With more companies reinforcing their supply chains and improving their resiliency in the post-COVID business environment, the global logistics sector is on track to reach $3.2 billion by 2021—up from $2.7 billion this year.
This represents a 20% compound annual growth rate (CAGR) for a sector that’s being driven by an increased focus on the continued supply of essential goods, growing demand for personal protective equipment (PPE), and a renewed focus on supply chain stabilization.
As these shifts continue to become the “new normal” for companies across all industries, the need for reliable logistics providers will grow exponentially. By providing an array of transportation options, a complete portfolio of logistics offerings, and a menu of value-added options, reputable logistics providers will continue to be in high demand.
Not all Logistics Providers are Alike
Because not all logistics providers are alike, it’s important to put some time and effort into finding one that truly meets your company’s needs. Where one may specialize in ocean shipping logistics, for instance, it may not be able to assist with intermodal or truck transport. And where another may have deep expertise in the manufacturing space, it may not understand an industrial electronics distributor’s logistics needs.
In an industry that’s growing at a rate of 20% annually, it’s not unusual to see a host of new, inexperienced entrants vying for their share of that pie. For this reason, finding a logistics partner that has a lengthy, established reputation in the industry is generally the best strategy.
“Selecting a logistics partner isn’t a decision that should be taken lightly,” says Hessel Verhage, CEO, DB Schenker Americas. “It is essential to put the time and resources into finding a logistics partner that can quickly adapt to your organization’s needs.”
8 Key Questions to Ask
To make sure you’re selecting the best possible match for your company, be sure to ask these questions of the logistics provider that you want to do business with:
- Do you provide a complete portfolio of services? If you need full supply chain support, find a provider that can review all of your distribution processes and leverage its knowledge to help you reduce costs and get to market faster. “These providers are able to view all of the processes involved in the distribution process, and use their expertise to create efficiencies across the entire supply chain,” Supply Chain Brain points out. “They can leverage cost across multiple services such as drayage, warehousing, and outbound distribution, resulting in lower costs and a better balance of needs.” If you plan on using multiple logistics partners, make sure you have the internal resources necessary to manage, administer, and orchestrate their activities.
- Can we have references? Don’t be afraid to pick up the phone and call some of the logistics provider’s references for feedback on their services, reputation, and ability to deliver. “Be careful when doing an online check,” Global Trade Magazine “Some companies may fake testimonials on their site, so try to delve deeper into that research. You can also tackle this problem by asking for references of companies that use that freight company.”
- Will you handle our drayage requirements? The global shipping market and infrastructure requires land-based operators and logistics providers to facilitate the handling of larger ships, container bunching, late deliveries, and other challenging situations. “Logistics providers must not only possess the ability to navigate the port landscape,” Supply Chain Brain points out, “but also must develop strategic relationships to be able to offer flexibility and solutions during smooth seas and in times of trouble.”
- What storage options do you have? Storing your product for a period of time, or transferring, consolidating, or de-consolidating the product before it reaches final destination? You’ll need a logistics provider with a comprehensive warehouse solution. Be sure to factor in proximity of the warehouse to the port of entry and the final customer, Supply Chain Brain
- What other special services do you provide? Look for a partner that can further enhance your supply chain with special services (i.e., storage in an overweight zone, temperature-controlled, racked or un-racked space, co-packing, re-packing, etc.), Supply Chain Brain notes, and state-of-the-art technologies that provide visibility into inventory and product tracking.
- Have you worked with other clients in our industry? According to Inbound Logistics, logistics providers must be able to adapt to customer needs and satisfy demand with best-in-class service focused on cost efficiencies and superior quality. “Find a provider that has proven knowledge in your business area,” it advises.
- Will our cargo be safe and secure at all times? Find out how the logistics provider ensures the safe delivery of a shipment from the moment it leaves the facility to the final destination. This is especially important when handling dangerous goods, Inbound Logistics “Transparency and integration of IT systems for transport and warehouse management also is vital. Ideally, the IT service provider operates with unified global core systems enabling seamless information flow.”
- Do you have a worldwide presence? Having a strong presence in markets around the world ensures a single point of contact throughout the process. In addition, the diversity of customs regulations and individual security precautions of destination countries can create obstacles. “With a provider that operates internationally,” Inbound Logistics points out, “you gain the market knowledge, including customs regulations and foreign trade compliance, of other parts of the world.”
This is just a sampling of the questions that shippers should be asking their logistics providers with the goal of selecting one that possesses the expertise, experience, and resources needed to successfully manage transportation logistics in an integrated, streamlined way.