Distribution logistics: an overview

Posted by SI-LOG on 14/11/2019
SI-LOG

Distribution logistics: an overview

SI-LOG 14/11/2019 pubblicato in trasporti


The world of distribution logistics has a strategic function for companies, it’s a critical success factor for the business. We can say that the main objective of distribution logistics is to reduce the cost of supplying finished products to customers, maintaining or improving the level of service provided. Discover the latest trends, the changes of Logistic 4.0, ground and ocean transport and so on.

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1. Logistics and Industry 4.0: the changes taking place

A strong and in-depth evolution new technologies is influencing positively the Transport and Logistics Industry. IoT (Internet of Things), Big Data, Artificial Intelligence: technologies traditionally used by the Industry 4.0 mean that the major economic players of the industry feel the necessary for digital transformation, since the needs of their clients are rapidly changing. 

Major investments mainly concern 4 key areas of Industry 4.0. What are they? Continue reading the article to find out. 

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Introduction to new client-oriented services.

In a general context of strong change, where clients are modifying their buying habits, Logistics Providers have to adapt and modify their services, introducing new ones. The modularization of logistic services linked to client demands mean that suppliers logistic services go from a primarily cost reduction approach to one based on actual customer request and need. 

While there are a number of new technologies that will affect the transportation and logistics industry, here are some critical ones to keep on your radar: 

1. Models of Sharing Economy.

Sharing Economy, is an economic model often defined as a peer-to-peer (P2P) based activity of acquiring, providing or sharing access to goods and services that are facilitated by a community based on-line platform, which substitutes ownership of goods, sharing access amongst more players, also benefits Logistics providers. According to a study carried out by DHL, logistics solutions of sharing economy are:

  •  Truly shared warehousing mean that warehouses are multi-customer warehouses. In other words, the logistics sector owner makes available empty-space rental-time in big warehouses.
  • Urban discreet warehousing: the concept of urban discreet warehousing is the sharing of personal storage space in urban homes (for example basements, garages, unused space in homes, back offices and vacant domestic properties, etc.); such as Makespace. Their service, via mobile phone and a web platform, includes picking up, storage and retrieval on demand.
  • Community goods on-demand, a great opportunity for logistics providers to offer on-demand pick-up and delivery networks, thanks to the launch of a sharing platforms (a service through which one can rent household items nearby, with delivery and pick up at a time and place which suits the client (small appliances, hardware appliances, etc.) such as Omni and Peerby. Clearly there is much scope for logistics providers to offer their unique knowledge, along with their storage, packing and transport facilities, to make services like these, work more efficiently. The involvement of a logistics company with a good reputation can also bring platform users a greater feeling of trust when exchanging items, which greatly enhances the experience for them.
  • Logistics asset sharing are great opportunities for logistics businesses to lead consumers their small and medium-sized delivery trucks in the evenings or at weekends. As well as offering insurance coverage; 
  • Transport capacity sharing, today's rapid growth in digital platforms for freight brokerage is helping to deal with the wasteful practice of driving empty or partly filled trucks. Leaders in this field include DHL’s Saloodo! in Europe, Freightos, Convoy and Loadsmart in America, and Huochebang in China. Benefiting from mobile technology’s flexible capabilities, such as real-time communication and data flow, location tracking, document capture and secure payment, these platforms can also address other inefficiencies. For example, delays caused by traffic, slow loading and communication lag, as well as inefficient transaction processes, can be avoided. 

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2. Reliable partners for Successful logistics 

In today's rapidly changing economy, companies face several challenges. The phenomenon of globalization, from the variety of demand to the ever changing of generations. New productive locations and supply, have generated in today's companies a need: the necessity to have ongoing effective and efficient communication with their service providers, in order to timely exchange information in the best way possible. 

We live in an Information Society: we must be educated in selecting only that which can be useful and stay away from information overload not to risk losing competitiveness in today's global market. To do so, it is necessary to build an actual collaborative network with one's suppliers to better achieve common or compatible goals. What does this signify? Let's take a look. 

