What is a Modal Split in E-commerce?
A modal split in e-commerce logistics is the percentage of goods transported by different modes of transportation. At any given time, different modes of transportation may be used in varying proportions. In addition to the nature of the goods and their destinations, transportation modes are chosen based on a variety of factors, including costs, destinations, capacities, and frequencies.
Significance of Modal Split in E-commerce Logistics
A modal split is an important tool in e-commerce logistics as it helps to ensure that goods are shipped in the most cost-effective and efficient way. The significance of modal split includes –
- By evaluating the different transportation options available and determining the best combination of modes that will meet the delivery requirements, companies can optimize their logistics operations.
- This can lead to lower costs, improved customer service, and increased profitability.
- Modal split helps to reduce environmental impacts by selecting the most sustainable transportation options available.
Prerequisites to Calculate Modal Split and How It Works
The following prerequisites are needed to calculate the modal split in e-commerce logistics:
1. A detailed understanding of the e-commerce logistics operations. This includes understanding the different types of delivery methods, the number of packages being shipped, the types of carriers used, and the geographical areas served.
2. Access to the necessary data sources and tools to analyze the data and create models. This includes understanding the type of data needed, the types of software used, and the expertise needed to create and interpret the models.
3. A comprehensive understanding of the different types of transportation modes used in e-commerce logistics.
4. The ability to create accurate models to calculate the modal split for each transportation mode. This includes understanding the time, cost, and environmental impacts associated with each mode.
Use Case With Modal Split
For example, a business ABC needs to transport an emergency order within a small delivery window from Australia to the Philippines. Using a modal split, 30% of goods are transported by air, 50% by ground, and 20% by sea. With this, ABC was successful in delivering the entire order within the stipulated time frame.