Challenges of International Logistics

Global trade has been growing at an annual rate of approximately 3 % (World Health Organization, 2019) . However, many companies aiming to globalize operations face several international logistical challenges that derail their intentions. Going global adds complexity, time, new risks, and distance to the logistics equation. Effective planning, control, and management of the movement of services and goods as they spread over international borders – from suppliers of raw materials to end consumers- presents numerous logistics challenges that companies should consider before venturing into international logistics. As the worldwide market continues to enlarge, companies should evaluate their capabilities and skills to be well-placed to sustain both current and forthcoming international trade ventures. Logistics companies should adopt transport management systems to address various challenges in global logistics. 

Challenges in Global Logistics 

Heterogeneity 

                One of the most critical challenges for global logistics activities is heterogeneity. With each country or region having a different element of peculiarity, a great variety of domestic logistics systems exist, which have to be arranged into an international network (Trachsel, 2018) . The processes of transportation and trade are only partly standardized on an international level, but largely depend on the specifications per country (Trachsel, 2018) . As a result, matching the global logistics strategy of a firm with the heterogeneousness comprises a collective view of the logistics environments both within the involved nations and also between different states. In addition to the logistics differences between countries, most of the countries also have internal logistics dissimilarities. Besides, several logistics conditions are continually being altered, making international logistics very dynamic and alterable. 

                Among the various factors that make heterogeneity a significant challenge for prospective global logistics companies are infrastructure, security issues, intercultural issues, and personnel. To begin with, infrastructure is a common issue in developing countries. Poor infrastructure in developing countries is significant for cost concerns since the share of logistics in overall costs is almost double in emerging economies, as compared to developed economies (Trachsel, 2018) . However, it is insignificant in the local competition since all competitors share a similar infrastructure. Besides the differences in infrastructure, intercultural issues, and their level of perception is linked to the cultural distances between the target market and the home country. Since logistics personnel are considered the most immediate corporate connection between the two countries, intercultural management is gaining importance for their daily operations. As a result, companies aiming to go global face the challenge of incorporating cross-cultural management. 

                There is also a variation of personnel between countries. The availability of personnel and their skills varies between one country and another. While warehouse staff, truck drivers, and other unskilled laborers can be easily found around the world, educated workers with managerial and technical logistics knowledge are uncommon in many countries ( Jayanthakumara et al. , 2019). This is common in emerging markets, where companies face a shortage of inadequately trained personnel due to both lack of workers during active growth phases and poor local education. The willingness of expatriates to be appointed to executive posts in a specific market also varies due to the varying attractiveness of different nations. 

Unknown Supply Chain Risks and Volatility 

In global logistics, supply chains can be grouped into three categories; the physical flow of goods, the fiscal supply chain, and the flow of information. Longer supply chains have more exposure to risk and possible disruptions (Lee, 2016). Natural disasters, changing tariffs, aging infrastructure across the globe, and health epidemics affect the volatility of supply chains (Mangan & Lalwani, 2016). For example, in early 2016, Sony and Toyota experienced massive supply chain disruptions due to several earthquakes in Japan (Escaith et al., 2011). These disruptions resulted in massive job losses. Another example is the current worldwide COVID-19 outbreak had caused major disruptions in global supply chains, putting them at risk (Baldwin & Tomiura, 2020). The role of China as a producer of raw materials for many supply chains around the world means that companies whose supply chains depend on China are likely to witness significant disruptions even if conditions approach normality by mid-April. When such disasters happen, it is vital to establish supply chain plans that help mitigate as much risk as possible. The escalating U.S diesel prices can result in higher transport costs volatility of supply chains around the world. 

Greater Supply Chain Variability   

Variability of a supply chain is the difference between one’s expectations and the actual happenings. Therefore, it is of significant concern to international logistics companies. Within a supply chain, deviance from the intended supply, production, and transit periods can escalate variability (Mangan & Lalwani, 2016). The result of this variability is that the outcomes may not match to the planned activities. Such variability also causes challenges in preparing for demand and available capacity, working with business-to-business retailers, and ordering raw materials. 

