Wim Harrington, GM iBP China looks at some new moves in global logistics

Today’s cargo industry uses its resilience to face challenges

The footballers, cricketers and sports men and women seen on the fields close to London’s Heathrow Airport every weekend have long been used to the distracting roar of the jet engines on aircraft coming into land.

Noisy yes, but Heathrow and airports like it have long delivered economic advantages to the local area. It’s even likely that some of those seen performing on the nearby fields are also employed by businesses that need to be based close to the airport.

Technology is changing all that…

For example, freight forwarding documentation vital to the smooth movement of air cargo can now be processed just about anywhere in the world. Waybills, shipment registration admin, customs documentation are generated at centralized global admin centres or by offshore outsourcing experts. For progressive forwarders, the back office has moved, the simple reason being valuable cost savings gained.

Freight forwarding remains one of the most volatile industries in the world. Today it faces challenges from reduced profitability, growing competition, unpredictable growth in demand and even a shortage of human resources.

But it’s a very resilient business, with a history of innovation.

IT changes the game

The industry has always adapted to changes in global trade and today it is generating innovative solutions that bring together competitive pricing with excellence in customer service.

IT solutions tailored to the cargo industry have helped deliver service excellence at lower cost via standardization in technology processes, e-transformation of paperwork and admin procedures, while also meeting the needs of a widening audience due to expansion in the express business.

Offshoring documentation and administration allows freight forwarders to process freight invoices at a cost sometimes equivalent to only 10% of previous costs per bill. Compiling import and export data, registering shipments, preparing customs declarations, customer communication on shipment status and final billing are all being processed at lower costs, increasing profitability for forwarders worldwide. These end-to-end IT driven supply chain solutions are driving the freight industry forward.

Learning the new rules

There remains a negative side of e-commerce in the world of logistics. In some cases the Electronic Air Waybill (e-AWB) is seen as somewhat European or Middle-Eastern-centric. Beyond Hong Kong and Singapore, there is a broader Asia region that has yet to make the full transition to embrace the e-AWB.

According to one head of commercial operations in Asia Pacific, adoptive issues remain in Korea and Japan – two leaders in other advanced logistical areas. The Philippines, with its wide use of English are surprisingly still playing catch-up when it comes to total industry acceptance.  Training and communicating the end benefits of e-commerce is an ongoing process for some industry segments.

Fashion trends become logistical challenges

The fashion industry, as always, is also affecting freight forwarding trends. In a global survey of 400 retail and consumer sector CEOs from around the world conducted by PwC found that while retailers were spending “an enormous amount of money, energy and time to improve their omni-channel sales, only 16% of companies say they can fulfil omni-channel demand profitably today.”

A key challenge was fulfillment. Not all retailers who receive an online order have the insight to decide which is the most profitable fulfillment option.  Pull the product from a store? Ship it from source? Send it from a centralized warehouse?  It is intelligent logistics and fulfillment solutions that will reveal and help eliminate hidden costs or customer service trade-offs.

Multi-channel selling through stores and online is morphing into omni-channel retail, with previously segregated sales channels converging into a single route to market. Once again, the call is out for supply chain innovations and excellence to enable the fashion industry to react to and profit from, a world of borderless baskets.

The talent shortage

Never before has the global demand for skilled logistics professionals been so high. The US Bureau of Labour Statistics reports that jobs in logistics are estimated to grow by 26% between 2010 and 2020, an average growth rate nearly twice the 14% rate of growth for all occupations. Demand for supply chain professionals in the US now exceeds the available talent pool by 6 to 1.

In the UK it has become increasingly difficult for logistics companies to find the right people, with a shortage of new talent entering the industry according to Manchester recruiter Clarico. It’s also an industry currently dominated by males with less than 1% of the workforce being female. Additionally it’s argued that those entering the industry are not suitably trained.

India still has the skilled HR shortage problems highlighted by the KPMG white paper “Skills Gaps in the Indian Logistics Sector.” The demand for human resources from the Indian Transportation, Logistics, and Warehousing sector is expected to increase from about 7.3 million to about 25 million, leading to an incremental HR requirement of about 17.7 million persons in the next 15 years. (NSDC Skill gap analysis report)

It’s a global shortage, arriving at a time when the supply chain industry is becoming more elaborate. With more complexity involved in shaping product development, the skills needed to be the logistics leaders of a decade ago have changed, with supply chains becoming more data-focused and relying heavily on virtual tools. 

CEO’s of the future will come via the supply chain

Historically, it remains difficult for education to keep pace with the needs of industry. This is especially true for the logistics industry where needs have changed and evolved so quickly. CEO’s of the world’s top third-party logistics (3PL) providers cite talent shortage as a significant problem.

These testing trends have come at an important time. Interestingly, leading business watchers believe the career path of the CEO’s of the future will increasingly come through the supply chain offices in future. Supply chains have become a critical high-stakes game in business today and companies with leaders primed for end-to-end supply chain excellence will be the ones to watch. While the logistics industry may need to encourage students to consider a career in logistics – this is one career path prediction that sits well as a powerful motivator.

The logistics industry continues to meet the challenge to generate excellence in service and solutions that meet customer needs. It’s a challenge that will be heard loud and clear, from Heathrow and beyond.

iBP provides services for the global freight forwarding industry including: Air and Sea Freight Forwarding and Customs, 24×7; Bank reconciliation services, Accounts Receivable and Accounts Payable; Automated central help desk operational 24×7; Automated Order Tracking; turning static management and business reporting into real-time proactive solutions-driven reporting. Contact us for more details.