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.
If a retail provider does not have a transportation plan in place, significant waste can occur along the supply chain. For example, it would cost more to ship large, bulk items via plane versus shipping the same items on a ship. Alternatively, if a company promises its customers two-day shipping, it must have rapid fulfillment capabilities built on predictable inventory and reliable transportation options.
Outbound logistics encourages retailers to take all retail logistic considerations into account while shipping a product, from fuel costs to time sensitivity. By leveraging supply chain management tools from retail logistics providers, retailers can identify the most efficient routes for shipping their products. This ensures on-time delivery and reduces supply chain costs.
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.
Rail plays a very important role in transportation logistics. Trains run on set schedules and are less susceptible to delays than commercial trucks. As a result, this transportation option is ideal for retailers who need to ship packages quickly and want to avoid delays.
Benefits of rail transport include the following:
- Lower fuel usage
- Minimized environmental impact
- Larger carrying capacity than trucks or planes
- Reduced chances of delays due to fixed schedules
However, trains are typically slower than trucks and planes, and carriers may need to transfer products throughout the shipment process. And since not every warehouse is close to a rail depot, it may not be the most accessible option.
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.
Geographic and political challenges in retail transportation logistics
The retail industry does not exist in a bubble. In addition to choosing the most efficient and cost-effective transportation option, retailers need to be aware of the geographic and political challenges they may face. As transportation logistics evolve, so do certain issues—including customs requirements, traffic congestion, and climate change.
Distinct customs procedures
When shipping internationally, retailers need to prepare themselves for each country’s customs requirements. Countries impose different rules, restrictions, and guidelines for products based on several factors, including product type and country of origin. The political relationship between individual countries often influences these customs procedures.
Partnering with a retail transportation logistics specialist can help retailers understand and comply with these regulations. Logistics specialists understand the customs documentation, fees, and processes each country requires. They can prepare each shipment for customs from the beginning, reducing the frequency of returned shipments, delays and the need for costly container assessments.
In many countries, demand for fast, convenient shipping is outpacing infrastructure availability. If a retailer is shipping via road transportation, traffic congestion can contribute to significant delays. According to a 2019 report by the National Academy of Sciences, highway congestion costs Americans $300 billion in wasted time per year—and retailers are often on the receiving end of these losses.
Many traffic congestion problems occur due to insufficient infrastructure and growing populations. Although congestion can occur anywhere, it is most prevalent in urban areas with millions of residents. Established and emerging market cities suffer from traffic congestion, increasing the chances of delays during the shipping process.
However, a retail transportation logistics specialist can use data and analytics to identify where traffic-related bottlenecks occur. Using this transport geography data, the specialist can recommend more efficient transport options if congestion is a threat.
Climate change and natural disasters
Natural disasters have killed tens of thousands of people and caused hundreds of billions of dollars’ worth of damage in recent years. Intense floods, unusual winter storms, hurricanes, and other natural disasters and uncommon weather events expose vulnerabilities in public infrastructure. Between 1980 and 2020, for example, the United States experienced 285 natural disasters that caused over $1 billion in damage—and 141 of these events took place between 2010 and 2020.
Climate change is likely contributing to these large-scale disasters. Although governments may be aware of the effects of climate change, they are not always willing to implement policy changes to combat it. However, customers are paying attention to the choices that retailers make. According to a 2020 market trends report, 45 percent of consumers stated that a company’s commitment to sustainable practices was very important in deciding where to shop.
As more customers change their shopping habits in response to climate change, they may be less likely to purchase from a retailer that does not use sustainable shipping practices. A transportation logistics provider can analyze a retailer’s current transportation management and implement sustainability changes. These changes can help the company meet this increasing demand.
Sustainability considerations for retail transportation logistics
Today’s customers are paying more attention to the environmental impact of their shopping choices. In response to these evolving demands, retailers must take into consideration their supply chain sustainability and the freight transportation they rely on. Choosing a logistics specialist with a sustainability certification can help retailers reach their green logistic goals.
Product packaging is a major source of waste, not only in the supply chain, but generally. According to the Environmental Protection Agency, discarded containers and packaging comprised 28.1 percent of municipal waste in the United States during 2018.
Corrugated cardboard boxes were the single largest category of municipal waste, making up 11.4 percent of total waste generation. Retailers can increase sustainability and reduce packaging waste by investing in optimized, efficient packaging. In addition, using recyclable or biodegradable raw materials can prevent retail packaging from accumulating in landfills.
The green warehouse is an emerging sustainability trend in the retail industry. These facilities aim to reach zero-net energy emissions by making eco-friendly choices, even without the pressure of government regulations. Green warehouses also aim to create onsite energy equivalent to the amount of energy they use.
For example, lighting and air conditioning are two of the most expensive warehousing costs. These utilities also draw a significant amount of power from the local energy grid. However, the warehouse can implement sustainable changes to reduce these costs. UV-blocking skylights reduce heat up to 85 percent, which can reduce a warehouse’s reliance on air conditioning. Workers can place photovoltaic panels on warehouse roofs to generate power and electricity for the facility, reducing energy consumption and increasing sustainability.
When searching for transportation management, choose providers that focus on implementing sustainable changes in their warehouses. Although reaching zero-net energy emissions is not possible in all parts of the world, logistics companies that have a commitment to the green supply chain can help retailers reach their sustainability goals.
Vehicles that rely on fossil fuels produce carbon emissions, which contribute to climate change. Fuel-efficient vehicles, such as ships or electric vehicles, provide sustainable transport options for the retailer. By using eco-friendly transportation options, a company can also avoid fines or penalties for violating environmental regulations, depending on their location.
In addition to transport sustainability, retailers may want to streamline their routes to further reduce their carbon footprints. Logistics providers can design a green supply chain for individual retailers, identifying optimal routes so that vehicles spend less time on the road and retailers can use the most energy-efficient transport options available to them.
Finding a retail transportation logistics partner
As more customers demand faster, cheaper, and sustainable shipping, transportation logistics are vital to the retail industry. By partnering with a retail transportation logistics provider, retailers can identify the most cost-effective and efficient shipping solutions for their products. Logistics partners provide valuable transportation knowledge, helping retailers overcome common shipping challenges and focus more time on developing their core business.
Agility works with retailers around the globe to develop, analyze, and improve their shipping processes. With a commitment to sustainability and expert freight knowledge, retailers can trust Agility to enhance their efficiency. Contact Agility today to learn more about its cutting-edge logistics solutions.