Shipping Logistics: Complete Guide to Optimization in 2025

Online shopping isn’t new, but the number of businesses opening e-commerce stores and consumers shopping online has increased dramatically since the pandemic. Globally, there were 2.14 billion digital consumers as of 2021. That’s 27.6% of the global population of 7.74 billion. More than one out of every four people you encounter shops online, emphasizing the importance of efficient logistics services.

According to Morgan Stanley, the e-commerce market is forecast to grow from $3.3 trillion to $5.4 trillion by 2026. While the e-commerce and logistics services industry is booming, delivering a memorable brand experience has become more challenging

As a result, investing in shipping logistics management or supply chain management for better customer satisfaction with lower costs is crucial for improving the bottom line. Here, we will discuss the definition of shipping logistics and how to optimize your shipping and logistics process.

Understanding Shipping Logistics

Shipping logistics is an integral part of any supply chain. It encompasses all the activities necessary to move finished items through your supply chain, from first-mile deliveries to final customer shipments.

Shipping logistics depend on several factors, including carrier alliances and freight shipping. You’ll also need to consider procurement logistics, which involves getting the right products at the right time and price. Regarding shipping logistics, the distance between where you keep your goods (distribution centers) and where most of your customers reside is essential.

Core Components of Shipping Logistics

Shipping logistics comprises several processes and systems that help simplify the movement of goods from origin to destination.

Here are the key components involved.

1. Transportation Management

Transportation forms the foundation of logistics and involves moving goods using different modes of transportation, such as road, rail, or sea. 

Transportation management includes activities such as route planning, selection of transportation means, and shipment consolidation. The ultimate aim of transportation management is to enhance your delivery efficiency and minimize costs. 

2. Warehouse management

Warehouse management comprises all the activities involved in managing day-to-day warehouse operations, including receiving, storing, and dispatching goods efficiently. 

3. Inventory management

This component deals with tracking inventory levels so you can meet customers’ expectations. For this, businesses forecast future needs based on historical patterns, monitor current levels, and order products accordingly to avoid under/overstocking. 

4. Packaging

This is another crucial component that involves packing products to ensure they are not damaged and stay safe or intact. Proper packaging is also essential to maximize the utilization of the available space and reduce shipping costs while meeting safety standards.

Types of Shipping Logistics Systems

You must understand shipping logistics if you’re an operations manager, which means you are in charge of a business. There are mainly three types of shipping logistics: 

There are three main types: 

1. Inbound shipping logistics
2. Outbound shipping logistics
3. Reverse shipping logistics

Each has a specific role to play in logistics management. It’s not always easy to track what’s happening in your supply chain, especially if you have a lot of products being produced or sold.

The warehouse management system controls the entire supply chain process, from the fulfillment centers to the customer’s address. In other words, it involves organizing and carrying out procedures to deliver products and services to your clients from the point of production.

Now, let’s take a closer look at each type of logistics and how they influence overall logistics operations.

1. Inbound Logistics Management

Inbound logistics means all the activities involved in receiving goods or materials at a company’s facilities. For example, a company that manufactures products may need to receive raw materials from suppliers or finished goods from another company.

Best practices for receiving

• The first step is designating a space as your receiving area, followed by cleaning, organizing, and making it clutter-free. This is crucial to simplify receiving and inspection of incoming goods. 
• The second step is verifying the inventory you receive to ensure that ordered goods are in the optimal condition and desired quantity. Based on your cargo type, you can consider matching the quantity, description, and weight of goods received with what you ordered to identify discrepancies.
• Once your verification is complete, update your inventory to reflect updated items in your inventory. 
• Group similar items, label them, and use barcode labels, tags, or scanners to identify desired products as needed and make your inventory organization easier. 
• Put away your received items in your designated locations. Ensure you have a clear and organized space to find products more easily and minimize stockouts. 

Inventory control systems

• FIFO and LIFO: These methods are used in organizing goods in a warehouse based on their value. First-in-First Out means the goods you add to the inventory will be sold first. On the contrary, Last-in-First-Out assumes that the goods you add to the inventory last will be out for sale first. 
• Minimum and Maximum levels: This involves setting the minimum and maximum stock levels at any specific point in time. 
• Just-in-time inventory: This method involves procuring raw materials from suppliers as and when the need arises or based on the production schedule. This method is effective in decreasing unwanted waste as all the raw materials are almost fully utilized in manufacturing goods. 
• Fixed order quantity: This method involves ordering only a certain quantity of products at a given time. However, various issues such as storage space constraints and reordering mistakes can occur in this method, if implemented manually. 
• Fixed Period Ordering: In a fixed period ordering rule, you link the replenishment of specific items to a particular interval. In this case, the order quantity is always different to compensate for customer demand.

