GRIIT spoke with logistics experts from BGI Worldwide Logistics regarding the impact of automation and e-commerce on the industry. They shared information as to how the industry is changing and what this means for importers and exporters. Find out what BGI had to say below.
How has the industry been impacted by automation, especially in terms of employment and business practices?
The logistics industry is continuously evolving to meet the demands of the changing marketplace. Companies are investing in advanced technology platforms and systems to handle the online retail boom with speed-to-market and the customer service experience becoming a major factor in company success. Organizations have had to quickly adapt by upgrading or implementing warehouse management systems to improve operations efficiency and flexibility, and by hiring employees with the technological training, education, and soft skills to meet the new demands. Logistics companies must continue to innovate and adapt to changes in the market in order to remain relevant.
How does e-commerce impact the cost of transporting a good overseas?
The cost of transporting e-commerce goods overseas largely depends on the country of origin, mode of transportation, and the product category. Both direct and indirect costs such as shipping time, regulatory costs and delays, and infrastructure should be taken into account. The lack of an integrated e-commerce transportation, services, and supply chain infrastructure has forced many companies to rely on air transportation for time-sensitive products like consumer electronics and fashion items. This mode of shipping goods overseas, however, is expensive and impractical for most e-commerce products. For less time-sensitive products, many companies have begun to establish a forward inventory system in order to have their goods strategically placed close to their target markets or consumers. This supply chain model is a more cost-effective and efficient system with better integration with the e-commerce logistics process. It also allows for the slower but less expensive mode of ocean freight shipping to be used reducing overall cost. The continued upsurge of e-commerce shipping with Amazon acting as the driving force of online sales growth has triggered a shift towards developing a logistics and supply chain infrastructure that will better support this burgeoning market, and eventually help to reduce the cost of transporting goods internationally for online sales.
With the entry of players, such as Amazon and Alibaba, what do you see as the future of the industry?
E-commerce companies such as Amazon and Alibaba have definitely impacted the industry. They have a broad reach and have driven down prices in some sectors of the transportation industry. Because of their size, they can negotiate lower pricing for domestic trucking than most other companies. It is reported that Amazon is gearing up to handle more imports for the sellers on their site to offer a complete one-stop shop. They will be able to arrange and handle a shipment from the overseas factory all the way to the Amazon warehouse. This will be extremely attractive to some sellers, including those who are new to Fulfillment by Amazon (FBA) selling and thus know little or nothing about the import process. Even the seasoned seller who does not want to be distracted by the details related to importing goods from overseas would most likely take advantage of this opportunity. This will undoubtedly appeal to a large number of sellers as it would allow them to focus more on selling than on logistics, although, they may place a premium on this service to FBA for the added convenience. It remains to be seen how far Amazon will penetrate the logistics sector, and whether they will undercut the current forwarders in the market.
What should an SME look for in a freight forwarder and customs broker when exporting or importing for the first time?
A Small and Medium-Sized Enterprises (SMEs) should look for the following in a freight forwarder or customs broker, whether exporting or importing for the first time or if they have been in the game for a while. Here are some of the questions an SME should ask:
- Experience: How long has the company been in business? Do they have previous experience in handling shipments to or from the region or destination in question? If your commodity or product has specialized handling requirements, have they handled commodities similar to yours?
- Knowledge: Does the company have the knowledge to ask the right questions?
- Attitude: Does the company treat their clients as just a number, or do they really take an interest in your business and have a desire to see you succeed and profit just as much as you do? Do they work “with” you to come up with solutions to issues your company may be facing in regards to transportation or logistics?
- Corporate Culture: Are you assigned a dedicated representative or is it “luck of the draw” when you call or email? Are the employees enthusiastic about their company? Are they friendly and pleasurable to deal with?
- Remember that you are hiring them for their knowledge and experience, not just price.
Why should I hire a Customs Broker? Can I just import a good and complete the documents myself?
Compliance is the main reason to hire a Licensed Customs Broker (LCB). Customs procedures and policies are very complex and require extensive knowledge of U.S. Customs rules and laws regulating imports. A customs broker’s experience and knowledge is an invaluable resource in helping to avoid potential fines or penalties that could be incurred simply because the importer does not have the latest customs information or knowledge of where to find it. The global political situation is constantly changing and new rules, regulations, and controls may be implemented at any time. Knowing when to file certain documents, or where to find regulations is critical to avoiding shipping delays, impounded cargo, or fines and other unforeseen and potentially detrimental consequences. Working with a LCB ensures that the importer properly declares goods into the country and thoroughly assess all duty and tax payments at the destination. Ultimately, your business and your reputation with your clients and suppliers are at stake, and ensuring international trade compliance requires a level of expertise and resourcefulness that a Licensed Customs Broker is trained for.
What are the challenges with trying to get my product into Latin America? Sub-Saharan Africa? China? (Usually, those interested in the regional markets listed seek information about a specific country in these two regions. Any information based on at least one country in one of the regions or both would be useful.)
Some common challenges when shipping to and from many overseas regions can include:
- Ensuring compliance with origin export and destination import regulations
- Confirming that any destination in-country services required are truly available
- Selecting an experienced logistics service provider
- Ensuring that the destination team is knowledgeable and able to resolve any problems with your shipment efficiently and economically
There are numerous additional country-specific requirements for importing goods. For instance, getting products into Africa, specifically West Africa, many of the countries require loading certificates or Electronic Cargo Tracking Notes (ECTN, BSC or FERI) to be issued in the country of origin. Once issued, the original Loading Certificate is required to be sent to the importer in Africa. The importer then presents this to the customs officials for the clearance process. Without this certificate, the cargo cannot be cleared for entry into the country and the importer will incur penalties or fines. This is typical in many regions of the world. That is why you should hire an experienced and knowledgeable forwarder or broker.
To learn more about BGI Worldwide Logistics, click here.