by Merlin Hernandez

Shipping is a vital component to logistics and supply chain management. With the rising strategic importance of global sourcing and international marketing, logistics planning has become a strategic priority. Shipping has thus assumed greater importance in the external environment with the globalization of commerce. The Internet has sped up communication and supported ease of information transmission for documentation and confirmations. Huge challenges remain, however, in delivery times, language and cultural differences, infrastructural capability (bureaucracies, roads), costs, payment methods, and currency exchange rates. Differences in legal systems and international laws can also influence import-export restrictions, duties, and tariffs that exist between and among countries.

Shipping and other logistics costs now account for more than 10% of sales revenues and are beginning to erode the economic advantage of operating internationally. This is fueled by the complexity of this aspect of business operations for which many companies do not have the expertise. Additionally, prior to going global, many large companies have had fragmented internal logistics that are siloed by brand or department. An overall enterprise-wide strategic approach to logistics management and greater attention to logistics planning may be indicated. The advantages are better management of economies of scale through improved consolidation and broader-based decision-making. This will be more readily achieved in a flatter organization with enhanced functional integration for more efficient procurement and order delivery. But even without any organizational re-structuring, a single shipping department can go a long way to leverage cost savings across the range of shipping needs.

Businesses seeking the advantages of global sourcing or to tap into lucrative international markets would find it especially useful to establish a long term relationship with a professional shipping firm like an international shipping broker or freight forwarder to help navigate the complex channels and legal requirements. This is especially beneficial to small businesses.