The Challenges of Today Logistic

The vigorousness of business globalization has activated the growth of logistic business. World wide entrepreneurs are seeking the faster, cheapest and more secure transportation and logistic ways to deliver their products to the users located in another side of the world. If you make a search in www.logisticsworld.com 's directory, there are 1,888 links displayed.
Since many companies had been setting up, urging to share portion of the cake, the core business of logistic has became more competitive and challenging. Here are some of the challenges I think are given the most impact to the shipping industry.

1. High Operation Cost due to Speculative Hike of Crude Oil.

The speculative hike of crude oil price in the world market had given a big impact to transportation cost. The price had once hit over USD 145/barrel, even though now is slightly dropped to USD 114/barrel. Most of the liner would try to absorb part of the burden to maitain competitive position. However, importers and exporters are still suffering from the additional cost.

2. Outstanding Services -- SPEED and Ability.

For certain consumer products, especially the electronic products, the new technology was introduced and published rapidly. Old models can be obsoleted very fast, means the life cycle of these products become very short. Thus, it is a NEED to minimize the transaction time of these products from manufacturers to the targeted market. This implemented to the raw materials also. Thus, in order to achieve the effectiveness of SPEED, logistic has became the main factor to look into. Those who is able provide the faster and cheapest solution, he will be the winner, sharing the large portion of the cake. Dare to remind that those intransit cargo either in the ocean or keeping in the port are devil operation to the exporters and importers. It's idle time. Therefore, an excel forwarder can minimize these idle time, and speed up the operation through below activities.

• Proper Channel of Communication and Information. The forwarder must be informative to all the shipping schedule from various liners in the desire region or route, and able to prepare or find the optimize schedule to their customer. Flexibility to reallocate if any unschedule interruption taken place. For example, vssel delay, vessel omit the requested port, bad weather, and etc.
• Custom clearance. Essential documents and good relationship with custom will help to accelerate the process. 1 or half day advance clearance would mean a lot to the importers.
• Prompt reaction to unpredictable issue like road accident, hijacking, incomplete documents, contract expire, etc. Take road accident as an example, if a container was falled and the quality of the cargo are assumed to be affected. Sending back to exporter for retesting and insurance claiming procedure need to be carried out. The prompt reaction to these activities could ensure the good cargo (after retesting) being released back to the market earlier.

3. Availability of Shipping Equipments

Equipments are the most valuable assets to liners. Hugh numbers of equipment need to be assigned from one destination to another. Insufficient or not proper managing your equipments might cause you losing your competitive position in fast moving logistic line. That's why an additional charges (demurrage charge) will incur to those failed to return the container. And most liners also unwilling to share their equipments with each other, especially for limited equipment like reefer container (container which equips with temperature control).

4. Intangible Cost

Some shipments were not fully utilized the container space due to order quantity limitation. The extra space inside the container will become a waste and these cost will be equally absorb by the cargo, and indirectly increased the shipping cost per piece of product. Thus, many exporters if possible will try to use smaller container ( 20' in stead of 40' ), or combine the orders in one shipment, or arrange with LCL (Loose Cargo Load) in stead of full load. For long run cost saving, exporters might would like to redesign and improve their packing method to maximize the usage of container space.

I believe there are more challenging factors out there that I didn't describe here. If you are in this line, welcome to comment.

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