Less Supply-Chain Visibility 

                 Following shipments as they traverse the globe and upholding excellent supply chain visibility becomes tough when several carriers, modes of transport, and third-party logistics providers are used to ferry the goods overseas. This difficulty poses a challenge to global logistics. KPMG Corporation reports that 40% of international producers lack adequate information and product visibility across their supply centers (Mangan & Lalwani, 2016). Poor supply-chain visibility causes supply-chain disruptions, revenue losses, and shipment delays (Mangan & Lalwani, 2016). Also, the loss of revenues as a result of diminished supply-chain visibility can acutely affect international business. 

Language and Cultural Barriers 

                Language and cultural barriers between nations, freight forwarders, trade regulators, business-to-business partners, and third-party persons present a significant challenge on the management of global logistics. The existence of these barriers is inevitable, and failure to consider them can cause an inability to collect payment and erroneous shipment processing (Skripnuk et al., 2019) . Meanwhile, incompatible systems may result in additional headaches and delays for logistics service providers and shippers. 

Security 

Since commodities are continually being handed over from one provider to another, security in the logistics industry had been a growing concern. Shippers initially book their freight with local truck operators, who deliver it to local warehouses for handling. These warehouses then load the consignment to trucks, which then transport the containers to handling ports. Before a consignment arrives at its final terminus, it has gone through several sets of hands. Except when each person involved in the process is diligent as expected, the security if goods becomes problematic (Cempírek et al., 2016) . When any party violates the procedures of excellent handling, it might only take a while before negative occurrences begin to happen. In the present-day supply chain, it is easy for a person with ulterior motives to sign a form indicating that they’ve dispatched 100 items. Yet, only 99 pieces were handed over, and one was kept for themselves. Manufacturers can also find it very hard to identify where theft might have occurred since information about the transport of cargo is usually available only days or weeks after the goods have reached their final destination.   

Capacity 

  Tightening capacity in domestic shipping and overcapacity in overseas shipping are challenges that prospective logistics companies are likely to face. Recent studies have shown that large vessel deliveries are causing continuous pressure on freight rates (Crainic et al., 2016) . In past years, oversupply and lack of demand have been enormous problems. The largest container shippers - Maersk, CMA CGM and MSC- have a current order capacity exceeding 15% of their combined fleet (Crainic et al., 2016) . A rise in capacity puts pressure on workers to build more facilities, hire more workers, and adapt their shipping methods. 

In Asia, shipments on the East Coast are still experiencing space limitations, which has elevated these rates to the highest in several years. Nonetheless, overcapacity is still an issue for the west coast. Regarding domestic shipping, there are problems with tightening capacity. Tightening capacity is experienced as an increased shortage of truckers. With the tightening capacity and active truck utilization, trucking rates are also on the rise. 

Changing Customer Needs 

Currently, logistics solutions must address the continually changing customer needs. Among the emerging needs is the full transparency in all orders and visibility of materials from the raw material stage to when the goods reach the final destination (Mangan & Lalwani, 2016). Reverse logistics has also become a common standard for certain groups of commodities. With too many parties involved and too many variables in global logistics, delivering quality service may, at times, become challenging and discouraging to logistics companies intending to offer services across borders. 

Counterfeiting 

People wanting to venture into global logistics face a risk of forgery, which takes on different forms. Counterfeiters falsely label products, use inferior or fake constituents to make a product or misappropriate brands. When consumers have no confidence in the provenance of a good, the manufacturer’s ability to sell goods is significantly undermined (Mangan & Lalwani, 2016). This is a particular concern for companies selling goods in Asia, where cases of counterfeiting are widespread, and consumers have low confidence in products. 

Lack of Accurate Data on Shipping Conditions 

Many products require shipment within predetermined conditions, such as temperature. Since manufacturers have no method of seeing the shipping conditions in real-time, some shipping companies may record false information on how certain goods were shipped (Mangan & Lalwani, 2016). For example, a shipping company ferrying perishable products may switch off the freezer soon after leaving the port and then turn it back on when they reach the proximity of the destination. The temperature may be the right temperature or the goods, but the quality of the assets will be compromised since the products will not have been subjected to the temperature throughout the journey. 

