Challenges of Global Logistics, Costing and Pricing in International Setup

CHALLENGES OF GLOBAL LOGISTICS,COSTING
AND PRICING IN INTERNATIONAL SETUP
SUBMITTED BY:PRANAY GUPTA

ROLL NO.:07
SUBMITTED TO Dr. SHIVANI RANA
What Are Logistics?
The overall management of the way resources are

obtained, stored and moved to the locations where they
are required. Logistics management entails identifying
potential suppliers and distributors; evaluating how
accessible and effective they are and establishing
relationships and signing contracts with the companies
who offer the best combination of price and service. A
company might also choose to handle its own logistics if
it is cost-effective to do so.
Global Logistics:
Global logistics is the design and management of a system that controls
the forward and reverse flow of materials, services, and information into,
through, and out of the international corporation.
Through the implementation of international logistics, the firm can

implement cost-saving programs such as just-in-time (JIT), electronic data
interchange (EDI) etc.
The two phases of the movement of materials include:
Timely movement of materials, parts, and supplies.

Timely movement of the firm’s physical product to its customers.
Role of Global Logistics
• Globalization helped in doing business beyond the
national boundary
• The world has become global village in real sense
• Internet has made easy to do business across the globe
• Speed and Efficiency in the movement of goods is
focused more.
• Global operations of business increase the complexity of
logistics.
Complexity of a Typical Global Supply Chain
OPPORTUNITIES/THREATS
Globalization moves to a Multi-Polar world
• Indian population grows as fast in 1 week as the EU population does in 1 year

• The Chinese middle class is consuming more and more of what it makes
• Major new hubs are being built around the world
Technology led complexity accelerates
• Much of the world is now on-line, mobile commerce is developing quickly

• Humble delivery equipment (containers, totes, hangers) become
intelligent
• Increasing dependence on automation
Cost and Time to Market Pressure
• Rising oil prices slowing the growth in global trade

• Marked shift from Air to Ocean par in Technology and Health
care companies
• Shorten lead time/production cycle; quick turnover
Terrorism has created a new cost pressure
• Container scanning will slow ports down, compliance will tie up

management
• Security issues can cost hundreds of dollars
The Smarter are getting Greener

• Carbon: Sustained investment hampered by short term who pays argument
• Energy costs steeply rising; Efficiency/carbon abatement actions needed
• Water supply is becoming the next sustainability issue for some
Who will win the War for Talent ?

• Imbalance of “white-collar” talent is limiting growth in the developing world
• Wal-mart report “Blue-collar” labour shortage in the US as a growing issue
• “Employers of choice” make training a priority
..these are opportunities if we grasp them, real threats if we do not

Top 10 Challenges Logistics Companies
Are Facing…
• The Transport and Logistics Industry is the back bone of any

economy, and the driving force behind all sectors, be it
agriculture, manufacturing or services.
• However, like all industries, it is confronting tremendous
change in present times – driven by tech innovations,
changing consumer expectations and stringent regulations.
• Although the global outlook for the industry is optimistic
(estimated at about US$ 4 trillion in 2018, It is slated to grow
to US$ 6.3 trillion, at a CAGR of 4.9%), the road ahead is
challenging, especially for small and medium enterprises.
Are Facing…
Here is a look at some key challenges facing logistics companies in 2019:
Are Facing…
1.Reducing Transportation Costs:
• This is the single biggest challenge for the industry, since transportation
constitutes a major chunk, about 30% of total expenses. But with rising fuel
prices, this can go up to 50%.
• Reducing Carriers: Companies can redistribute their business among fewer
carriers and negotiate for lower rates. However, this increases the risk of over
dependency on few carriers.
2.Improving Business Processes:

• A research by Inboundlogistics.com cited that 36% of the enterprises polled
strongly agreed that they relied on their 3PL partners to drive cost reductions
and business process improvements.
• This means logistics partners are expected to have the knowledge and
experience to look beyond supply chain and logistics operations to drive
changes within the overall operations framework
Are Facing…
3.Enhancing Customer Service:
• Nowadays, the markets are dynamic, supply chains have become longer and
more complex, and customer expectations have changed, both in terms of
delivery times and service quality. Now customers also expect their logistics
partners to solve problems and help them grow in a competitive
environment
4.Improving Supply Chain Visibility:

• In order to have accurate, on time deliveries every time, logistic companies
need to have full visibility on all aspects of the supply chain:
• Shipments ought to be tracked, to ensure they are following the prescribed
route and schedule, and in case of disruptions, notifications and alerts be
activated so that prompt action can be taken. Customers need to get
updates, viz., shipping notifications, ETAs, as well as be able to track
shipments on a web portal
Are Facing…
5.Supply Chain Finance:
• Access to supply chain finance is critical for shippers / logistic companies to
ensure smooth business operations and optimization of cash flow, especially
in today’s uncertain times of geopolitical tensions, unexpected custom
duties, exchange rate fluctuations, natural disasters etc.
6.Impact of the Economy:

• Political instability, decline in manufacturing sector performance, increase in
consumer price index, inflation etc. adversely impacts demands for products
and services, which also impacts freight demand. Conversely, government
investments in infrastructure projects increases wages and demand for
products.
HONG KONG LOGISTICS INDUSTRY OVERVIEW
▪ Trading & Logistics is one of the four key industries in Hong Kong
contributing approximately 25.5% of the total GDP
▪ Hong Kong International Airport has been named the busiest cargo
airport which handled over 4 million tons of freight
▪ Hong Kong Container Port’s throughput ranked the 3rd among world’s
port in 2012 which handling 23 million TEU
▪ Excellent Port Infrastructure
▪ Presence of over 3000 logistics service providers

HONG KONG AIR FREIGHT & LOGISTICS
INDUSTRY OVERVIEW
▪ Hong Kong’s air freight export has been dropping while re-export volume
continues to grow
HONG KONG OCEAN FREIGHT & LOGISTICS
INDUSTRY OVERVIEW
▪ The throughput of Guangdong ports (adding up Shengzhen & Guangzhou) has already
surpassed Hong Kong
▪ Cost competitiveness is a prime reason
CHALLENGES FACED BY THE LOGISTICS
INDUSTRY
INDUSTRY
INDUSTRY
INDUSTRY
INDUSTRY
WAY FORWARD

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CHALLENGES OF GLOBAL LOGISTICS,COSTING

AND PRICING IN INTERNATIONAL SETUP

SUBMITTED BY:PRANAY GUPTA

The overall management of the way resources are

Through the implementation of international logistics, the firm can

The two phases of the movement of materials include:

Timely movement of materials, parts, and supplies.

• Indian population grows as fast in 1 week as the EU population does in 1 year

Technology led complexity accelerates

• Much of the world is now on-line, mobile commerce is developing quickly

Cost and Time to Market Pressure

• Rising oil prices slowing the growth in global trade

Terrorism has created a new cost pressure

• Container scanning will slow ports down, compliance will tie up

The Smarter are getting Greener

• Energy costs steeply rising; Efficiency/carbon abatement actions needed

• Water supply is becoming the next sustainability issue for some

Who will win the War for Talent ?

• Wal-mart report “Blue-collar” labour shortage in the US as a growing issue

• “Employers of choice” make training a priority

..these are opportunities if we grasp them, real threats if we do not

• The Transport and Logistics Industry is the back bone of any

2.Improving Business Processes:

4.Improving Supply Chain Visibility:

6.Impact of the Economy:

▪ Excellent Port Infrastructure

▪ Presence of over 3000 logistics service providers

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