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From the supplier to the partner: trust as principal of success.

In order to improve one’s distributive logistics and consequently corporate productivity and profitability, it is of the upmost importance to find trustworthy and qualified service providers who can partner up with you and collaborate to your success.
The trend is about the enhancement of our traditional way of communicating. Effective communication is a vital component to successful business. You must maintain fluid communication, to streamline and speed up processes, enabling you to timely step in whenever issue arise. Thus, the true added value is collaboration: the key tangible tool which companies have, to tackle Industry 4.0 and its effects on the Distributive Logistics Industry.

Technology: a valid tool, but that does not substitute the human being. 

To keep up with the developments, a reliable, secured real-time communications technology is needed to stay ahead of the curve and whose interactions are supported by computer networks. The discipline of collaborative networks focuses on the structurebehavior, and evolving dynamics of networks of autonomous entities that collaborate with each other. Logistics can spell the difference between success and failure in business.

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3. Distributed Logistics and Quality: an overview

World Bank ranked Italy 21 on 167 countries analysed. In the report "Connecting to compete - Trade logistics in the Global Economy", a report summarizing the findings from the new dataset for the Logistics Performance Index (LPI) and its component indicators. 

The LPI is an interactive benchmarking tool which LPI encapsulates the firsthand knowledge of movers of international trade. This information is relevant for policymakers and the private sector seeking to identify reform priorities for "soft" and "hard" trade and logistics infrastructure. 

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Findings include gaps in logistics performance between the bottom and top performers persist. Supply chain reliability and service quality are strongly associated with logistics performance. Infrastructure and trade facilitation initiatives still play an important role in assuring basic connectivity and access to gateways for most developing countries. The logistics policy agenda continues to broaden, with growing focus on supply chain resilience, cyber security, environmental sustainability, and skills shortages

 

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 Quality, in fact, does not only mean obtaining certifications, but also the ability offering a service able of keeping up with the times, offering cutting-edge solutions that meet the changing needs of consumers. What is the state of the art of the logistic landscape? Find out in this article. 

Logistics policies: Logistic Performance matters

Logistics is now an elevated priority recognized everywhere because facilitating trade and transport is at the core of stimulating economic development. Well-functioning domestic and international logistics is a precondition of national and international competitiveness. 

And fact-based metrics can provide reliable benchmarks, assess policy impacts, and compare global advances in logistics. Previous editions of "Connecting to Compete" have highlighted how the implementation of better policies leads to better logistics performance. In this sense, important changes have been made. Initially, in fact, Logistic strategies tended to focus on facilitating trade and on removing bottlenecks at borders. Today, however, international logistics is increasingly intertwined with internal logistics: the scope of discussion includes the re-planning of spaces, the environmental, social and economic sustainability of the supply chain, and not least the supply chain's ability to face the onset of problems with increasingly smart solutions.  A greater quality of the sector, therefore, is given by the sector policies undertaken to transform the logistic service in adherence to the modern principles that move the market. To learn more about this topic, you can read the article "Logistics and Industry 4.0: the changes taking place".

Key Performance Indicators in a State-of-The-Art Logistics System

A Key Performance Indicators is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs to evaluate their success at reaching targets. What, then, are the performance indicators for superior logistics?

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4. Omni-channel: what it means and how it impacts on logistics

Nowadays we are more and more accustomed to using different platforms before making a purchase: we try a dress in a physical point of sale and then decide to buy it online, or look for the products through the smartphone, read the reviews and then buy them directly in the store.

With the growing impact of mobile apps and digital touchpoint on shopping behavior, customers have more channels to find and buy products. This translates into more opportunities for marketers to connect with and engage such customers. But it also means a great deal more complexity for successful marketing execution. Customers continue to drive omni-channel experiences. They want interactions on one channel (or device) to carry over to their next interaction channel. Customers don’t necessarily look for the “same” experience on different channels, but they do expect and demand consistency and highly personalized experiences across all channels.