Manual Processes 

Manual processes taking place at handovers are challenging for global logistics companies. Scanning of barcodes and manual filling out and scanning of paperwork needs to be done to send back information to the manufacturer (Mangan & Lalwani, 2016). In most cases, this information does not reach the manufacturer for days, which caused substantial delays and more hours spent in combining this data. 

Transport Costs 

Transportation costs can also be a significant challenge to global logistics companies. With the escalating prices of fuel, buyers pay the tax by paying more for transport. 

Solutions to Challenges of Global Logistics 

The fundamental solution to ensuring the security of goods is through a deep understanding of the position of products along the supply chain, how the products will be handled, and how frequently the products will be handled. A possible solution might be to consider packaging methods that reduce the damage on goods by keeping them secure and intact (Cempírek et al., 2016) . Some logistics providers might consider engaging freight forwarders who serve as stalwart allies in global logistics packages pertaining to handling and packaging. Forwarders help companies to move goods securely and safely between different points both by assisting in the selection of adequate insurance protection and finding the most direct routes to minimize instances where the products are handled (Andrejić & Kilibarda, 2018) . Incase freight forwarders are not accessible, conferences, and events organized by trade associations can provide useful information about secure and safe shipping. 

The flow of information during the shipping process is also as important as the flow of the goods. Keeping this in mind, logistics providers have to perfect information flow within the supply chain. The best solution to challenges of information flow is the adoption of global transportation management systems (TMS). A TMS uses technology to assist logistics providers plan, accomplish, and enhance the physical movement of goods by ensuring compliant shipment and availability of proper documentation (Subramaniyam et al., 2017) . A TMS provides visibility into daily shipment activities, adequate documentation for trade compliance, and ensuring products are delivered on time. Since a TMS gives better control over all shipment data, logistics providers can use this data to handle changes and fluctuations in demand. Furthermore, a TMS decreases a supply chain's variability as more information made available improves the ability to ensure actual activities are reflective of the planned activities (Güner et al., 2018). The improved and centralized controls of a TMS also improve the visibility of a global supply chain. Also, the use of TMS across borders ensures that shipment procedures comply with relevant regulations and eradicate cultural and language barriers (Subramaniyam et al., 2017) . Finally, the use of cloud-based TMS platforms exceeds the limits of outdated, on-premise information management systems. Using cloud-based TMS ensures worldwide access and lessens the disruption in the wake of adverse events such as trade conflicts and weather-related disasters. 

An emerging practice that can be adopted by logistics companies is the incorporation of artificial intelligence and autonomous tracking into its fleet to track real-time data as well as with potential alternate paths to reduce transport costs. Autonomous tracking involves the use of sensors to create intelligent vehicles that can boost fuel efficiency, evaluate route conditions and observe how human operators respond along the routes (Shah et al., 2020). Some companies have incorporated autonomous tracking technology into their day-to-day logistics. In this way, they are gathering data from fleets to traverse routes to boost efficacy. 

Another example of the application of artificial intelligence in global logistics is the use of the Narrowband Internet of Things (NB-IoT) technology as a solution to the challenges of visibility and inadequate information on shipping conditions. NB-IoT is a Low Power Wide Area Network (LPWAN) radio technology available for a wide range of uses. The NB-IoT devices can be installed in parcels, containers, and trucks to monitor data such as pressure, temperature, humidity, light, and location (Çağlayan & Köksal, 2016). This data can be uploaded to a cloud-based transportation management system in real-time and synchronized to a blockchain (Ertemel, 2018). The advantages of using NB-IoT technology are wide coverage, support of a large number of simultaneous connections, low cost, and low power consumption (Subramaniyam et al., 2017) . The NB-IoT gadgets can be used to give the manufacturer real-time data on environmental conditions such as humidity, pressure, and temperature and raise alarms when requisite conditions are not met (Subramaniyam et al., 2017) . Finally, the concept of intercultural management is necessary for any logistics company going global, because to work in a cross-cultural environment, one has to interact with people of different cultures. Intercultural management is concerned with facilitating the interaction of customers and personnel, management, and communication across borders, to increase the productivity of an organization (Ablonczy-Mihalyka, 2015). Given the fact that many companies have made enormous losses via mismanagement of projects spanning across borders, intercultural management should not be overlooked. 

