Safety and Profits in Freight Logistics

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Table of Contents

Introduction
Safety Issues in Freight Logistics
Corporation Profits and Losses in Freight Logistics
Conclusion
References

Introduction

The industrial revolution in the early twentieth century changed the world in terms of production and distribution of the products to consumers. The invention of automobile engines changed the transport sector. People and property could easily move from one place to another. The development of information technology in the twenty-first century has also changed the way people conduct business transactions.

Currently, people from across the world can use the internet and social media platform to interact and conduct businesses across the world. As technology advances, the production processes become cheaper and faster. Consequently, the varieties of products offered in various markets have significantly increased. The same modern technology and its applications have made it easier to move products and services from one part of the globe to another. With several transportation options in the current world, freight logistics has become more complex. Safety management of people, property, and environment in the industry has become a challenge. On the other hand, the complexity has made it difficult to control external costs associated with the outbound shipment.

Safety Issues in Freight Logistics

The technological development has helped in improving the production of goods and services in all industries. Besides, it has enhanced the connection between individuals and business entities across the world. Transactions of products and services across the world have increased. As a result, logistics has continued to be part of the daily operations in many industries. However, the aspect of logistics in business operations is based on its efficiency.

People who handle consignment at the port and during transit use a combination of machines, technology, and human power. The safety of human resources and the natural environment is important (Kant, Quak, Peeters, & Woensel, 2015). Improving safety standards helps in increasing the effectiveness and productivity of human resources in the freight logistics sector.

Physical activities such as the transfer of items can cause body injuries leading to accidents and ergonomics related illnesses. Factors that cause injuries and accidents depend on the nature of activities in which a worker engages. Several factors lead to accidents in the freight logistics industry. The types of tools and equipment people use to determine their safety. The working environment also determines the safety of people and other resources.

Conditions of the vessels used to transport products and services influence the safety of people using them, the product they transport, and the environment in which they operate (Yoshida, 2011). Lastly, the nature of the transportation medium such as water, air, and the road significantly influences the effectiveness of safety measures. An organization should consider all the above factors when establishing safety guidelines.

Building materials are among the heaviest and the bulkiest products handled in the transportation sector. In the contemporary context where technology thrives, how companies to transport bulk materials has changed. The introduction of automobile technology made it possible to transport heavy materials from one place to another. The materials could be easily transported over a long distance by the road (Govender & Thokozani, 2014).

With the introduction of air cargos, such heavy materials are transferred across the world. When in transit, heavy products are susceptible to damage and destruction because of weather changes and other factors. Some materials such as chemicals may have dangerous effects on the crew. Also, certain materials can be destroyed. In the process, they can cause harm because of poor packaging.

The increase in the number of transit options has posed serious threats to freight logistics in terms of safety. Because of accidents on the roads, transportation trucks often overturn. They cause deaths, destruction of other property, and environmental pollution, especially when they carry chemicals. Water transportation is one of the options used in the transportation of both heavy and light commodities over a long distance. It is difficult for big water vessels to capsize. However, they take a long time to deliver products to their destinations (Kant et al., 2015).

Many accidents in water transport occur at the ports. Congestions and inadequate organizations in the port cause many accidents. Inappropriate management of machines such as cranes, hydraulic lifts, and trucks among others makes many ports unsafe for both human and nonhuman resources. With the increase in the production and distribution of goods on the global platform, many ports receive consignments that they are unable to manage. Once the management plan fails to address safety and operational issues, the probability of becoming a victim of unsafe environments is high (Govender & Thokozani, 2014).

Transportation of fluids and chemical present various issues. Many countries use pipelines to transport oil and gas products. Commodities transported through pipeline reach their delivery destinations within the shortest time possible. However, some of them are highly flammable and toxic (Yoshida, 2011). Oil spillages cause significant losses to companies. They also cause environmental pollutions and tragic accidents. The main challenge is the inability of the companies to control pipeline connecting places that are several kilometers apart.

Load safety continues to become a serious issue because users do not comply with the established codes of practice. The scenario closely relates to inadequate competence and ownership of the risks. Those who create consignments leave the load safety responsibility on the hands of their drivers. However, how a vehicle is packed determines its safety. For instance, an overloaded vehicle could cause an accident even if the driver carefully observed road safety rules (Govender & Thokozani, 2014). Logistics managers need to develop a health and safety strategy that would ensure all players are responsible for their actions. Currently, the idea of passing responsibilities to the subsequent handlers of a consignment exposes people and property within the freight logistics industry to danger.