In Italy, 60% of the population aged 14 and over use Internet at least on one occasion during the purchase process. In essence, what does omni-channel mean? How does it impact brands and logistics? It is the topic of this article.

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What is Omni-channel?

Once upon a time there was talk of multi-channel: the ability of a brand to guarantee more communication channels, integrating them into an activity that is as consistent as possible with its marketing policies. In marketing and technology you often know that something is still new when you can’t find one unanimous way to spell it. Ecommerce, eCommerce, e-commerce – remember those days? Omni comes from the word Omnis which can mean all or universal. This is in comparison to other categories out there, like “multichannel”, from the Latin word Multiuse, meaning multiple or many and from cross channel, derived from the Latin word Crux, meaning to go across. The way that many are explaining omnichannel today is: ‘cross channel being done well’.

These days we tend to overcome this concept in favor of the Omnichannel: given the increasingly customer-centric market (as highlighted also in the article "Distribution Logistics: how to respond to the modern needs of customers"), Brands feel the need to be present in all the different touchpoint which the consumer has access, during his purchase path, offering a continuous experience between online and offline. Omnichannel is about true continuity of your experience. But what’s key is that it extends beyond a single brand’s universe. The ability to have a continuous experience across brands, across format and across devices that is completely bespoke – that is the promise of a new way of thinking and marketing that has been long unnoticed.

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5. Distribution logistics: ocean transport

Freight transport by sea has been widely used throughout recorded history.

The maritime transport is historically the most used. Popular since the dawn of humanity, nowadays about 90% of everything we buy arrives to our country via containers ships. There are currently over 20 million shipping containers in the world, and roughly 10 million of them are moving on vessels at any given time of the year. Around the world there are about 50 thousand merchant ships, carrying over 200 million containers worldwide, for a total of thousands of tons. Research studies indicate that shipping by vessel is by far the most environmentally friendly method of transport. 

In this article we illustrate the basics of maritime transport to help you understand how an international sea shipment works.

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Shipping by sea: much more than just transport

International shipments by sea are not limited to the simple transfer of goods from one place to another, through special ships. This type of transport must be subject to specific customs, legal, commercial and insurance aspects, for which it is good to be supported by a valid logistics provider. For more information on how to choose the most suitable one, you can read the article "5 factors to consider when choosing a logistics provider".

Transportation by sea in short

Containers are the blood cells of world’s economy, and the idea of “globalization” would not even exist without the product flow created by containers. Shipments by sea can be summarized as follows: the goods are packed according to their nature, shape and size, and the forwarder reserves the container or the space required for transportation. The goods are moved to the port and pass through the customs of the point of origin. Once the customs have passed, the goods are loaded into containers, through two modes (FCL and LCL, see next paragraph) and loaded onto the merchant ship.

Loading mode for sea transport

Maritime transport involves the movement of goods mainly in two ways: 

when shipping via sea-freight, you can either fill a container with your own goods (FCL) or share a container (LCL) - but which is the one for you? Today, we're comparing the two so that you can identify which process will be most efficient for you and your business. When you use via sea freight, your goods are loaded into a container and stored on a vessel for transit. LCL and FCL are the two methods of shipping your goods. The best method to use usually depends on the size and volume of product that you’re importing;

  • LCL is when goods are in a shared container (so you can import a small amount),
  • whereas FCL is when your goods are in a container on their own (so you can import larger volumes).

Let's see more specifically what is meant by transport FCL and LCL. What is LCL? And what is FCL?

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6. The quest for efficiency in distribution logistics

It is one of the most important goals of a company, even if its meaning is not always clear. We talk about the strive for efficiency in distribution logistics, which is the relationship between the costs necessary for a process and the benefits generatedbetween the resources initially used and the quality of those shipped

Having become such a pivotal sector for the success of a business (even more so with the advent of internet), it is of the upmost importance that those involved in the logistics distribution process have exceptional organizational skills, as well as transversal key competences (which can vary from IT to statistics) and be able to dialogue and collaborate with all stakeholders involved, from logistics operators to suppliers to end clients.

