It is an exciting time for global logistics companies, as technology is transforming the way they do business at the same time that the business they do is being transformed before their eyes. The mechanics of transporting large amounts of valuable freight from one country to another are simultaneously becoming more efficient and less secure. Here are four major issues that are facing the enormous companies that make international trade possible.
It is well known that there are major challenges in moving people and material in and out of the Middle East. Tension between global superpowers have now caused serious disruption in local supply chains and thorny issues of legality for trucks, ships, trains and planes that cross borders. Recent events in Europe related to the British decision to leave the EU appear to also be causing instability. The new pattern of imports and exports there have yet to be worked out to any meaningful degree, so the logistics firms that serve Great Britain have no clear idea what to expect in the next few years.
Global instantaneous transparency has been achieved with many types of technology, and every time it has resulted in an utter transformation of its medium. Think of the changes wrought by social media and GPS systems and you will see two examples of evolutionary leaps brought about by open sharing of a global network. Now this principle is going to be applied to global logistics pricing, taking effect from the consumer level to levels upon which international logistics companies operate. Most global logistics decisions are made through business-to-business negotiation. These deals are characterized by personal negotiations and fragmented information. The prices offered tend to include high fixed costs, and it can take weeks to return a quote on a prospective offer. Online pricing will remove these concerns entirely, and it might result in substantial loss of revenue for some global logistics firms. Operating costs may also drop substantially at the same time, so it remains to be seen what the final accounting will show.
Decline in Shipping
The collapse of the oil industry appears to be based on serious structural changes to the global energy economy, and there is strong reason to suspect that its predominance will not return. This has brought with it a massive loss of trade in the shipping sector, causing venerable concerns to go out of business and a drop in both shipping prices and capacity.
The largest companies of the world are larger than ever before, and at the same time new technologies are giving them a forbidding organizational advantage. The process of consolidation will naturally continue, with the biggest companies getting even bigger while the smaller companies wither and fade. It remains to be seen whether a new tier of logistics companies will grow up to exploit some market left neglected by existing companies or to take advantage of some new technological leap that the larger companies are too slow to recognize. At the moment, the trend is definitively towards mergers and growth.