The shipping industry is one of the most utilised industries throughout different businesses. Be it any kind, goods worldwide are transported through this industry. But what is it that keeps the shipping industry continuously getting going?
You might have come across the terms logistics and freight forwarding. However, they are so prudently used that one needs to distinguish between them. This blog will discuss the difference between logistics and freight forwarding.
We must first understand the two related terms individually to differentiate them.
What is logistics?
The efficient movement of goods from their origin to their final destination is known as logistics. The goal of logistics is to promptly and economically meet consumer demands.
Logistics, in a broader sense, refers to organising and transporting resources — people, materials, inventories, and equipment — from one location to storage at the desired destination. In the military, logistics refers to transporting equipment and supplies to troops on the battlefield.
Logistic management is critical to the success of any business. Companies use logistics management to ensure that goods move smoothly from their origin to the end of consumption.
Companies can build proper strategies and frameworks with appropriate planning, making the entire process much more straightforward for the business.
What is freight forwarding?
The role of freight forwarders in the shipping industry has changed dramatically over the last few decades, as their part was not previously defined. Importing and exporting cargo around the world necessitates extensive knowledge and experience in a variety of fields.
Freight is simply the term for the transportation of goods. Previously, freight described goods transported primarily by road and rail. However, in modern terminology, there is little distinction between terms such as cargo, freight, shipping, etc.
Freight can be defined as the bulk transportation of goods by road or rail. Many businesses have also adopted the term freight in ocean transportation, which is now used in trading.
Let’s understand the roles and responsibilities of logistics and freight forwarders.
Logistics is simply the management of various activities like
- Management of different orders throughout the supply chain.
- Customer’s requirement, quantity, quality and area of demand.
- The logistics department highly manages the storage of goods to ensure proper storage practices.
- Warehousing of different types of goods, from perishable to non-perishable.
- Planning and executing the distribution of goods.
- Aligning diverse packaging to various materials based on the requirements.
- Transportation management and handling of fragile and non-fragile items with ease.
- Import and export of logistics.
- Tracking and managing the trade information throughout the journey of the goods.
- Managing the supply chain from the initial to the final stage.
- Management of assets along the complete supply chain ensures smooth cargo flow from one point to another.
Logistics management is a broad term that defines and manages all the above responsibilities, but what priorities are deemed vital in freight management?
- Freight forwarders need to negotiate and match the expectation of the company’s rate, terms and conditions while sealing a deal.
- One needs proper documentation to stick along with transit to eliminate any hassle later.
- On-time collection and delivery of goods.
- Freight management focuses on establishing contacts while deploying excellent transportation facilities.
- When working with officials, freight forwarders must maintain a close relationship with the customs brokers to ensure customs compliance.
- In case of any damage, the forwarders are responsible for insurance and cover the cargo in transit.
- Analysing different modes of transport required for transporting the goods.
- Managing and tracking cargo movement along with freight claims.
Difference between logistics and freight forwarding
There are various approaches to analysing the distinction between logistics and freight forwarding. Still, the point of difference can only be understood when the two terms are closely examined.
The shipping industry is vast, with numerous terms and points of understanding. One can easily distinguish between logistics and freight forwarding if one understands each provider’s roles and responsibilities.
|A broader term that includes various job roles and responsibilities.||A subdivision of the logistics industry.|
|Owns all the assets, including the intermodal fleet of trucks but does not provide actual shipping.||Owns the intermodal fleets and is responsible for the transportation of goods.|
|Responsible for goods management from production to distribution.||Responsible for the transportation of goods from the warehouse to the final destination.|
|Management of types of goods, numbers, quality and area of distribution.||Management of necessary documentation like insurance, clearance, and many more.|
|Attempts to cover every segment of the supply chain.||Have a speciality with companies which can vary in terms of modes of transportation, fragile goods, etc.|
Importance of logistics and freight forwarders
Both logistics and freight forwarding have benefits that a shipping firm can utilise. Logistics manages most of the responsibilities of the supply chain, from planning and execution to resource management and delivering goods to the final destination. Freight forwarders handle the transportation of goods from the warehouse or one point to the final destination or the customer’s doorstep.
While both manage the goods, logistics will focus on the quality, quantity and fleet management, and execution of goods. In contrast, the freight forwarders look over the transportation, documentation, policy and tracking of goods.
Freight forwarding is a part of logistics where freight forwarding is an agency or an agent that facilitates the movement of goods effectively. Logistics manages the inbound, outbound and reverse logistics, where each segment reduces equal roles and responsibilities.
Companies should align their goals towards managing the fleet properly.
Any shipping industry’s top priority is delivering goods and materials at the right time, place, and with the right products. Logistics management encompasses a wide range of jobs and stakeholders. Freight management is an essential subset of logistics management.
Without both managements, many businesses would come to a halt, causing a cascade effect around the world.
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