This article explores the issue of efficiency within the world of distribution logistics: to achieve a high level of efficiency in the distribution logic, it is necessary to meet certain criteria, called "drivers". Good logistics performance is an essential component of stimulating economic development. And this is what we found.

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Drivers for logistics efficiency

  • Total distance covered by the vehicles. It is a priority and geared at reducing empty kilometers. Less empty runs, fewer costs and more efficiency. To achieve such a goal, it becomes indispensable to elaborate the shortest and most suitable routes to balance the flow of the various shipments. This of course applies if the logistics is undertaken by the company itself, and if it is outsourced to third parties: in the first case the costs due to inefficiency fall on the company and in the latter case, the supplier is accountable for any costs due to potential bottlenecks. In addition, greater use of 3PLs, usually offers better benefits and may actively help reduce spikes in freight rates.

  • Saturation of the vehicles. It is necessary to analyze the composition of the load, making the most of its volume and weight without compromising the speed of the shipment. Furthermore, it should not be forgotten that the saturation of the means contributes not only to cutting costs, but also to reducing the environmental impact of logistics processes.

    The capacity crunch has arrived, and shippers are scrambling to find ways to make a profit in logistics. The wrong strategy or blend of transportation modes will result in losses, and since consumers only see product costs through Amazonian eyes, increasing product price points and shipping charges is unacceptable. Since full truckload shipments are only traveling to one destination, fewer stops translate into faster delivery. Fewer touch points reduce risk, and since marginal risk derives from the time it takes to arrive at a destination, which is expanded in perishable freight, full truckload reduces risk. It is also important shippers understand the characteristics of full truckload freight, which can be used to make freight more attractive to carriers as well. Taking advantage of full truckload requires shippers to know when it is better to use full truckload than other modes. This means understanding freight characteristics that should denote use of full truckload, which include the following:

    - requires specialized equipment to transport;
    - high-volume or high-weight freight;
    - freight in need of faster delivery;
    - high-volume destination. 

What is reserved logistics?

Reverse logistics stands for stands for all operations related to the reuse of products and materials.

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7. Disruptive trends that are changing the Logistics Industry Forever

Logistics has ancient origins and a future in the becoming. What is the origin of this activity and what are the future trends?

In ancient Greece, the word Logistikos identified the process of computing and military art which was adopted by the French. "art of moving, quartering, and supplying troops," in 1846, (l'art) logistique. Before the 1950s, logistics was thought of in military terms. It had to do with procurement, maintenance, and transportation of military facilities, materiel, and personnel.

When the meaning of logistics was broadened to the industrial production, it was in any case limited to the distribution of the finished product until the 1970s, when the first forms of evolution began. Companies were committed to improving the scope of physical distribution: from warehouse management to the entire distribution cycle. These challenges, to a large degree, are delineated by logistics modeling in the 70's. That decade can be characterized as the period in which the greatest strides in the development of computer models applicable to logistics took place. The areas of logistics where efforts have been concentrated can be divided into facility location, terminal operations analysis, routing and scheduling, and logistics system design.

In the 80s the focus shifted from the distribution process to the management of materials: the term "materials logistics" was coined, replacing the previous "distribution logistics". Materials logistics is the interface between physical distribution, manufacturing and purchasing. Supply chain management, although it may not feel like it to those toiling in the field, is a relatively new concept. One of first instance of the term supply chain management appeared in the early 1980s, in an article of The Financial Times, although it wasn’t until the mid-1990s that the concept gained mainstream recognition.

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The next phase of the development is still in progress. The globalization of markets, the consequent increase in the level of competition, a stronger focus on customer satisfaction, the diffusion and a more advanced use of technologies: all these factors have undergone a radical change. Logistics is transforming itself from a set of operating activities to a system to achieve higher levels of performance: the so-called "integrated logistics".

