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In the business of trading, support of logistics solutions is inevitable. However, it may create confusion between the terminologies. This article elaborates on the meaning of trading and logistics companies and the role of logistics in trading.

Logistics

Let’s begin with the meaning.

Trading and logistics meaning

Trading and logistics are closely related terms. However, they are not the same. What is the difference between a trading and a logistics company? Simply put, while trading is involved in the buying and selling of products, logistics take care of the movement of these products from buyer to seller. Any trading business requires logistics arrangements.

Trading Logistics
Meaning Trading means buying goods from a manufacturer/distributor and selling them to potential customers/distributors/traders.

It transfers ownership of products.

Logistics is associated with actual movement of traded products from a manufacturer to a distributor.

It is involved in the movement and storage of goods.

Activities Involved in buying and selling activities. Logistics activity encompasses transportation, warehousing, inventory management and so on.
Revenue A trading company gets revenue from buying and selling products at advantageous rates. A logistics company earns its revenue through rendered service to customers.
Paperwork Trading involves paperwork related to buying and selling such as a contract, bills, receipts, purchase orders, and so on. Logistics is involved with paperwork and documentation related to logistics such as transit insurance, bill of lading, shipping bills, bill of entry, etc.
Examples Import-export business, dropshipping, reverse dropshipping, etc. Logistics company, 3PL (third-party logistics company), 4PL (fourth-part logistics company)

Role of a logistics company in trading

A logistics company’s role in trading is not only limited to good movement. In fact, the role of logistics in international trade is far more critical than just the movement of goods or transportation. Here are some important functions a logistics company carries out during international trade for a trading company.

Transportation:

International trade often involves multi-modal transportation such as sea freight, air freight, road transport, or railways. A logistics partner or a 3PL company offers end-to-end logistics services encompassing all types of modes of transport. Additionally, logistics companies aim at cost-effective transport management.

Customs clearance and freight forwarding:

A logistics company is responsible for doing all kinds of paperwork involved in customs clearance and freight. It includes several activities such as preparing and submitting necessary paperwork, buying suitable transit insurance, ensuring adherence to import and export regulations, and facilitating smooth movement of goods through customs checkpoints. For example, if goods are imported to India, a logistics company will access the ICEGATE portal to submit relevant documents and pay customs duties.

Warehousing

Warehousing allows traders to remain close to the buyer/distributor minimising the transportation time. Therefore, it is an important task that a logistics company undertakes on behalf of the trader. A logistics company often manages inventory levels, optimises warehouse operations, ensures shipping delays.

Moreover, international trade requires different kinds of warehousing for different purposes. For example, custom-bonded warehouses where goods are stored without payment of duties. Once goods are ready for export, duty is paid, and goods are moved. A logistics company can arrange for such warehousing as well in case of the need.

Risk mitigation

In international trade, various kinds of risks are involved. Some of them include geopolitical issues, natural disasters, and other unforeseen situations. These further cause transportation disruptions and delays. A well-experience logistics company implements effective risk management strategy while ensuring the reliability and security of the supply chain. Risk mitigation strategies can foresee certain situations and the goods can be transported through another route. This avoids shipping damages and delays.

Other factors

What else a logistics company can help a trading company achieve?

  • Cost-efficiency: A good logistics company helps international traders achieve cost efficiency in logistic management. It leads to cost savings in international trade. Cost efficiency is achieved through transport route optimisation, minimising inventory holding costs, and negotiating favourable terms with service providers.
  • To be compliant: Often, international trade involves a lot of documentation and paperwork, without which goods may be stuck at customs. Logistics professionals are better equipped to handle the paperwork and help you to be compliant. Therefore, a logistics company can help in minimising transit time, reducing lead time and ensuring that timelines are met.
  • Customer satisfaction: Efficient logistics leads to a positive customer experience. It ensures timely and reliable delivery of goods. Therefore, meeting customer expectations in terms of delivery times, and intact product condition.

Top 10 logistics companies in India

Here is a list of the top 10 logistics companies that can help traders transport their products.

  • Blue Dart Express Ltd: Blue Dart offers a range of services including transportation of products that have temperature-controlled logistics needs.
  • Gati Ltd: It is one of the well-known logistics and supply chain solutions providers in the country. The range of offers includes express distribution, warehousing, e-commerce logistics, and freight forwarding.
  • Allcargo Logistics: It is also a homegrown logistics company that has diversified into a range of service including logistics park, contract logistics, project logistics, and so on.
  • DHL Express India: DHL is a global giant in logistics which has a wide network in India too. The company has a presence in more than 200 countries, which makes it a preferable and reliable partner for any import-export business.
  • DTDC Express Ltd: Popularly known as DTDC, it is one of the largest logistics companies in India. It offers an array of logistics services including freight and e-commerce logistics solutions.
  • Safexpress Pvt Ltd: It is a logistics and supply chain solutions provider. The company offers logistics services including consultancy, warehouse management, reverse logistics, e-commerce shipping, tailormade logistics solutions, etc.
  • Mahindra Logistics Ltd: A subsidiary of the Mahindra Group offers supply chain solutions including end-to-end supply chain solutions, 3PL services, last-mile delivery, transportation, warehousing and distribution.
  • Delhivery Pvt Ltd: Delhivery is one of the rapidly growing logistics companies in India. Although it mainly serves the e-commerce industry it also offers traders services such as last-mile delivery, warehousing, and supply chain solutions.
  • TVS Logistics Services Ltd: Belonging to the TVS Group, the company extensively uses digital technology to provide end-to-end logistics solutions. The range of services includes transportation, warehousing, distribution, sourcing and procurement support, and so on.

Also read: Single logistics law: New law for logistics, check impacts

Concluding remarks

The success of a trading business relies on the efficiency of logistics as multiple aspects like compliance, customer satisfaction, etc., are linked to it. Therefore, one needs to be careful while choosing the right logistics partner. Firstly, you can outline your needs and accordingly explore logistics companies suing your requirements.