceeding 30 in. x 30 in. x 30 in. in size. Any good not meeting this definition of freight is usually sent as a parcel shipment.
Logistics is an umbrella term describing the systems of managing how you get, store, and transport resources for your business.
Freight logistics, or shipping logistics, specifically describes the freight transportation aspect of logistics. This process involves the movement of large or heavy shipments via truck, rail, air, or ocean.
3 types of logistics
Freight logistics includes a large spread of services such as inbound, outbound, and reverse logistics. Depending on your business type and size of your operations, one or more of these logistics services may be used to move heavy freight to its destination. Properly optimizing inbound and outbound logistics can have an immediate impact on a business’s sales, costs, profit margin, and customer satisfaction.
1. Inbound logistics
Inbound logistics is used when an organization is looking to receive materials, supplies, and/or original products that its employees will use to create or assemble products they sell to consumers.
- A leading tech company identifies and sources the amount of motherboards/soldering equipment it needs to meet its quota of selling 15 thousand computers in the remainder of Q4. Inbound logistics would include procuring the products used to assemble the motherboards, tracking their timely arrival to the warehouse, unloading and tagging the materials, and tracking their use to assist with replenishing stock as needed.
Inexperience with transportation management and logistics planning can contribute to several issues with inbound logistics. Problems a company may encounter include poor visibility of supplier operations, increased inbound logistics costs, and inefficient in-plant operations. For these reasons, some organizations may rely on a logistic shipping company to streamline their inbound operations or their suppliers to book freight directly.
2. Outbound logistics
When considering inbound vs outbound logistics, outbound covers the transport, tracking, and delivery of goods and products to the end user or customer. The critical steps involved in outbound logistics include order fulfillment, packing freight and products, shipping packages, and the delivery and subsequent customer service activities related to completing any delivery tasks.
- A growing fashion label is seeking to optimize its outbound logistics to exceed demand and customer service standards. The brand has suffered from slower than average delivery times and customers who are less than satisfied with goods they have received due to damage or missing items. Optimizing routing of outbound shipments using advanced shipping technology and implementing greater “hands-on” customer service are two examples of outbound logistics solutions.
Optimized outbound logistics offers companies the following benefits:
- faster deliveries and happier customers
- lower amounts of order cancellations
- reduced lost items and delivery failures
- lower costs for your customers and more cost-efficient for your business
3. Reverse logistics
Reverse logistics works similar to inbound and outbound logistics in that its goal is to move freight efficiently, but the source and destination of freight and products are different. Reverse logistics moves shipments from the customer back to you.
Outbound logistics ends when a customer receives their product. If they require the product to be returned or recycled, reverse logistics begins. Said another way, reverse logistics handles all freight movement from the end customer (backward through the supply chain) to the point of the product or freight being marked for final disposal.
- A customer receives their order for a new tractor. After 30 days of using the tractor, the customer notices major issues with the motor itself. The customer initiates a return or service request, triggering reverse logistics. This process includes authorizing a logistics carrier to pick up the tractor or faulty part, examining and potentially restocking/recycling the product, processing a refund, or shipping a replacement to the customer.
Reverse logistics allows organizations to lower waste and instead focus on methods they can use to reuse, resell, or recycle materials of defective or unusable products received from end users/customers. This process can also improve profit margins and lower a brand’s carbon footprint.
Common types of freight modes
There are several freight modes that shippers use as part of freight logistics. Which freight mode you choose depends on factors like the type of goods being shipped, their quantity, and whether you need a dedicated truck to move them. Each mode offers different benefits and cost considerations.
1. Full truckload (TL)
One of the most common freight modes that large and growing organizations use is Full truckload (TL). With TL, your freight stays on one truck with a dedicated driver until it reaches its destination. This mode reserves a truck for your exclusive use and can help organizations meet speedy delivery expectations.
Truckload shipping typically costs more than other freight modes, and you usually pay the same amount whether you fill the entirety of your truckload or not.
The primary benefits of TL shipping include:
- lower damage rates
- fewer stops and faster delivery
- cost effectiveness for large volume shipments
The downsides of TL shipping include:
- high costs for exclusive use of a truck
2. Less than truckload (LTL)
Less-than-truckload (LTL) freight includes shipments that do not require the entire capacity of the truckload trailer. Weight is typically less than 7,500 lbs. and takes up less than 12 ft of trailer space. Trucking companies use LTL shipping to consolidate shipments to maximize the trailer’s space.
Most LTL shipments travel via a hub-and-spoke model where trucks stop at various terminals for unloading, consolidating, and reloading. This increase in stops and handling can lead to shipping delays, damage, and loss compared to truckload.
The primary benefits of LTL shipping include:
- only pay for the space you need
- reduced warehouse costs because you can send more shipments
The downsides of LTL shipping include:
- potential delays due to unloading, consolidating, and loading at terminals
- increased risk of damage from handling at multiple stops
- lack of visibility on freight tracking
3. Shared truckload (STL)
Shared truckload enables several shippers to share trailer space in an optimized, multi-stop full truckload. Similar to truckload, shared truckload freight stays on a designated truck with a single driver all the way to its destination.