The logistics industry has become a complex, articulated and strategic structure: a critical success factor in the modern economy.
The change has already begun, and the next 10 years will open the door to a new era: the ability to adapt to the new factors that dictate the rules of the game will establish winners and losers in the logistics industry.

Below are the major trends:

1. Technology

The peaceful technological innovation revolution, and the speed with which it is adopted, will heavily influence the activities, processes and people in the supply chain. The technological paradigm, therefore, will include: Technological advancements will take logistics & supply chain industry to the next level. Technology is being used to provide faster and reliable delivery services.

- Autonomous vehicles (IoT). A network of interrelated objects and devices such as vehicles, workplaces, homes, warehouses with unique identifiers that aid in transferring data over the network without any human intervention and efforts. Autonomous vehicles can scan the environment through radar and GPS: thanks to these systems, the means have the ability to understand and adapt to the environment, completing the predetermined tasks. The IoT revolves around an enhanced device to device function. It is built on cloud computing and networks of data-gathering sensors. It is a mobile, virtual, and instantaneous connection and it is going to make everything in our lives “smart.” Companies like Google, Intel and others are working in collaboration with few automobile giants in giving the final touch to autonomous vehicles. Amazon has already announced that they are going to use drones to deliver products within an hour.

- AI, Artificial Intelligence and Machine Learning will set the platform Artificial intelligence can be defined as human intelligence exhibited by machines. AI is a constellation of technologies—from machine learning to natural language processing—that allows machines to sense, comprehend, act and learn. Many enterprises treat AI as a software program, a learning tool. A software that represents the “brain” of autonomous vehicles uses artificial intelligence: a more complete way of analysing date and draw conclusions through numerous and complex algorithms

that approximate, mimic, replicate, automate, and eventually improve on human thinking.
In 2019, chip manufacturers such as Intel, NVIDIA, AMD, ARM and Qualcomm will ship specialized chips that speed up the execution of AI-enabled applications. These chips will be optimized for specific use, cases and scenarios related to computer vision, natural language processing and speech recognition. Next generation applications from the healthcare and automobile industries will rely on these chips for delivering intelligence to end-users.

- "Uberisation". This new technological paradigm is taking the economy by storm. The Uberization of the economy, and indeed logistics market at large, was driven largely by the success of Uber. Its model is one everyone wants to replicate. Uber has launched its “Uber Freight”, reinventing the logistics of the transportation industry.

Thus, we can draw the conclusion that mobile apps targeted at the logistics industry represent a niche in the market. A mobile app for logistics has the potential to make the industry more efficient by instantly matching consumer demand for packaging services directly with source, and further cuts out the middle man. This optimizes the associated cost and time taken to deliver and receive packages. And why not replicate Uber’s on demand model for logistics that can offer shared transport solutions, an instant match between supply and demand and prices in real time?

- 3D printing. 3D printing has captured the interest of everyone. In fact, 3D printing is already a major disruptive trend in some industries, and it will certainly disrupt others. It is likely to impact logistics and especially the design of supply chains. 3 D printing is a process of making three dimensional solid objects from a digital file. Logistics providers should embrace this change and anticipate the implications of 3D printing on global supply chain dynamics. Accenture believes that digital supply networks are the backbone of this new ecosystem: worldwide conduits that streamline and accelerate the exchange of products, materials, components and (perhaps most important) information. 3D printing will offer opportunities for mass customization and decentralized production. Presently the value of the transferred production is of approximately 4,000 billion Euros, and the impact forecast by the new technologies (3d printing, but IoT as well) will bring about a reduction between 2.3% and 3.9% in 2025. Fewer products will be shipped from far away, but “last mile” shipping could increase.

- Big Data. Since its appearance half a decade ago, Big Data has revolutionised everything; transportation, and logistics is one of the fields where big data brings an incredible potential. The complex and dynamic nature of logistics makes it the perfect use for big data application, and it is changing the way a lot of organisations operate. It has changed the way we collect, process and analyses data, and its disruption is so essential that some even call it “the electricity of the 21st century”. Advanced algorithms to adapt loads and automatic processing of data, all supported by APP for mobile devices: here is an alternative to more manual merchandise brokerage models. The ability to extract information through logistics processes is one of the main challenges for reducing risks, optimizing resource utilization and ensuring greater supply chain flexibility.

