Logistics FAQ
Frequently asked questions on operational logistics, shipment management, warehousing, last-mile delivery and logistics system integration. Oriented towards developers building AI/RAG applications in the logistics domain.
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What is the difference between logistics and supply chain management?
Logistics is the set of operational activities for the physical movement and storage of goods: transport, warehousing, packaging, picking and delivery. Supply chain management (SCM) is the strategic and inter-organisational discipline coordinating the entire network of suppliers, manufacturers, distributors and customers, including demand management, procurement, production planning and partner relationships. Logistics is, in essence, the operational sub-set of SCM. See the Supply Chain pack for the strategic perspective; this pack focuses on logistics execution.
What distinguishes a carrier from a freight forwarder?
A carrier (vettore) physically executes the transport with its own assets (trucks, aircraft, vessels) and assumes direct responsibility for the goods during transit. A freight forwarder is an intermediary that organises and coordinates transport on behalf of the client, selecting appropriate carriers, managing customs documentation and insurance. Forwarders do not necessarily own transport assets; their liability is contractual towards the principal, typically governed by FIATA Standard Trading Conditions.
How does the hub-and-spoke model work in logistics?
In the hub-and-spoke model, shipments from various origins (spokes) converge on a central node (hub) where they are sorted by destination and reloaded on outbound vehicles headed to destination spokes. This enables scale economies on trunk hauls. The main disadvantage is the additional transit time introduced by the intermediate handling stop. Express couriers and air cargo networks typically use this model globally.
When should I use FTL versus LTL?
FTL (Full Truck Load) is cost-effective when the shipment occupies at least 60-70% of a truck's volume, when complete cargo confidentiality is required, or when rapid transit with no intermediate stops is essential. LTL (groupage) is preferable for shipments under 10 tonnes or 30 m³, where the cost of a full vehicle is not justified. The choice must also consider commodity sensitivity (fragile, hazardous) and acceptable transit times.
How is dimensional (volumetric) weight calculated?
Dimensional weight is calculated as: (length cm × width cm × height cm) / divisor. The divisor varies by mode: 5,000 for air (IATA standard), 4,000-5,000 for express couriers (verify your specific contract), 333 for some sea lanes. If dimensional weight exceeds actual weight, the carrier will charge on dimensional weight. This penalises large, light parcels (e.g., packaging with excessive void fill).
What is OTIF and why does it matter?
OTIF (On Time In Full) measures the percentage of orders delivered both on time and complete. An "On Time" order meets the agreed delivery date/time; "In Full" means all ordered lines and quantities were delivered without exceptions. OTIF is the primary KPI for logistics service level: low OTIF signals capacity, planning or carrier reliability issues and directly impacts customer satisfaction. Industry benchmarks: > 95% for grocery retail, > 98% for automotive JIT supply.
How is a failed delivery attempt managed?
When a courier fails to deliver (consignee absent, address error, refusal), the shipment enters a hold status (giacenza). The carrier notifies the shipper and/or consignee with the failed attempt details and available options: re-delivery with a new agreed date, collection at the carrier depot/pickup point, address correction, or return to sender. Each day in hold may generate additional charges. Proactive pre-delivery notifications (SMS, email) significantly reduce failed first attempts.
What is the difference between a WMS and a TMS?
A WMS (Warehouse Management System) manages operations inside the warehouse: receiving goods, slotting, picking, packing, dispatching and physical inventory. A TMS (Transport Management System) manages the movement of goods between logistics nodes: transport planning, carrier selection, in-transit shipment tracking, freight audit and reporting. The two systems integrate: the WMS signals goods ready for dispatch, and the TMS manages handover to the carrier.
What are Incoterms and why are they critical in international contracts?
Incoterms 2020 (International Commercial Terms) are ICC rules that define, for each term (EXW, FCA, FOB, CIF, DAP, DDP, etc.), who bears transport and insurance costs and at which geographical point the risk of loss or damage transfers from seller to buyer. They are critical because an incorrect choice can leave a transport leg uncovered (no insurance in place), create unexpected costs (import duties borne by the seller under DDP), or lead to legal disputes. The Incoterm must be specified precisely in the contract - not just the term but also the exact named place (e.g., "FCA Milan Malpensa Airport").
How does EU import customs clearance work?
EU import clearance requires: filing the Import Customs Declaration in the national customs IT system (AIDA in Italy, with an MRN generated), paying customs duties calculated on the customs value (CIF value at EU entry point) multiplied by the applicable rate from the EU Common Customs Tariff based on the HS Code, and paying import VAT. The declarant is typically a licensed customs broker. Under the "simplified declaration" procedure (authorised economic operators) goods can be released before formal customs inspection.
What is the cold chain and who certifies it?
The cold chain is the logistics chain maintaining goods at controlled temperature throughout the journey - from production to consumption. Typical ranges: chilled (+2/+8°C), frozen (−18°C or below), GDP-certified pharmaceuticals (+2/+8°C), ultra-low temperature (−80°C for some mRNA vaccines). In the EU, pharmaceutical distribution under temperature control is governed by the GDP Guidelines (EMA). GDP certification is issued by national regulatory authorities following an audit. For food products, HACCP and EU Regulation 852/2004 apply.
How is the cost of an international shipment calculated?
The total cost of an international shipment includes: main freight charge (calculated on weight/volume or per container), fuel surcharge (BAF/YAS for sea, FSC for air), customs duties and broker fees, cargo insurance, origin and destination handling charges (THC - Terminal Handling Charges), possible groupage/deconsolidation fees, and specific surcharges (hazmat, oversize, peak season). The standard estimation tool is a freight quotation or an RFQ (Request for Quotation) sent to a freight forwarder.
How does a TMS perform route optimisation?
A TMS performs route optimisation using algorithms - typically based on the Vehicle Routing Problem (VRP) and its variants - to assign delivery orders to vehicles and calculate the optimal route minimising distance, time or cost. Typical inputs: delivery time windows, vehicle capacities, access restrictions (ZTL, weight limits), pickup and delivery locations. Advanced systems incorporate real-time traffic, mandatory driver rest rules (EU Regulation 561/2006) and intra-day dynamic re-optimisation. VRP-based optimisation typically reduces fleet mileage by 10-25% versus manual planning.
What is reverse logistics and why is it strategic?
Reverse logistics encompasses all logistics flows from the customer to the manufacturer/vendor: product returns, packaging collection for recycling, end-of-life products for disposal. In e-commerce, return rates in fashion can reach 30-40%. Efficient returns management reduces costs (faster restorable merchandise) and improves customer experience. Reverse logistics is also a sustainability requirement under CSRD and Extended Producer Responsibility (EPR) regulations in the EU.
How does a WMS integrate with an ERP system?
WMS-ERP integration typically occurs via REST APIs (for cloud-native, real-time integrations), batch EDI/XML files (for legacy systems), or integration middleware (ESB/iPaaS). Typical flow: the ERP sends sales and purchase orders to the WMS; the WMS executes physical operations (receiving, picking, shipping) and returns movement confirmations to the ERP to update inventory and trigger invoicing/transport documents. Inventory synchronisation is bidirectional and must guarantee transactional consistency.
What are AGVs and how do they integrate with warehouse systems?
AGVs (Automated Guided Vehicles) are self-navigating vehicles that move goods (pallets, totes, containers) within the warehouse without human intervention. They navigate via laser, SLAM or magnetic guides. The WMS assigns movement tasks to AGVs via a Fleet Management System (FMS) that optimises routes and manages the fleet. Integration uses standards such as VDA5050 (for industrial AGV/AMR). They significantly reduce labour costs but require high upfront investment and specialised maintenance.