OTGC Reduce international logistics costs

OTGC Global Cargo Delivery

Reduce International Logistics Costs

It is necessary to understand logistics performance at the country level in order to better evaluate and target Trade and Transport Facilitation (TTF) policy efforts over time and across countries. Lower costs for logistics reduce the cost of delivering products, thereby encouraging sales, increasing trade, opening new markets and generally encouraging business. Performance evaluation also helps to improve the efficiency of supply chains and the functioning of related infrastructures, services, procedures and regulation

Logistics plays a vital role in economic systems and in everyday life. Given the

significant cut back in manufacturing and labour costs, reducing logistics costs has

become an increasingly important task for managers. On account of the complex supply

chains and globalization, the cost of logistics operations could comprise as much as half

the value of general commodities. However, technological development offers new costcutting opportunities

The level of logistics costs is heavily dependent on the industry, but in general tends to be high in logistics-intensive operations such as food, metal, chemical and paper manufacturing

The importance of lowering logistics costs has also been acknowledged on national,regional and global levels. These costs are significant and affect the competitiveness of nations ,as well as national-level policymaking, infrastructure development and other investments

Several regional studies have also identified logistics costs as one of the major drivers affecting competitiveness

Relying partly on findings from national logistics surveys conducted since 1990, the Finnish Government, for example, has included the goals of improving logistics competitiveness and reducing the costs in its programme (Finnish Governmental Programme 2007, 38).

Despite their significance, logistics costs are not directly included in any of the indicators developed for ranking countries on a global scale.The closest attempts include the Global Competitiveness Index (GCI) and the Logistics Performance Index (LPI). The GCI is under development at the World Economic Forum, and ranks countries’ competitiveness based on 12 categories including infrastructure and technology, for example,The widely used LPI, published by the World Bank Group, measures the current logistics environment in six areas: customs,infrastructure, international shipments, logistics quality and competence, tracking & tracing and timeliness

given that a more efficient logistics system is the key to sustainable economic growth, it is a macroeconomic imperative to track the major cost components

One choice firms make that significantly affects the perceived cost of logistics is whether or not to outsource the operations or to keep them in-house. The outsourcing of logistics functions is becoming increasingly prevalent, the current outsourcing rate of domestic transportation in Europe, for example, being 85 per cent, whereas for international transportation and warehousing it is 81 and 71 per cent, respectively.In terms of measuring logistics costs, it is a matter of some importance whether or not the costs of outsourcing are perceived as being attributable to logistics. Furthermore, if the outsourcing contract bundles several functions, the cost of each one may be hard to assess