There’s been a worldwide explosion of mergers and acquisitions among logistics companies. The Wall Street Journal reports that as many as 10 major deals totaling $18 billion have been signed since early 2014. But what’s most striking to me isn’t the industry’s new environment; it’s how it got there.
From the article:
As global shipping becomes more complex, customers are beginning to “open the window, be more flexible and share information” with their logistics providers that they may have considered too sensitive to share in the past, said Shanton Wilcox of Capgemini. That has allowed logistics companies to get creative in handling an ongoing shortage of truck drivers, for example, Mr. Wilcox said.
As a global logistics provider we have been trying to encourage our customers to be more open to this idea, but so far it’s been a really tough sell.
I already touched on this a few weeks ago, but I can’t say it too often: Global logistics runs on volume. The larger the volume, the better the rates.
Most small- to medium-sized companies can’t get near enough volume to be in a position to negotiate, and so will never see the rates they pay decrease. The best way to overcome this obstacle is to find a partner company and consolidate your international supply chain.
Going back to the quote by Wilcox, people need to get over the idea that their products are too sensitive. The marketplace is very competitive, that’s true, but what you really need to focus on is getting the most out of your logistics budget. If you want to be worried, be worried about wasting money.
Where do I start if I want to consolidate my global logistics?
Develop a relationship with your global logistics provider so you can find out which of their customers has a geographical supply chain similar to yours. Products don’t matter; it’s all about location. Use your international logistics provider as a matchmaker.
This solution is great for companies stuck shipping LCLs (limited container loads) monthly or one big shipment a year (typically only a few containers). If they consolidate with another small- to medium-sized company or two, they would be able to make better smaller monthly shipments. This cuts not only logistics but also inventory costs.
Naturally, the process takes time to complete, but the savings are worth it.
It’s important to remember in the beginning there will likely be plenty of headaches, but keep in mind that there are always headaches. When it comes to global logistics, once things are set in place the savings could be the difference between being in the red or in the black.
A lot of the players in the industry are trying new things. So you have to ask yourself this question: What am I more worried about, trying new ways of doing business or getting left behind?
Photo Credit: Luigi Mengato