In other words, algorithmically pooled STL freight doesn’t require unloading, consolidating, and reloading at terminals—resulting in fewer damages and more on-time deliveries than LTL.
The primary benefits of STL shipping include:
- deliver on time 30% more often than LTL
- ship 99.8% damage-free
- only pay for the space you need
- more reliable tracking
A downside of STL shipping includes:
- flexible pick-up preferred to coordinate shared loads
4. Partial truckload (PTL)
If you’re looking to move shipments that are larger than LTL but still less than TL, you’ll typically want to take advantage of partial truckload (PTL) shipping – see also: Volume LTL (VLTL). One of the major benefits of partial truckload shipping is faster transit times than LTL because your shipment mostly stays on one truck.
Other primary benefits of PTL shipping include:
- cost savings when compared to TL
- no freight class required to ship
- generally less handling and fewer delays than LTL
Some downsides of PTL shipping include:
- generally required to work with brokers to use this mode
- less capacity than other modes due to specific size requirements
- lack of visibility on freight tracking
If PTL is the best mode for your load, FlockDirect® provides truckload service at partial truckload rates and helps you avoid the drawbacks of traditional PTL—including knowing exactly when your shipment will arrive and feel confident that you’ll hit your must arrive by date.
Outsourcing as a freight management solution
Finding reliable carriers, ensuring on-time deliveries, and maintaining visibility on multiple shipments can be daunting. Many shippers choose to outsource freight logistics to improve efficiency and ensure cost-effectiveness. There are a few different options for outsourcing your freight management.
Outsourcing freight management to freight brokers bridges the gap between shippers and carriers. Freight brokers act as a liaison between the two parties to ensure shipments run smoothly. For a single shipment, a broker may be responsible for negotiating rates with the carrier, ensuring truck arrivals and departures, and confirming pickups and drop-offs.
Many companies have limited manpower to spend on fostering relationships with carriers, overseeing loads, and handling claims. Brokers may take these tasks off your plate.
Just like brokers, freight forwarders act as intermediaries between shippers and carriers. They also offer a host of other supply chain services including overseeing ocean or air transportation, end-to-end inland transportation, document preparation (not to mention storage services and warehousing of freight). Freight forwarders enhance accountability and offer access to global shipping partners.
3PL & LSP
Third-Party Logistics (3PL) and Logistics Service Providers (LSP) provide time and cost savings while giving organizations the flexibility and opportunity to scale their operations to new heights. 3PL and LSP’s assume the tasks of logistics planning, material procurement, product sourcing, and maintaining inventory. Certain 3PLs may specialize as logistics shipping companies and offer freight service, order fulfillment, and warehousing.
Logistics shipping companies oversee and manage the operations and shipment of freight and other heavy goods by engaging in activities such as:
- selecting and engaging the most cost-effective carriers and transport companies
- negotiating terms and ensuring the best rates for transportation of heavy freight
- optimizing shipments for the best mode of transportation and balancing heavy loads
- ensuring accurate scheduling and pickup of shipments
Managing freight logistics with technology
In some cases, the right tools may be all that’s missing to increase the efficiency of your freight logistics. Small, medium, and global organizations are leveraging technology to scale efficiently and at the lowest cost.
Transportation Management Systems are a powerful tool for shippers to automate business operations and simplify supply chain processes across various geographies, freight modes, and carrier types. Enhanced TMS systems also help organizations to bill faster and document easier. TMS help organizations scale more rapidly by enhancing visibility of freight while also operating as securely as possible.
Flock Freight’s patented technology pools freight in the most efficient way possible for faster, cheaper shipping. Shippers can use our self-service platform to easily book shipments, choose any freight mode to fit their load, connect with reliable carriers, and track shipments in real time. The Flock platform easily integrates with your TMS via API or EDI to streamline your workflows.
Tips to improve your freight logistics with Flock
Optimizing your freight logistics can greatly impact your company’s profit margins and customer satisfaction. By utilizing Flock Freight to focus on the following aspects of your logistics program, you’ll quickly notice the improvement in your organization’s logistics.
Pool freight to deliver on time
If you’re shipping less than a truckload, traditionally you have two options. You could ship standard LTL, but take the chance of costly delays or damage. Or, you could reserve a full truckload to guarantee your goods arrive on-time and damage-free, but you’re paying for space you don’t need.
Flock Freight finds and fills empty spaces on trucks, pooling multiple shipments into a single shared truckload that travels an optimized route. This results in 30% more on-time deliveries than standard LTL and consolidator networks.
Optimize routes to reduce delays and damage
If you’re looking to improve customer satisfaction, optimizing your routes helps reduce delivery delays and damage that hurts your brand’s reputation. Avoid costly pallet damage and shipment delays by using Shared Truckload (STL) to optimize your logistics activities. STL ensures single truck transport from pickup to drop off, eliminating the delays and damage associated with traditional hub and spoke shipping methods.
Streamline your booking process
If you have limited resources to dedicate to freight management, streamlining the booking process can save precious time. With Flock, you can quote shipments online using our self-service platform—without speaking to a representative. For tendering at scale, use API or EDI to integrate our technology with your existing TMS.