Corporation Profits and Losses in Freight Logistics

Significant costs are incurred to satisfy the demands of customers in different industries. However, firms within these industries do not fully understand these costs. It is because the traditional accounting and financial analyses focus on the production costs and omit the costs needed to meet customers’ demands. The costs of logistics vary from one company or industry to another. However, the total costs of logistics determined as a percentage of the gross domestic product have significantly increased in various markets (Yoshida, 2011).

Apart from the external aspects that increase expenses, operations within the logistic sector provide revenues through the delivery of products and services to the users. Therefore, apart from safety and operational issues, it is important to understand the impacts of decisions in the profits made in logistics and supply chain context. In terms of financial issues, logistics activities need resources such as working and fixed capitals (Kant et al., 2015). Therefore, freight logistics strategies should consider safety and financial issues that affect business operations.

The executives in the logistics sector need to provide accurate and timely information on operations, planning, purchases, sales, and finances. Effective management of transits, destinations, arrival times, and freight costs need appropriate documentation of information. These could be done through internal paperwork, internet tools, and communication strategies. The traditional frameworks used in tracking the logistics made it difficult to predict various aspects of the system.

The lack of predictability has created many negative impacts on the industry (Govender & Thokozani, 2014). Consequently, negative results such as obstruction to sales, surplus inventory, and varied operational performance occur during the transportation of products and services. Many organizations within the freight logistics sector lack reliability and accessibility to real-time data on supply chain operations. They have no choice apart from contacting the suppliers for details such as shipment information, legal issues, and tariffs. Such approaches are ineffective and labor-intensive. Subsequently, they create additional costs for the company and its suppliers (Quak & Nesterova, 2014).

The inability of companies and non-profit organizations to control logistics processes is a recurring problem. Many organizations have created optimized logistics plans with routine policies. Their objective is to provide specific guidelines on the way their suppliers and users should transport their products and services. Nevertheless, these organizations have limited control over the entire process. Even though they pay the freight charges, firms cannot determine whether the freight firms and other stakeholders follow their established policies. Instead, they rely on their employees and suppliers to execute the routine policies and guidelines on their behalf (Yoshida, 2011). They do not have any legal or management means through which they can enforce their logistics strategies.

The cost control problems have little effects on the outbound shipping. It is because organizations have the capability of controlling their outbound consignments. However, their main terms of purchases are Ex Works. In this case, the buyer incurs the costs of inbound shipping. As a result, they assume the risks related to the delivery of their consignments. In this circumstance, the buyer depends on the supplier to follow the expected freight routines (Quak & Nesterova, 2014). The main problem is that many suppliers do not adhere to these routine guidelines because their focus is on many customers they serve daily.

The workload and a large number of customers they serve make suppliers put their attention to services rather than guidelines. In such cases, the purchasing company would incur additional freight costs and those related to delays within the supply chain. The situation might be worse when a catastrophic incident occurs during shipping. Not all these additional costs can be traced back to the value of the product or services being shipped when calculating the accurate cost of products. The buying company has no capability or means of making changes once the products have entered the supply chain system. These include the impossibility of responding to external factors such as weather conditions and the necessity of separating consignments for different destinations (Smil, 2007).

Many firms do not realize the instant effects of these extra costs. However, the increase in costs becomes visible after some weeks. The company must pay the amount indicated in the invoices of the inbound shipment before it can generate an expenditure report. Even in such situations, the company’s financial records will still indicate the total cost. Breaking down the information needs extensive work such as manual paperwork and accessing multiple portals of shipment carrier (Vogel, 2016). The gathered information must be compiled for analysis. All these works are cumbersome and the inbound shipment costs will remain unknown unless a firm decides to engage in the strenuous activity.

Another issue that affects the logistics is the continuous rise of the freight costs. The freight rates have been increasing steadily in all transportation sectors for the last five years (Yoshida, 2011). The situation poses a serious challenge to international business organizations.

As indicated earlier, the rates imposed on external shipping cannot be controlled by the logistics executives. Nevertheless, effective management of inbound shipping and all related activities are significant to companies involved. Apart from trying to increase the company’s visibility in the logistics platform, the management also focuses on staff reduction. They tend to decrease the budget for the IT-based services and an increase in the centralization of the shipment services (Smil, 2007). However, many of those changes and strategies create further problems for those organizations.