2. Outbound logistics systems

Outbound logistics refers to all the activities involved in shipping goods or materials out of a company’s facilities, such as freight shipping. For example, if a company that manufactures products ships its finished goods to retailers and wholesalers, this activity would fall under outbound logistics.

Order fulfillment promises

• Place the products in high demand near human or robot pickers and packers so picking times are improved. On the other hand, you can place the products in low demand or very less frequently ordered can be kept at the back of your warehouse. 
• Plan a shipping backup strategy so you can switch to another carrier in case your carriers raise their prices instantly, leading to a failure to acquire your margins.
• Another tactic is the automation of tasks such as sorting, picking, and packing your customers which can help save labor costs, enhance working conditions, and make operations safer. 

Last-mile delivery optimization

Last-mile delivery optimization is the combination of all the processes involved in maximizing the efficiency of the last stage of a product’s delivery journey. 

Some of these processes include: 

• Route optimization, 
• Predictive analytics in logistics 
• Order tracking, 
• Using drones, unmanned aerial vehicles (UAVs), or micro-fulfillment centers
• Smart locker systems
• Electronic proof of delivery 
• Using sustainable delivery practices
• Driver recruitment and training 

All these together are intended to boost your last-mile delivery efficiency.

3. Reverse logistics handling

The Reverse logistics process involves receiving returned goods or materials back into a company’s facilities after being used by customers or sold by retailers/wholesalers. It covers everything from collecting returned items at retail stores to inspecting them for damage before they are sold on auction sites.

Shipping vs. Logistics 

You’re probably familiar with both shipping and logistics, but little you may know about their differences. Shipping is the process of transporting goods and/or materials between locations, while logistics is a broader term that is an overall process of managing an extensive operation.

Of course, while shipping is restricted to goods transportation, logistics could be used in hospitals to manage patients or pharmaceutical delivery to deliver medicines.

Modern Shipping Logistics Optimization

Abandoned carts are a huge problem for the shipping industry and the companies that sell online. 

50% of customers who add an item to their shopping cart will abandon it if the appropriate shipping options aren’t available. You’re losing a lot of potential business there! Many factors contribute to this problem—rising freight costs, disrupted supply chains, and expanding competition.

Regardless of the cause, the solution remains: understand customer expectations and optimize your order processing and shipping logistics processes to run a successful business. Here are steps to optimize your shipping process.

Technology integration

Route optimization software

Implementing route optimization software can help you create routes based on time windows, priority, drivers’ shifts, vehicle capacity specifics, and special handling instructions. 

This helps you create the most efficient delivery routes that reduce the distance and time spent on the road, thereby minimizing fuel costs and maintenance costs associated with that.  

Real-time tracking systems

When a customer places an order, you want to ensure that they are always informed about the status of their shipment, whether it’s delayed or a change in the delivery date. 

This way, they can rest assured that their package will arrive when it’s supposed to and that you are handling the shipping and logistics process for them. By sending notifications, you will get:

• Less hassles about managing shipments
• fewer complaints from customers who haven’t received their shipped packages on time, 
• Extra time to participate in business strategy and analyze driver performance.

Cost reduction strategies

1. Create your shipping regulations

Your clients should be able to find information about delivery options quickly. Your e-commerce shipping workflow must run smoothly and allow you to keep your promises. 

For example, it is better not to offer fast international shipments if you have not already turned to a reliable third-party logistics provider. Another example is free shipping; you should always check that it does not cost you much due to surcharges and unexpected carrier rates.

2. Carrier selection methods

As a business owner, you know how important it is to get your products to customers quickly. Major shipping services, including USPS, UPS, FedEx, and DHL, have their strengths and weaknesses. As a result, these shipping logistics companies are making it difficult for businesses to choose a shipping carrier for order fulfillment.

One of the first things you need to do is determine your customer’s type. Some customers are willing to wait longer for delivery in exchange for lower prices, while others want their products delivered as soon as possible at all costs. 

Once you have figured it out, choosing a shipping carrier that matches the needs of your company and your customer base will be easier.

3. Inventory distribution tips

Have you ever wondered why customers are happy to wait a week for shipped items to arrive but will get annoyed if it’s only two days late? Customers expect the shipped items to arrive on time when ordering. And when it doesn’t, that can be a big problem.

