In markets with unpredictable logistics questions, automation can help businesses find the answer
Yet as they race to add customers, build sales and boost revenues abroad, many companies are putting potential profits in jeopardy by entering new markets without a solid plan for managing their global shipping and logistics operations.
As some organizations are learning the hard way, the key to running a global logistics operation profitably is being fully prepared to face – and rapidly resolve – a wide range of market-specific complexities. Beyond easily anticipated roadblocks like translating language and converting currency, many nations present unique and unpredictable logistics challenges.
Few, if any, nations exemplify the complexity of global logistics more than China, where despite the government’s recent progress in improving the nation’s logistics environment, shipping goods into and out from its borders remains a convoluted and costly process. Why? The reasons are many:
- With nine ministries and commissions overseeing logistics, companies shipping goods across the country face numerous, complex and frequently conflicting rules and regulations
- Most of China’s warehouses, shipping yards and cargo hubs are outdated and lack automation
- With the Chinese Communist Party holding what Fortune described as “ultimate control over the Internet and the IT business environment,” foreign companies typically struggle to flow logistics data in and out of the nation
- More than 700,000 trucking operators, most of which are small independents, do business there
- Local protectionism and corruption are more often the rule than the exception
- Large trucks are restricted from some urban areas, forcing shipments to be transferred to smaller vehicles
Offsetting its many unique logistics challenges, China offers a host of equally distinctive business opportunities. For example, the new Shanghai Free Trade Zone, launched in 2013, dramatically widened the nation’s door for inbound and outbound trade. As a result, international shipments may now be transferred in Shanghai, rather than having to go to Incheon or other ports for transfer, and foreign vessels are able to ship domestically from Shanghai to other China ports. The following year, the government announced a six-year plan aimed at lowering logistics costs, and they continue to invest significantly toward improving infrastructure, particularly the railway system.
What does all this mean for companies looking to establish logistics operations in China? Some headaches, for sure, but far more opportunities. Automated transportation management technology can be a significant enabler to mitigate the former and maximize the latter.
In fact, in many emerging omni-channel markets across the world, automated technology is helping companies successfully manage market-specific issues by:
- Providing full visibility into all facets of their shipping and operations, which enables them to rapidly identify potential headaches, analyze their root causes and take steps to correct them.
- Optimizing route planning. Algorithms applied to every order help mitigate issues like driver shortages and increased road congestion. By examining shipping orders for variables such as order size, type and destination and combining them with local variables like street restrictions (one way, no trucks over a certain size, etc.) and fees (tolls, border taxes, etc.), companies can determine optimal carriers, fleet types and routes. As a result, their route-planning efficiency skyrockets, their freight costs plummet, and their carbon footprint shrinks.
- Providing better control of operational and cost-related shipping variables, without increasing staff workload or responsibilities by responding to complex problems with more informed decision making.
- Enabling them to forge strong relationships with their key shipping partners across the world. With cloud-based technology, all parties have easy, 24/7 access to online communication. The technology’s rapid auditing and invoice settlement features help preserve collaborative partnerships with carriers and vendors.
- Helping them tackle complex regulatory compliance issues. Automated systems can be customized to meet different reporting requirements. Certain technologies have the tools to automate and audit processes to ensure compliance with in-country rules and regulations, as well as cross-border customs requirements.
Clearly, automated technology can be a game-changer for companies looking to successfully navigate through market-specific shipping and logistics challenges.
Yet, companies must understand that not all automated systems are the same. In fact, of the five levels of transportation management systems (TMS) on the market today, only Level 5 TMS focuses on tackling the unique and unpredictable business challenges that inevitably crop up while companies expand their global shipping and logistics operations.
“From an omni-channel standpoint, TMS users are seeing better year-over-year growth in both revenues (8.7% vs 7.3%) and margins (7.3% vs. 6.1%). Margins are especially important when looking at the role transportation plays in overall costs. Additionally, TMS users are outperforming their peers in terms of on-time order fulfillment (92% vs. 87%).”
Those kind of numbers speak for themselves – and companies looking to make gains abroad would be wise to listen.
Ken Fleming is CEO of Eyefreight, a leading TMS provider. Contact Eyefreight at email@example.com