1. Extended lead time of suppliers
In an internationally organised business, most products produced in a particular factory will be sold in a number of different countries. In order to manage the interface between production and sales teams in each territory, long lead times may be quoted allowing the company to respond to variation.
2. Its extended and unreliable transit time
Owing to the length and increased uncertainty of international logistics pipeline, both planned and unplanned inventory may be higher than optimal.
3. Multiple consideration and breakpoints
Consolidation to the length and increased uncertainty of international logistics pipeline, both planned and unplanned inventory may be higher than optimal.
4. Multiple freight modes and cost options
Consolidation is one of the key ways in which costs in pipeline can be lowered. Economies of scale are achieved when goods produced in a number of different facilities are batched together for transport to a common market.
5. Ever changing customer needs
The era of one size fits all type of service providing has ended. Nowadays, logistics solutions must be tailored to each customer. Full transparency of orders, visibility from raw material stage to final goods sale, and reverse logistics have almost become standard for some commodity groups. With too many variables in global logistics and many different parties getting involved, keeping above level of service might be challenging at times.
6. Infrastructure
In the age of mega alliances, one major problem stands out: the infrastructure. With thousands of vessels already serving the major trade lanes around the globe, the problem of lack of infrastructure has emerged clearer recently. Most of the terminals are still trying to complete their set up to accept such large vessels and service them. This is causing congestion problems at some terminals. Without the infrastructure to accommodate these vessels, congestion will be a major issue.
7. Capacity forecast
Overcapacity in ocean shipping and tightening capacity in domestic shipping are both affecting the logistics world in a different way. Freight rates are on continuous pressure due to large vessel deliveries. Lack of demand and oversupply was one of the biggest problems in the past few years.
8. Security
Security is a growing concern in logistics industry due to good being passed from provider to provider. Shippers book the cargo with local truckers, who delivers the cargo to local warehouses for handling. The warehouses then load the cargo to trucks which deliver the containers to ports. When the shipment arrives to its final destination, it has passed through seven or eight different sets of hands. Unless everyone involved in this process does their due diligence, security becomes a problem. When any party (from shippers to local warehouses to truckers that handle the deliveries) breaks the procedures, it is only a matter of time before something seriously
negative will happen. It is important to work with service providers that have a secure supply chain processes, that have security places in place and that participate in government security programs.
