The retail industry has witnessed unprecedented growth in recent years, even during the COVID-19 pandemic. Retail sales in the United States saw a 5.3 percent month-over-month increase in January 2021, and sales were 7.4 percent higher than they were in January 2020. In today’s competitive landscape, transportation logistics are crucial to ensure that customers receive top-quality products on time.
Investing in integrated logistics management can help retailers ship goods faster, prevent common errors, and boost customer satisfaction. However, it is important to be aware of the challenges that retailers face when planning their supply chains and the options available to transport goods safely and securely.
Why transportation logistics is important in the retail industry
Retailers who want to compete and grow need to set themselves apart from their competitors. With the increase of e-commerce and the wider availability of online retail, customers are expecting faster, cheaper shipping options. They are also seeking companies that value sustainability.
In these situations, integrated logistics solutions can help. Third-party logistics (3PL) professionals can provide several services to retailers, including the following:
- Transportation planning
- Shipment chain management
- Supply chain assessment and design
- Purchase order and vendor management
- Localized packaging
- E-commerce logistics
- Sustainability analysis
- Container utilization and optimization
- Labelling and price tagging
- Data analysis and configuration
Transportation logistics and global supply chain management can help retailers in several ways, from increasing customer satisfaction to reducing transportation cost.
Whether a retailer is shipping a product directly to a customer or sending goods to one of its retail locations, transportation logistics help ensure timely delivery. Fast shipment times are becoming increasingly important in retail, especially when shipping directly to consumers. According to a 2020 market report, 46 percent of American customers abandoned an online shopping cart if the shipping time was too long or not provided.
Customers who wait several days or weeks to receive their products can feel dissatisfied, which can harm retention for the retailer. Research from another market study shows that 32 percent of customers would stop purchasing from a brand after a single bad experience.
With professionally organized logistics, however, retailers are better prepared to respond to customer demand. They can implement solutions within their supply chains to ensure safe and fast shipping, place product in distribution centers closer to their customers, and improve the direct door delivery of their goods, reducing errors and improving the customer experience.
Access to value-boosting insights
Retail logistics specialists offer more than physical warehousing and transportation solutions. Many companies offer a cutting-edge transportation management system that helps retailers gain important insights into their supply chains, such as where frequent errors occur and the state of the retailer’s inventory. With access to these insights, retailers can better identify areas of improvement, reduce resource waste, and increase the availability of popular products to meet customer demand.
These insights can help retailers boost their businesses’ value. Since logistics can improve inventory availability, customers can rely on certain retailers for access to top-quality products. And since retailers can use these insights to improve their internal processes, customers reap the benefits. Fewer errors in the logistics process means that customers are less likely to receive the wrong order, broken items, or a failed delivery, improving overall satisfaction.
Supply chain management can help businesses save money. Retailers can leverage insights from logistics solutions to identify areas to reduce costs and generate new revenue. And by outsourcing these services to 3PL professionals, retailers can significantly decrease their in-house transportation and warehousing costs.
Logistics also reduce waste by creating a clear plan for warehousing, packaging, and shipping products. With an integrated logistics system in place, retailers eliminate uncertainty in chain management and can identify the most efficient, cost-effective transportation options for their products. Retailers can also implement reverse logistics solutions, helping them process and recover returns at a faster, more efficient rate.
Understanding your transportation options in the retail supply chain
When a retailer wants to ship a product, choosing the right transportation option can be a challenge. There are multiple options for inventory transport, from trucks and trains to planes and ships. Each transportation option is appropriate for different situations and provides unique benefits, depending on the type of merchandise the company wants to ship. Logistics industry specialists can help retailers choose the optimal transportation solution for their products, reducing waste and improving efficiency.
Air freight is accessible in most locations and is ideal for retailers who want to move items quickly across long distances. Perishable goods, time-sensitive documents, and international shipments are strong candidates for air transport.
With several thousand airports equipped to process the shipment of goods around the world, this growing transportation option provides many benefits to retailers:
- Fixed, reliable schedules
- Faster transport times
- Enhanced security
- Minimal product handling
However, air transportation is also one of the more expensive freight transport options. Air fuel costs more than truck, ship or rail fuel. Plus, retailers can incur additional expenses as the result of special handling fees, checkpoints, maintenance, security surcharges, and transfers.
Air carriers also have certain limitations on the type, size, and weight of products that they can ship. Depending on what they sell, some retailers may not be able to transport their goods via air.
According to the Bureau of Transportation Statistics, truck freight accounted for over 54 percent of all freight distribution between the United States and Canada in January 2020. Road transportation is ideal for retailers who are sending multiple small shipments directly to other businesses, warehouses, or customer residences. Since retailers are more likely to be close to a highway than a port or railway, road transportation is an accessible option.
- Benefits of truck transportation include the following:
- Availability of door-to-door shipment
- Lower cost compared to air and ocean transportation
- Fewer product restrictions
- Easier tracking due to built-in navigation systems
However, retailers do not have as much control over road transportation options than other types of freight. Packages are more likely to suffer damage in a fast-moving truck than a slow-moving ship, for example. And since road freight is more susceptible to shipment delays, such as delays due to poor road conditions or bad weather, this mode of transportation is best for retailers who can absorb longer shipping times.
Ocean transport is a popular transportation option for retailers who ship internationally or need to transport large, cumbersome shipments. In fact, ocean freight drives between 80 and 90 percent of global trade. Since ships can carry larger and heavier loads than a plane or truck, retailers can ship large items in bulk more cost effectively.
Additional benefits of maritime transport include the following:
- Larger size and weight capacity
- Lower fuel costs than air transportation
- Operation on a set schedule, reducing delays
- Minimal handling and enhanced shipment safety
However, ocean transport may not be the most cost-effective or accessible choice for retailers. If a retailer does not have a warehouse close to a port, it may be more expensive to move product by ship. And although ships can carry larger loads, they also move at much slower speeds than other modes of transportation.
In some cases, a shipment may require two or more transportation options before reaching its final destination. For example, a truck or train may carry a product to a port, where workers transfer shipping containers to a ship. In intermodal shipping, the product typically will either remain inside the same shipping container or be consolidated and transferred from one shipping container to another.
This form of transportation is ideal for shipments that are not time sensitive and need to travel a long distance. A transportation logistics company can help retailers ensure that their products comply with all requirements for each mode of transport.