What is a logistics company and how do you find the right one for your business?

Logistics is a complex function for any business. For an emerging business to hire a professional logistics solutions provider is an important business decision as it impacts other business functions. There are various types of logistics companies in India. However, before going to the list of logistics companies, let’s understand what a logistics company is and what functions it can undertake for your business.

What is a logistics company?

What is a logistics company? In simple words, a logistics company is one that undertakes the movement of goods on your behalf.

Professional logistics companies also carry out other value-added activities such as warehousing, shipping, packaging, etc. The importance of logistics and transportation services manifolded especially during the pandemic when businesses faced major challenges in timely delivery of consignments.

In India, there are several prominent logistics companies, specialising in a range of supply chain and logistics services, such as cargo services, freight forwarding, courier services, road transportation services, domestic and international shipping services, and more. Some of top logistics companies, known for reliable services are:

• Blue Dart logistics services
• Delhivery logistics
• GATI
• RIVIGO (by Mahindra logistics)
• Ekart logistics services
• DHL logistics company
• DTDC logistics company
• OxyZEN

Types of logistics companies in India

Logistics services can either be inbound or outbound services. Businesses can choose a logistics service provider based on their transportation needs and the services offered by the logistics company. There are various types of logistics companies in India offering specialist or generalist logistics solutions. Some of the notable types of logistics companies include:

• First party logistics companies: These companies only provide required fleet of vehicles for transportation of goods. Their services do not involve shipping and warehousing.
• Second party logistics companies: These types of logistic companies offer shipping and transportation services through multimodal shipping. However, warehousing needs are not served by second party logistics companies.
• Third party logistics companies (3PL): 3PL services are popular among MSMEs in India. Many emerging businesses prefer third party logistics services as they offer services across the supply chain including warehousing, inventory management, packaging, shipping, transportation, etc. For example, a 3PL company can store your inventory, pack it and ship it when required on your behalf.
• Fourth party logistics companies: Fourth party logistics companies handle your entire supply chain management. These companies become a single point of contact for the business for all its supply chain-related activities. This is generally more suitable for large sized businesses.

Tips to find the right logistics services company for your business

There are different kinds of logistics companies, and as a business owner, you need to select a service provider who can meet your business requirements. You need to consider logistics costs, the market reputation, the pincode coverage, delivery timelines and other factors before selecting your logistics marker.

Here are some tips for you to select the right for your business.

Analyse your logistic needs

First step is understanding your business needs. As a business owner, it is important for you to analyse and understand your logistics needs before partnering with any logistics company. You can list down your requirements and expectations from the logistics partner. Accordingly, you can formulate the logistics strategy and decide which type of the logistics company best suits your business needs.

For example, your business needs may be limited to transportation and you do not require warehousing services. In this case, you can focus on companies that specialise in transportation and affordable shipping solutions.

You should also consider the nature of your business while choosing a logistics company. Shortlist only those who have the required expertise and experience. For example, pharma companies have special storage and transportation requirements. These goods need to be stored and transported in controlled temperatures and humidity to ensure product quality. Additionally, packaging plays a critical role. Hence, you need to consider areas of expertise that the logistics company while choosing a partner for your business.

Flexibility is essential based on shipment volume

While choosing a logistics partner, flexibility is one of the crucial aspects. Depending on the volume of your shipment, you may prefer to have a logistics partner that gives you flexibility of full or partial-truck loading. This will help you to save cost as well as deliver goods timely despite the low volume of goods.

In this respect, it is also important to check the weighing method that the service provider uses. Volumetric weight is the commonly used weighing metric and suitable when you have lesser goods to ship.

Effective customer support will ensure hassle-free shipping

Customer service in logistics can be a key differentiator for your business. Your logistics partner should be able to provide accurate information, keep end-customers updated on the status of their shipment, and provide prompt resolutions to their transportation challenges.

Most logistics players will claim to have robust customer service and support. However, ground reality can vary. Hence, it is a good idea to verify how well they serve the customers in terms of value-added services like order tracking, responsive customer support, reverse logistics for goods returned, and assistance in documentation. This will ensure hassle-free shipping for you.

Additionally, check the credibility of the company before partnership. You can speak to their other customers and read testimonials to verify customer support and credibility.

Wide coverage will help your business

Ensure that the logistics agency serves the geographies that your business caters to. Additionally, if you have plans on expanding your market, consider future needs while choosing a logistics partner.

For instance, if you are currently delivering to regional and local markets, but have plans to expand to national markets, choose a logistics partner with wide pincode coverage. This will save you new partner onboarding time and costs.

Lowest pricing is not always the best

You must know that lowest pricing does not mean the best value. Many companies claim to offer low cost logistics services. But not all are efficient.

When you select a logistics company, consider multiple factors, such as:

• No hidden costs involved
• A transparent pricing policy
• Detailed quotation including all pricing points such as transportation, warehousing, packing, shipping, insurance, and other services
• Carrier services offered i.e., single vs multiple carrier shipping

Safety cannot be compromised

Think about unforeseen situations such as a fire in the warehouse where your goods are stored. This will lead to damages and losses.

It is important therefore that your logistics partner is aware and conscious about the unlikely events and is proactive in taking preventive actions. It would be beneficial for you to check the company’s approach towards handling such uneventful situations.

Technology is an added advantage

You also need to consider technological capabilities of the logistics company. Logistics today is about using relevant technology solutions for streamlining the process. Consider solutions offered for:

• Real time order tracking and monitoring
• Radio-frequency Identification (RFID) technology, barcode scanning, SKU codes etc. to make warehousing management hassle-free
• Transportation management systems etc.

Closing thoughts: Logistics service for small businesses

The logistics sector in India is fragmented, with many regional logistics partners catering to the needs of MSMEs and emerging businesses. While this has created employment opportunities for many and contributed to India’s GDP, there are challenges it has to conquer.

When selecting a logistics company for your business, keep the following in mind:

• Scalability: Does the logistics provider have the infrastructure to support your business as it scales and grows?
• Cost comparison: Are you getting the best rates on logistics services? Have you compared rates with other service providers?
• Value-added services: What additional services can be provided? Do they support with customs, freight forwarding, insurance, taxes and the like?
• Terms and Conditions: Read the fine print, especially related to reverse logistics, insurance, and policies against damaged goods.

Note: This blog has been updated on 11 April, 2023