From the depths of our villages (where farmers turn the soil over to get crops, from where fishermen cast their nets and stretch out their rods to catch fish and other seafood, From where hunters set traps and arm themselves with their hunting rifles to capture game), to the counters of supermarkets and large retail outlets that abound in our metropolises, the TRANSPORTATION and LOGISTICS industries play a key role in the proper functioning of any economy.
Moreover, every individual aged five years on average is employed on a daily basis in one of these two industries linked to the movement of goods and people.
However, there is still a lack of understanding of the current use of these two concepts. In one of our discussion forums, someone asked whether it is possible to have LOGISTICS without TRANSPORT and vice versa.
In this article, we will make some clarifications regarding the difference between TRANSPORT and LOGISTICS, after redefining each of the two concepts.
Definition of TRANSPORTATION
According to economists, TRANSPORTATION can be defined as the movement of a good or a person from one point to another. It is an economic good, such as a haircut or a pair of shoes, although it is not just that. Technically, TRANSPORTATION is more of a service than a good, because it is more immaterial than material. TRANSPORT has its own characteristics. The main ones are the following:
o First of all, TRANSPORT is an intermediate consumer good. It is rarely demanded in and for itself. It is an aid to professional activity, leisure or production. The demand for TRANSPORT can therefore only be understood in relation to lifestyle and production activity.
o Secondly, it is a capital-intensive activity. The production of TRANSPORT, or more precisely motorised TRANSPORT, involves capital (roads, railways, trucks, locomotives, planes, etc.), inputs (fuel, electricity), labour (truckers, railway workers, pilots) and time. This is true for all goods, but to varying degrees, and the share of capital, both in infrastructure and in means of TRANSPORT, is more important for TRANSPORT than for most goods, especially services.
o A third characteristic of TRANSPORT is the long life of its infrastructure. Decisions in this area will bear fruit for decades or even centuries. The construction period of these infrastructures is also very long. For technical reasons (it takes several years to build a complex structure) and above all for socio-political reasons (it takes even longer to gain acceptance for the principle and the route of a road or rail line), decades may elapse between the decision and implementation.
TRANSPORTATION is crucial because it promotes trade between people, which in turn establishes civilizations. It is very interesting that TRANSPORT is a catalyst for civilization, but it makes sense because it allows trade and communication.
Definition of LOGISTICS
The Council of Supply Chain Management Professionals (CSCMP) defines LOGISTICS as the process of planning, implementing and controlling procedures for the effective and efficient TRANSPORTATION and storage of goods, including services, and related information procedures from point of origin to point of consumption in order to comply with customer requirements. This includes the management of inbound freight, outbound, internal and external movements.
Simply put, LOGISTICS refers to the art of knowing how to arrange a set of interrelated elements and events to achieve a desired objective. This term can also be used even when TRANSPORTATION is not involved.
So, for example, if a friend tells you that he is planning a surprise birthday party for his wife and you ask him how he will handle LOGISTICS, you are implicitly asking him:
o How is he going to find out the phone numbers of his wife’s friends?
o How is he going to invite them to the party without his wife knowing?
o How is he going to bring his wife there under another pretext?
In short, you ask him how he will coordinate a complex set of events to achieve the goal of pleasantly surprising his wife.
In business language, LOGISTICS can also be used as a technical term to manage complex processes that may or may not involve TRANSPORTATION.
For example, Toyota uses Just-In-Time (JIT) manufacturing. This means that Toyota optimizes its inventory against its assembly line schedule, taking into account a number of factors: which part (for example, a car door) is needed on the assembly line and when, where the supplier is located, how long does it take for that part to leave the supplier and arrive at its destination, which TRANSPORTATION company has the best schedule and the appropriate routing to pick up the part from the supplier and deliver it to the assembly line, and so on.
The difference between TRANSPORT and LOGISTICS
After reading the above definitions, it becomes increasingly obvious to perceive the difference between these two concepts.
LOGISTICS requires prior planning, whereas TRANSPORTATION is just there to carry out this planning when getting the freight. It is therefore clear that LOGISTICS and TRANSPORTATION are separate concepts, but that TRANSPORTATION is simply a part of LOGISTICS.
When it comes to LOGISTICS, managers have to make other decisions beyond the mode of TRANSPORT, including: packaging, wrapping, documentation, insurance, storage, import and export regulations, claims management, selection and management of suppliers and service providers, risk management, returns management, etc.
Thus, although these terms are often used interchangeably one instead of the other, the fact remains that TRANSPORT deals and is limited to dealing with the function of moving goods or people from one point to another.
This is another reason why it is essential, within the LOGISTICS departments of companies, that managers do not see software, such as TRANSPORT management software, as a miracle solution to their LOGISTICS problems. TMS software is certainly useful, but as you can see, beyond the procurement and management of TRANSPORT through software, there are many other constraints that a LOGISTICS executive has to face on a daily basis.
Thus, to calculate your LOGISTICS costs, for example, you have to add TRANSPORT costs (distribution costs, for example), inventory maintenance costs (warehousing and inventory costs) and information-related costs (order costs, for example).
TRANSPORTATION and LOGISTICS are two very different but intertwined industries that play a key role in the movement of goods and people. While LOGISTICS is the driving force behind the operation, TRANSPORTATION is the driving force to ensure that goods get from point A to point B and that the mode of TRANSPORTATION gets it there in a timely manner.
The main differences between the two are what gives each such an important role in the complex elements of today’s trade and infrastructure.
At the end of all this, and to answer the initial question of << can there be LOGISTICS without TRANSPORT and vice versa? >> We can therefore safely say that there can be LOGISTICS without TRANSPORT, but there could not be TRANSPORT without LOGISTICS.
Do you have any other important points you would like to share regarding the differences and similarities between the concepts of “TRANSPORT” and “LOGISTICS”? If so, please feel free to leave a comment below this article.