3 challenges to expand your logistics internationally
Do you know that many businesses face loss due to inefficiency to meet customers demand on time? The most efficient way to retain a customer could not be anything but to stand on the customer’s expectations & meeting their demands on time.
As the business at global level continues to grow, the hurdles for the logistics industry also increase. The various impediments in expanding the logistic channel includes Fuel cost, carrier capacity, hostile territories, shortage of drivers, governmental regulations etc.
One of the main components of logistics industry is transportation & that too seems to be under distressing conditions. The pressure to increase the speed & consistency of freight delivery continues to grow with ever increasing demand of fast delivery.
Transportation barrier & inept implementation of technology
According to a survey by PwC, 50% of the commercial transportation companies think that lack of digital culture & training in the company would probably make any innovation attempt fail. The dearth of digitalization in the transportation industry is also a contributing factor in slowdown being faced by logistics industry. The rudimentary ways of operations in the transportation industry had been perpetuated for a long time and contributed in more loss. There are many reasons for transportation companies to avoid digitalization but they are nothing in comparison to the success achieved by the competitors.
Another major concern of the logistics industry is to deliver the goods in ‘as is’ condition to the customers. One of the main reasons for the concern is ever increasing load on ocean shipping & domestic shipping both. The three largest container carriers — Maersk, MSC and CMA CGM — have order capacity equal to 15.6 percent of their current combined fleet & the next 18 largest carriers have orders equal to 19.8 percent of their existing fleet.
Unavailability of proper labor, standardized packaging and warehousing
It becomes immensely challenging for shipping companies to hire/recruit trained & qualified personnel who is fit for the job. In addition to it, the attrition rate of such employees is also high in the logistics industry. The cause of this high attrition rate of employees can be attributed to ever changing environments of the logistics industry too. Another reason contributing to workforce crunch faced by the logistics & transportation industry is the remuneration being offered to the employees in this sector. The logistics industry does not look much enticing as compared to other industries to allure youngsters. The regulations & tightening of laws for the transportation industries is also one of the major factors for the workforce crunch.
With the arrival of giant E-commerce companies like amazon, Alibaba, the whole e-commerce industry & its various wings have gone into radical transformation. Now, the customers have instant access to the products they want to buy. The fast & doorstep delivery option being offered by these giant companies have undoubtedly acquired more & trusted customers for them but it has also increased the load on logistics partners. The packages from these platforms are of diverse sizes & contains both fragile & non-fragile items. The handling of such non-standard packages is causing more error rates & time expenditure.
Utilization of the available capacity in warehouse & transportation plays a greater part. The rental fee for the warehouse will not be less if only one-third of the available space was used due to inadequate ill-devised plan for placement for goods. Some major problems may also arise from the inadequate information about the stocks. Inadequate quantity of a product might lead to delayed delivery services while excessive quantity of product will increase inventory carrying costs & reduced prices of product to increase sales.
Regional barriers & Governmental regulations
Various regional barriers pertaining to the logistics industry includes hostile territories, inaccessible locations, weather conditions, cultural differences etc. The various hindrances faced by logistics companies in developing countries include unstable economies, shifting politics & lack of basic infrastructure for expansion of business. Now, the indispensable question in front of these companies is whether they should play locally or expand their business globally by making such a strategy to succeed in those highly unpredictable & individually unique markets?
As per the website of the “French Ministry for the Ecological and Inclusive Transition”, outside companies that are not registered in France are not allowed to perform more than 3 cabotage operation within 7 days span. These regulations place restrictions on prime contractors and drivers, and thus negatively impact the expansion of logistics channel internationally.
The location and its climatic conditions also play a significant role in making the area serviceable by logistics companies. Serving is such areas may incur unanticipated costs arising due to difficult terrain, hostile environments etc. Another major factor in expanding the logistics internationally is the regulatory restrictions & laws. The laws of different countries are also affecting the swift movement of freights across regions.
The possibility of implementation of technology in the logistics industry is still enough. Application of automation & real-time updates about inventory of any given location will surely improve business sales & customer satisfaction. Identifying issues related to transportation like increased prices of fuel, wear & tear cost of vehicles will surely help in addressing them effectively. Companies like Amazon are adapting to change by going one step ahead. They are incorporating Robotics & Drone Technology in warehouses to immensely increase the efficiency without spending any extra penny.
Use of robotic manpower machines in sorting the incoming & outgoing packages will improve the inventory management. It is not feasible to keep employees (with decision making & intervention rights) acquainted with all the steps involved in the logistics process. Whereas, it’ll be better to provide relevant information about the movement of packages by sending them alerts & notification.
In order to stay effective & efficient continuous assessment & redesigns are needed. At last, logistics or any such business (for that matter) would only survive if it is adaptable to change. As Charles Darwin says “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”.