Conclusion 

The heterogeneity of the global logistics environment, unpredictability, variability, and visibility of the international supply chain, the security of goods, and the lack of adequate information during shipping are significant challenges that any upcoming international logistics company is likely to face. However, through implanting the measures outlined in this paper, these companies can soar in the business. Existing and upcoming logistics companies should consider adoption of technological inventions such as the NB-IoT devices to increase the visibility of their global supply chains. In this paper, Transportation Management Systems present the best solution in tackling a number challenges in global logistics. Logistics companies should therefore adopt them in their global operations. 

References 

Ablonczy-Mihalyka, L. (2015, September). Cross-cultural communication breakdowns: case studies from the field of intercultural management. In  Proceedings of International Academic Conferences  (No. 2704402). International Institute of Social and Economic Sciences. 

Andrejić, M., & Kilibarda, M. (2018). RISK ANALYSIS OF FREIGHT FORWARDERS’ACTIVITIES IN ORGANIZATION OF INTERNATIONAL COMMODITY FLOWS.  International Journal for Traffic and Transport Engineering ,  8 (1). 

Baldwin, R., & Tomiura, E. (2020). Thinking ahead about the trade impact of COVID-19.  Economics in the Time of COVID-19 , 59. 

Çağlayan, M. C., & Köksal, M. (2016). Analytic hierarchy process while choosing authentication with radio frequency identification (rfid) systems.  Journal of International Trade, Logistics and Law ,  2 (2), 113-125. 

Cempírek, V., Nachtigall, P., & Široký, J. (2016). Security in Logistics.  Open Engineering ,  6 (1). 

Crainic, T. G., Gobbato, L., Perboli, G., & Rei, W. (2016). Logistics capacity planning: A stochastic bin packing formulation and a progressive hedging meta-heuristic.  European Journal of Operational Research ,  253 (2), 404-417. 

Ertemel, A. V. (2018). Implications of Blockchain Technology on Marketing.  Journal of International Trade, Logistics and Law ,  4 (2), 35-44. 

Escaith, H., Keck, A., Nee, C., & Teh, R. (2011). Japan’s earthquake and tsunami: International trade and global supply chain impacts.  VOXEU, April ,  28 . 

Güner, H. M., Çemberci, M., & Civelek, M. E. (2018). The Effect of Supply Chain Agility on Firm Performance.  Journal of International Trade, Logistics and Law ,  4 (2), 25-34. 

Jayanthakumaran, K., Bari, M. T., & Perera, N. (2019). Inclusion of Firm Heterogeneity in Resource Boom-Bust Cycle Literature. In  Trade Logistics in Landlocked and Resource Cursed Asian Countries  (pp. 47-70). Palgrave Macmillan, Singapore. 

Lee, Y. H. (2016). Smart logistics and global supply chain management.  Maritime Economics & Logistics ,  18 (1), 1-2. 

Mangan, J., & Lalwani, C. (2016).  Global logistics and supply chain management . John Wiley & Sons. 

Shah, S., Rutherford, R., & Menon, S. (2020, January). Emerging technologies of IoT usage in global logistics. In  2020 International Conference on Computation, Automation and Knowledge Management (ICCAKM)  (pp. 251-257). IEEE. 

Skripnuk, D. F., Cherenkov, V. I., & Didenko, N. I. (2019, September). Crossborder Integration of Supply Chains: Problems and Digital Solution Concept. In  International Conference on Digital Technologies in Logistics and Infrastructure (ICDTLI 2019) . Atlantis Press. 

Subramaniyam, C. S., Sivaraman, K., Ramachandran, S. S., & Veeraraghavan, A. K. (2017). A Survey on IoT Based Intelligent Road Traffic and Transport Management Systems.  Int. J. Innov. Res. Comput. Commun. Eng. ,  5 (12), 1302-1309. 

Trachsel, V. (2018).  Heterogeneity and international economics  (Doctoral dissertation, University of Geneva). 

World Health Organization. (2019). Global trade growth loses momentum as trade tensions persist. Retrieved from https://www.wto.org/english/news_e/pres19_e/pr837_e.htm