Being competitive is “much more” than reducing costs. Optimizing expenses can allow businesses to design more efficient logistics operations capable of contributing to the success of international trade. But in today’s hyper-connected world, where more and more of the variables that make competitiveness tend to be commoditized, to be a standard, the path of competitiveness is to add value. Randall Castillo Ortega, a seasoned business owner and expert in global trade, explains how logistics competitiveness impacts foreign trade.
If we share fuel prices, workers’ wages, computer systems and must circulate or use the same infrastructure, how can we be more competitive? The answer is to add value, understanding the needs of the loads and their global context, being creative and prioritizing excellence in communication. Competition, always healthy, also innovates.
“To contextualize the relationship between logistics and foreign trade,” explains Castillo, “you have to understand what logistics means. It is a process of implementation and control of efficiency over the flow of goods from one place to another. Making an analogy with an importing, exporting and/or producing company, the board is the brain of the company and logistics is the heart. The logistics is to make things happen.”
As for its link with foreign trade, If logistics really manages to be competitive, dynamic and efficient, it will have an impact on the international trade multiplier in operations, creating new forms of trade, just as is currently happening in eCommerce. Through which, for example, a rural producer can, through a website, an international transport and a Logistics Hub, offer its products in the largest centers of consumption, such as Shanghai and Dubai.
Currently, international trade depends a lot on logistics competitiveness, and any sufficiently strong logistics agent can immensely affect its dynamics in a positive or negative way. Logistics competitiveness is important both for the company, whose operations depend on the proper functioning of the supply chain, and for the customer, for whom more and more traceable, reliable and fast logistics is becoming a differentiating element and an essential added value.
Logistics is a fundamental leg of foreign trade business. Even the best business can be ruined if it does not have a good logistics coordination and without an adequate negotiation of tariffs. In this regard, it is a complete and fundamental relationship, where the development of infrastructure and logistics services plays a priority and crucial role in relation to the international trade operations of nations.
When analyzing the competitiveness of logistics operations linked to international trade, it must be done in an integral way. That is, to contemplate the complete logistic flow, including not only the physical movement of the goods from one point to another, but also the customs treatment and the procedures of the different agencies that intervene in the activities that make the operation itself concrete. At this point, the greatest weakness is presented.
Beyond the infrastructures and global conditions, without a doubt, the management of logistics operations is also a possibility to add value and competitiveness to international trade. “The supply chain is the backbone of any company, and logistics is becoming an important differentiator for the customer and also for the consumer,” asserts Castillo.
In the past, the management of operations was summarized in carrying out the activity of the company. Then, we started to include concepts such as process optimization and cost savings. Today, it is no longer just a matter of optimizing while maintaining quality levels to save, but every time. Logistics generates more value for the product or service.
Today, it is essential to have logistics processes that provide security and transparency to operations. Without a doubt, these are aspects highly valued by shippers and customers.
There are three basic points when it comes to managing logistics operations: the review of costs as a usual exercise; strengthening relationships with strategic suppliers as an element of cohesion; and the analysis of the unitarization of cargo: how to transport more merchandise having the same logistics costs.
In an increasingly globalized and interconnected world, where consumers demand immediacy, the main aspects that allow adding value to consumers and competitiveness to operations are improvements in traffic management, shortening the transport times of materials and improvements in communication management. This is in order to evidence, sincerely and energize the information, making it available to everyone in an agile and easy-to-read way.