To deal with the situation, the logistics managers should undertake several actions to control external costs. An increase in external costs causes constraints of internal resources. One of the recommended actions is to conduct a systematic analysis of the freight data to establish sources of external losses. Instead of trying to control external factors, logistics managers can devise strategies to avoid them (Karimi, Srinivasan, & Han, 2013).

In the contemporary business environment, technology has taken the center stage. Logistics is a complex field with several operations taking place simultaneously. Appropriate technology will enhance faster operations and execution of processes. All departments need a robust system to manage data and other relevant information. Therefore, a freight logistics system requires a robust technology platform. That way, it is possible for the managers to gather appropriate information and initiate the correct response at the right time (Kant et al., 2016). On the other hand, they can work with logistics professionals who render services aimed at reducing external costs.

Companies face several challenges in their attempts to manage inbound shipping. Fortunately, technology has provided practical solutions, which help companies in the management of the processes. Organizations that have adopted the modern systems have increased their visibility and gained substantive control of the costs related to inbound shipment services (Yoshida, 2011). An inclusive management service has the required technical aspects to deal with the complex nature of logistics. The use of technology is essential in serving customers in modern markets with on-demand services. However, it is important to conduct thorough research and analysis to come up with a technological solution that answers specific problems.

Some of the issues that derail global logistics are capacity, congestions, and costs. As the number of organizations taking part in production and freight logistics increase, the capacity of the infrastructure also reduces. Because of limited capacity, the transport service providers tend to raise the costs of deliveries. Subsequently, transportation costs increase without considering the consumer costs. Congestions cause delays in the delivery of products and services to their destinations. Customers can easily switch to the readily available substitutes because of constant delays in delivery (Vogel, 2016). Coupled with the uncontrollable costs of outbound shipments, it is easier for a company to incur huge losses.

A serious problem occurs in the road transport sector, which is characterized by intense labor and limited capacity. The problem is magnified when bulk carriers are involved. Coupled with the difficulty of determining qualified drivers, the probability of making losses remains high.

Even with qualified drivers, the conditions encountered on the road such as traffic jams and accidents are still uncontrollable. The few qualified drivers and conditions faced on the road are deterrents to the effective management of road carriers and shipments. The idea of having an optimum capacity is the dream of every organization (Karimi, Srinivasan, & Han, 2013). However, creating such a capacity in road transport is difficult. Therefore, companies that deliver their products through roads have limited choices of safety.

Conclusion

Logistics is an important sector for all industries across the world. Local and international companies rely on logistics to reach their customers. However, the inability of firms to control certain aspects of freight logistics cause serious safety and cost-related issues. Before choosing a carrier, a company should weigh options and select the safest and most cost-effective mode of transportation. The move would reduce the extra costs incurred because of uncontrollable factors.

The collaboration of all stakeholders can assist in addressing the general problems in the industry. With the increased volume of bulky consignments, domestic firms need to develop robust systems. It will be simple to handle consignments by eliminating external costs and safety issues. In conclusion, the effective use of technology could help in improving deliveries and services. Technology is essential in gathering and analyzing logistics information. It can also be used to manage the activities that take place during shipment. Choosing the right management solutions would help in detecting problems and identifying the most appropriate solutions.

References

Govender, N., & Thokozani, M. (2014). Dynamics of intermodal logistical systems on containerisation and road transportation in Durban, South Africa. Journal of Transport and Supply Chain Management, 8(1), 1-10.

Kant, G., Quak, H., Peeters, R., & Woensel, V. (2015). Urban freight transportation: challenges, failures and successes. Logistics and Supply Chain Innovation Lecture Notes in Logistics, 3(1), 127-139.

Karimi, A., Srinivasan, R., & Han, L. (2002). Unlock supply chain improvements through effective logistics. Chemical Engineering Progress, 98(5), 32-38.

Quak, H., & Nesterova, N. (2014). Towards zero emission urban logistics: Challenges and issues for implementation of electric freight vehicles in city logistics. Transport and Sustainability Sustainable Logistics, 14(8), 265-294.

Smil, V. (2007). The two prime movers of globalization: History and impact of diesel engines and gas turbines. Journal of Global History, 2(14), 373–394.

Vogel, P. (2016). Service network design as a logistical challenge in the reliable provision of service in bike sharing systems. Service Network Design of Bike Sharing Systems Lecture Notes in Mobility, 1(2), 31-48.

Yoshida, Y. (2011). Pricing, capacity, and construction boundary of a congestible highway with an elastic demand: Social optimum, second best, privatization, and vertical disintegration. The Japanese Economic Review, 62(3), 401-424.

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