Alternative fuels. The use of alternative fuels can revolutionize the transport economy, as energy technologies and practices have weakened the link between energy price and logistics costs. Alternative fuels such as ethanol, natural gas, biodiesel, hydrogen, and electricity are providing an increasing share of transportation energy. With energy production (e.g., solar panels) and the cost to manufacture storage (e.g., batteries) declining quickly, the trucking industry is on the cusp of substantial change. These technologies are already being adopted and will grow quickly in the next 5-10 years. The economics are most compelling for short-haul city distribution, as alternative fuels also help compliance with increasingly stringent emission standards.

2. Consumer needs 

"Quality is not only reflected in the product, but in the whole customer experience." Changes driver are:

The way to maintain the company’s position within a changing market and increase profit starts by focusing on the service provided to the customer and on decreasing the cost, logistics activities became the backbone of these organizations that target the customer satisfaction while achieving competitive advantage. The desire of consumers to have the products available at any time affects the whole logistic process, and more generally on commercial activities. In fact, the expectations of consumers accustomed to the advantages introduced by e-commerce become more and more evident: Typically, they wish to receive deliveries as quickly as possible and at the lowest cost. In this highly competitive environment, sellers have no choice but to try to optimize the management of stocks in their network, to quickly deliver and reduce the costs of making available products

- “I want it now” and personalization. The consumer wants the products to always be available and personalized: e- commerce solutions with ever faster delivery times have accustomed people to limited waiting times, and the market must adapt accordingly. Shared warehouses and 3D printers are the first solutions born to meet these needs.

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8. Distribution logistics: ground or overland transport

Transportation modes are an essential component of transport systems since they are the means by which mobility is supported.

A wide range of modes that may be grouped into three broad categories based on the medium they exploit: land, water and air.

Each mode has its own requirements and features, and is adapted to serve the specific demands of freight and passenger traffic. Overland transport is the simplest, most common and used since antiquity. Especially in Italy. Two major modes make up the ground transport system, roads and railways. Obviously, roads were established first, as rail technology only became available by the 18th century, in the midst on the industrial revolution. Historical considerations are important in assessing the structure of current land transportation networks.

But exactly, what are we talking about when referring to "land transport"? We will investigate the topic in this article.

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Ground transport: all information

When it comes to ground freight, you have two options, Road or Rail. Usually companies prefer road shipments when it comes to short and easily accessible connections, while they choose the train to cover large distances, where it takes several days to get the goods to their destination.

When a company decides to use land transport, it is customary to make a distinction between "loose goods" and "full load" before deciding which solution to adopt. "Bulk goods" means the possibility of booking spaces for one or more pallets on a truck or on a train carriage. This allows you to split the shipping costs with other companies that have also purchased that space. Many transporters have fixed prices for bulk goods and in technical jargon we talk about LCL: Less than a Container Load. With "full load" or FCL (Full Container Load) it refers instead to the fact that the customer books a complete truck or an entire railway carriage and in this case the shipping costs increase.

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9. Distribution logistics for the food & beverage sector

Italy has always been synonymous with good food: high quality raw materials, in-depth knowledge of food and wine, culinary art at the highest levels make our country one of the cornerstones of food and wine worldwide. 

Therefore, there are always high expectations from companies operating in the food & beverage sector.

To ensure that the quality of a product is not affected, it is essential to adopt high-profile distribution logistics, considering that typically we deal not only with our product, but with aspects related to it such as traceability, delivery precision, seasonality of flows and also consumer protection.

The food and beverage industry depends on the smooth and timely supply of raw materials. Since the ingredients required by food industries come from many different geographical locations, sometimes halfway around the world, transportation and logistics play an important role in ensuring the success of the industry.

