Importance of choosing right mode of shipment in Logistics.

Mode of the shipment is one of the most important factor to be considered while we make the decision for moving our goods from supplier to destination. Choosing the right mode will reduce the logistics cost, delay, customer complaint and overall organization can optimize logistics. Regional knowledge and routing of vessels, airlines and trucking will help to take right decision on selecting the mode. Different types of goods require different types of modes of transpiration. General cargo, special cargo such as temperature controlled and chemicals need special mode of transportation to avoid damage and safety issues. The selection of the right transportation mode is very critical to the business and the logistic management.

What is mode of shipment?

We can define mode of shipment is how shipment is being loaded or where the shipment is loaded. In logistics shipment can move by sea, air, land. Broadly classifying the mode as Ocean Freight, Air Freight, Road Freight, Rail Freight, Inland waterways and Pipeline. We will go through each mode and find out what are the drivers behind for selecting each mode. Choosing the wrong mode will lead to poor logistics and additional cost.

Drivers for selecting mode of shipment.

There are so many factors need to consider while choosing the mode of shipment. Planning is the one of the most important element in logistics. When we talk about planning of logistics or supply chain, selection of the mode will be the most prioritized element. Below listed are the major drivers for choosing shipping mode.

Necessity of the shipment

Necessity of the goods is the prime factor for choosing the mode. There are so many other factors are involving such as cost, reliability and convenience but all of these factors will not affect the urgency of the shipment. If we are not able to deliver the shipment as per customer’s urgency using available and source and networks then we will lose the customer an ultimately we will the business and profit. There are also chances in manufacturing companies they might need shipment in urgent basis for the plant, usually those shipments can bring to organization by LCL or as consolidated shipment but in order to avoid to shut down the plant we must bring the shipment as air freight on urgent basis, for that cost may be 6 to 8 times higher than LCL. Transit time for Ocean freight, rail freight and road are more comparing Air freight shipment.

Reliability of the carrier.

Reliability of the carrier is another factor for choosing the right mode of the shipment. While we choose the shipment mode as ocean freight we need to consider that carrier has equipment and space and shipment will be loaded in the same booked. Last two years supply chain and logistics disrupted a lot due to port congestion, shortage of labors, shortage of containers and space. Freight charge is increased 300 to 400% for many routes round the world. When we select air freight as mode of shipment we need choose reliable airlines who commit the loading of our shipment in a booked flight and avoid any partial shipment on our booking.

Type of the shipment

Size, weight and nature of the goods are also the prime factor for choosing the right mode of the shipment. If our shipment is heavy and oversized we need to choose ocean freight for overseas shipment and road or rail freight for domestic shipments. Dry bulk cargo such as coal, grain, sand, metal, minerals, coal and project cargo such as transmitter, generators, wind turbine etc., are carried by rail and road freight, not air freight. Temperature controlled items such as pharmaceuticals and perishable items and medicine required special packaging and handling and moving them as air freight shipments.

Budget

Cost of transportation is one of the most important factors while selecting the mode of transit. It affects the overall price of the goods. We need to discuss the urgency of the shipment with concerned department such as Procurement or operation then select appropriate method of the shipment. If shipment is not urgent we can reduce the cost of transportation and handling charges we can use consolidation option to move shipment based on space we require for the shipment. LCL shipment also reduce the inventory cost as it will not bring and store large volume of goods.

Safety of Goods

Safety of goods is also a crucial factor in determining the correct transport mode. In rail and sea transport, the goods are more prone to damage or loss. Land transport is the safest means when considering the safety of goods or while shipping fragile items. The safety of your goods also depends on the transport company you are using.

Regulatory law

Regulatory law is another aspect to consider while we decide the mode of shipment. Different modes ha different policy and procedure to go through and complete formalities, it can take time to complete regulatory compliance. Airports have regulatory offices working 24x7 as perishable and temperature controlled shipments need to compete clearance process soonest possible. Regulatory compliance for ocean and land freight will take more times that will lead to delays for the customs clearance.

Reduce shipping costs is incredibly important for your business. Your shipping costs significantly affects your company’s profitability. Most carriers tend to revise their rates on a yearly basis. Other methods of reducing logistic costs can range from optimizing inventory levels, reorganize better shipping networks, create better processes, and improve supplier/third party relationships and so on.