Logistics Issues You Need to Know for Global Trade

Date posted: September 4, 2017

global trade

By Jonathan Furman

International trade is a lucrative prospect for any company, big or small. But, global trade brings with it a whole set of problems and concerns.

Logistics plays an integral role in the world of foreign trade. Right from raw material procurement to door-delivery of the product, logistics permeates every stage of business. It is imperative for firms to have a well-oiled and smooth functioning logistics system in order to ensure business success.

Common issues in international logistics

Logistics suffers from multiple issues, some of which are common to all business functions and others which are completely unique to some. Here is a list of problems that you need to watch out for while entering the world of global trade:

Lack of infrastructure

By infrastructure, we talk of everything right from technology to storage facilities. Sometimes companies may lack the software necessary to track global shipments. Other times, companies may not have access to state-of-the-art repair and service facilities. High-capacity vessels and containers may be a distant reality for many companies.

Companies can choose to use state-owned facilities or lease out the facilities provided by partner firms or third-party logistics providers. This will ensure that they don’t lock their finances in capital investments.

Underutilization and overutilization of capacity

Capacity utilization depends predominantly on the demand and production capacity of a company. Most times when companies are unable to estimate their demand-supply requirements, they end up over-utilizing or underutilizing their capacity. Correct estimation of figures can help avoid this.

Capacity mismanagement also depends on whether the company can afford a container or a vessel of a particular capacity and whether it is available in their country or not.

Safety and security

International trade involves the movement of goods from one party to another. Manufacturers cannot control the safety of the goods at all times. Excessive handling can damage goods by the time they reach the final consumer.

To protect their products from these risks, companies often work with their partners and take an insurance cover for their products right from the manufacturing stage to delivery of goods. By sharing the insurance responsibility, companies can reduce the risks they are exposing themselves to.

Connectivity

Some markets are geographically located in ‘hard to reach’ places. Right from poor roads to terrains accessible only on foot, connectivity issues are some of the most pressing concerns in the world of global trade.

Companies can hire local people to take care of the final leg of the logistics. Locals will be knowledgeable about the best pathways, shortcuts, and safer roads. This will help companies ensure that the products reach the end consumer safely and on time.

Changing global trade regulations

Global trade is subject to multiple global regulations and foreign laws. Companies need to be updated on the latest developments in the legal framework of the countries they are trading with. This will ensure that they follow all the legal regulations.

 

Jonathan Furman got his start through an Advertising agency. He began in the production department and Jonathan has founded his own management consulting firm A.K.A. Furman Transformation, igniting his full passion in transforming all aspects of a company’s Sales, Marketing, and Operational Growth strategies, into the most powerful and polished version of themselves. http://www.furmantransformation.com

 

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