Your order processing and shipping logistics are strongly impacted by how you distribute your product. By holding your products in multiple fulfillment centers to your customers, a distributed inventory strategy enables you to cut down on shipping expenses and transit times.

Inventory distribution makes ground shipping operations the most efficient way to ship products to their destinations.

4. Enable multiple shipping options

With the rise of e-commerce and the increasingly hectic lifestyles of modern consumers, it’s more important than ever to offer a variety of shipping choices during checkout. A State of Shipping Report 2022 revealed that 62% of shoppers expect free shipping orders to arrive within three business days. 

Modern customers want to receive their orders quickly, and they want them to arrive quickly so they can return to their hectic lives. Therefore, you need to consider this step to optimize the shipping logistics process. 

This would allow customers to live stress-free and enjoy a hectic lifestyle. You deliver shipments that arrive instantly at the final destination.

What Are The Challenges of Shipping Logistics? 

Shipping and logistics management can be challenging if it’s not done correctly. As markets become more dynamic and supply chains become longer and more complex, competitors are increasingly everywhere.

74% of consumers are at least somewhat likely to buy solely based on their experiences.

Developing a solid shipping logistics strategy requires a lot of consideration of shipping needs. It is challenging because the rise of on-demand logistics influences many changes within a typical eCommerce supply chain.

While handling shipping logistics, you will encounter the following challenges:

1. Finding delivery routes manually

Manually choosing delivery routes can be time-consuming and stressful. Not only do you have to take the time to plan out each route, but you also need to decide which packages go where. This means hours of decision-making, which can easily delay your shipments and cause you to miss deadlines.

2. Less chance of timely deliveries

As a business owner, you’re responsible for ensuring that your customers receive their deliveries on time. Delayed delivery is terrible for your business because it annoys customers and makes them less likely to purchase from you again.

Late delivery disappoints customers, and that’s not good for your business. As a result, they will be less likely to return to you again.

3. More attempted delivery

Delivery failure is one of the biggest challenges in shipping logistics solutions. You might not be able to deliver the shipment because of the customer’s unavailability, but it costs you more as a business.

You may encounter this issue when your customer’s address is incomplete or incorrect or you do not have their phone number. It can also happen when bad weather prevents you from getting to the delivery address.

4. Difficult to deal with increased demands

One of the major challenges in managing shipping orders is fulfilling demand surges. Do not expect the demand to be stable; it’s bound to fluctuate (with seasons). Not being prepared means you will have to hire or spend more time and money on manual resource planning each time there’s a surge in demand. And a business meaning to be successful can’t afford that.

Optimize Your Shipping And Logistics Service With Upper 

Whether you run a small business or large-size delivery services, Upper can help you improve the efficiency of your daily delivery operations.

Upper’s route planning and optimization software for shipping logistics is excellent for logistics services and can relieve the stress of route planning. With Upper, businesses like yours save 10 hours per week, improve efficiency, and get more deliveries done on time.

• With Upper’s optimized delivery routes, you will consistently deliver your shipments on time and eliminate all delayed deliveries. The route planning and optimization software helps your drivers choose the shortest routes based on their specific delivery constraints, such as driving preferences, time windows, and more.
• The dispatcher can assign a priority level of low, medium, or high to your shipments to ensure urgent and time-sensitive shipments are never delayed. To help your drivers handle their work more effectively, you may add several stops and details like service time, priorities, or other notes.
• Reduced failed deliveries as Upper notifies customers of their delivery’s ETA, so your drivers don’t have to visit the same customers multiple times. Customers will be present at the location because they have been informed and expect delivery. 
• Upper helps you effectively deal with surges in demand. With its efficient route planning and optimization, your drivers will deliver more, thereby accommodating more deliveries daily. More space and time for deliveries mean you don’t have to hire more resources, do manual resource planning, or make your drivers work overtime to fulfill more deliveries. 

You’ll, thus, be able to deal with demand fluctuations more easily. Sign up for Upper Route Planner’s 7 days free trial today.

Conclusion 

With more and more people shopping online, it’s essential to have a shipping logistics management and supply chain management strategy in place. Successful shipping logistics providers (including third-party logistics) meet customer expectations and reduce shipping costs as well as transit times.

The customer’s delivery experience is just as necessary as the product they purchase. If you don’t provide them with a good experience, they won’t return to your store.

But you can turn the tables using Upper and make shipping and logistics management hassle-free. A route planner can help you deliver on time so that your customers are satisfied and you achieve desired business productivity.