Because of the short term nature of raw materials and finished products, the food and beverage industry faces many unique challenges that are not found in any other industries.

Let's see what are the key factors of a good logistics process within the agri-food sector.

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Time: the fundamental driver for food logistics

Because food and beverage products have a limited shelf-life, transportation and logistics solutions must be time-sensitive.

From fresh foods such as fish products or dairy products, to frozen foods that need strong thermal conditioning: perishable goods cannot be separated from rigid logistics and delivery times.

Speedy Delivery to Avoid Deterioration: Many of the raw materials go bad quickly. For example, vegetables and fruits do not last long even if stored in climate controlled facilities. Therefore, they need to be delivered quickly. The same applies to finished products. Most processed foods have an expiry date after which they cannot be consumed.

Especially susceptible to rotting and putrefaction are foods like pizza, bread and milk products that can go bad within a few days.

Preservation of Quality: Of all the industries, food and dairy industry is one that can never compromise on quality. Without good logistics you can have negative repercussions on business costs, customer service, the company's reputation and even on the various processing stages. The agrifood chain is a complex and articulated world and organizing it efficiently and effectively is not easy: with a simple equation it can be said that the more a company invests in services and a quality distribution logic, the more benefits it will have and less costs, especially in the medium-long term.

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10. Container Transport: everything you need to know

International shipments of goods, especially in the maritime sector, are mainly based on container transport. These containers are made in standard sizes and can be transported efficiently over long distances and transferred from one means of transport without being opened. Standardised containers have transformed the shipping and transport industry, allowing the transport of goods by rail, road and ship easily, as the containers can fit onto different forms of transport with ease.

The standardisation of containers has helped increase efficiency and economies of scale when transporting the approx. $3tn of trade which goes through our transport systems each year, from aerosol cans to zebras! But how did this transport system come about, and which container shipments can be made? We talk about it in this article.

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Container transport: history

Modern container shipping celebrated its 50th anniversary in 2006. Almost from the first voyage, use of this method of transport for goods grew steadily and in just five decades, containerships would carry about 60% of the value of goods shipped via sea.


The idea of using some type of shipping container was not completely novel. Boxes similar to modern containers had been used for combined rail- and horse-drawn transport in England as early as 1792. The US government used small standard-sized containers during the Second World War, which proved a means of quickly and efficiently unloading and distributing supplies. However, in 1955, Malcom P. McLean, a trucking entrepreneur from North Carolina, USA, bought a steamship company with the idea of transporting entire truck trailers with their cargo still inside. He realized it would be much simpler and quicker to have one container that could be lifted from a vehicle directly on to a ship without first having to unload its contents. His ideas were based on the theory that efficiency could be vastly improved through a system of "intermodalism", in which the same container, with the same cargo, can be transported with minimum interruption via different transport modes during its journey.

Containers could be moved seamlessly between ships, trucks and trains. This would simplify the whole logistical process and, eventually, implementing this idea led to a revolution in cargo transportation and international trade over the next 50 years.


This mode of transport developed brings enormous benefits to international trade in terms of reducing transport costs, damage to goods and theft. Since the product remains inside the container from the start, then from the manufacturer to the end customer, the distribution chain is simplified and each movement is automated thanks to the use of specific means.

Transport container: as it is

It was a logical next step that container sizes could be standardized so that they could be most efficiently stacked and so that ships, trains, trucks and cranes at the port could be specially fitted or built to a single size specification.

This standardization would eventually apply across the global industry. This standardization now applies across the global industry, thanks to the work of the International Organization for Standardization (ISO) that in 1961, set standard sizes for all containers. The two most important, and most commonly used sizes even today, are the 20-foot and 40-foot lengths.

The 20-foot container, referred to as a Twenty-foot Equivalent Unit (TEU) became the industry standard reference with cargo volume and vessel capacity now measured in TEUs. The 40-foot length container - literally 2 TEUs - became known as the Forty-foot Equivalent Unit (FEU) and is the most frequently used container today.

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