Challenges Faced by Transportation and Logistics Companies

1. Challenges Faced by Transportation and Logistics Companies airra.org/challenges-faced-by-transportation-and-logistics-companies February 26, 2021 The transportation and Logistics business is an area of strategic importance to all companies. The transportation and logistics industry is responsible for moving goods from their origination point to their delivery point, either in a physical warehousing facility or in an online fulfillment center. The industry also directly contributes to the growth and development of the Nation’s economy and contributes to the Nation’s infrastructure. As such, the Department of Transportation plays a vital role in the transportation industry. Many and policy statements regarding the transportation and logistics industry, such as those found in Federal Register Notice. In addition to issuing such notices, DOT has formed a committee responsible for examining and recommending changes to our transportation policies and practices. DOT: The transportation and logistics industry encompasses a wide range of activities. One of DOT’s primary functions is to issue policies and procedures required by the shipping industry designed to mitigate risks associated with the transportation of sensitive materials. Another function of DOT is to issue rules and regulations that affect the transport of motor vehicles. These include motor vehicle insurance, which requires drivers to cover them while they are on the road. Motor vehicle licensing is another significant function of DOT. Drivers must obtain a license to operate a car in the streets. Produce and Ship: 1/3

2. The transportation and logistics industry is highly specialized and often produces small numbers of products. The companies involved in the transportation industry are highly specialized in the type of products they can produce and ship. Additionally, the transportation industry itself is highly fragmented, with many companies operating in silos, producing limited amounts of products and shipping to just a few customers. This creates a lot of risk within the organization itself and makes it difficult for the company to make the wide variety of product decisions that it needs to remain competitive. It also makes it difficult for the companies to decide about the logistics of a particular transportation process. Small and Specialized: Because the transportation and logistics industry is small and specialized, companies involved in the industry face some unique issues. The volume of products involved is limited, as is the range of transportation methods available to those involved. Also, the number of customers a given company can serve in any one day is limited. The companies involved face significant political constraints, such as needing to support U.S. trade relations and maintain friendly relations with other countries. Finally, many of these companies have substantial physical locations or are geographically dispersed. These considerations make it difficult for companies involved in the transportation and logistics industry to meet the demands of their customers, the challenges of doing business in a competitive environment, and the organizational needs to manage all aspects of the supply chain effectively. There are several issues facing transportation and logistics companies that can significantly affect how efficiently they deliver and manage their products. One of these issues is the problem of scale. The smaller a company is, the more expensive the transportation and logistics processes tend to be. Larger companies involved in the transportation and logistics industry face this problem at every level. Still, the larger companies involved in the supply chain are often not faced with this problem because of their scale. Inter-Company Coordination: Another major issue facing transportation and logistics companies is the issue of inter- company coordination. This is the ability of a company, or several companies, to coordinate goods from point A to point B. This coordination can include warehousing, trucking, and warehousing, the ability to use common carriers such as railways, air freight, and shipping consolidators, as well as issues related to re-contributes and third- party services, among others. l Many companies face logistical issues that can affect their ability to meet their customers’ needs. For instance, companies involved in the transportation and logistics industry must provide prompt, reliable, cost-effective, and accessible service. Companies involved in the transportation and logistics industry must effectively manage internal 2/3

3. issues, such as inventory, inventories, and labor and payroll. The ability to effectively manage internal issues will help companies prevent problems with both cost-effectiveness and customer satisfaction. There are many challenges involved in the transportation and logistics industry. The transportation and logistics industry, like all industries, will continue to experience growth, regardless of the specific industry characteristics. This growth will be driven by population growth, increasing global trade volumes, changes in land use and climate, and other factors, which will impact how transportation and logistics companies interact with their clients. These challenges will, no doubt, continue to affect the industry in the years to come. For more information, you can check vanglogistics.com. 3/3