How does the growth in foreign logistics markets affect us?

Global Logistics and growth in this market

Supplying to foreign markets is nothing new. Think about how worldwide certain drinks and sweets have become and with more and more developing countries emerging as international exporters, and the steady growth experienced by many eastern nations, global logistics is set to continue rising, presenting new and exciting opportunities and the challenges that come with them.

Growth spurts in the East for global logistics

Nicknamed The Rising Dragon, Vietnam has been attracting global logistics firms for years, and is now experiencing an economic growth spurt. As success continues, the country is expecting to receive more foreign investment. According to business blog Vietnam Briefing, logistics firms have been enjoying the local need for efficient supply chains, with firms such as Maersk growing by 200% from 2005 – 2010. The country also demonstrates the local factors that have to be considered. For example, ocean shipping is far more popular and reliable than most road systems in the country. There’s also an increase in cold chain transportation to export increasingly popular Vietnamese seafood and farm products, although given local tastes and cooking practices, this isn’t desired as much in the domestic market. As with any business overseas, cultural sensitivity is essential.

When talking about logistics in the east, or even just worldwide transportation, there’s one name that dominates: China. China’s economy has found its way back on its pre-recession levels, and the country is now enjoying rapid growth again. According to the Alphaliner Weekly, even back in 2010 the country managed to operate six of the most productive container ports in the world, with Shanghai topping the list. Seeing this growth in international and domestic logistics, foreign companies are taking the opportunity to get involved.

Buying your way into the market

Acquisitions are an increasingly popular way of global companies buying a share of the growth. This isn’t exclusive to China, with most of Southeast Asia and parts of Africa eager to increase imports and exports, and special trade corridors becoming more popular. Global businesses possess the scale and experience that local ones don’t, so can bring this success to foreign markets. However, the new hazards brought up by alien conditions are numerous, and business strategies will have to keep complex issues in mind. Delays, difficulty in integrating foreign and domestic teams, cost volatility, cargo theft, differing environmental laws, limited data, liability for loss or delays, are just a few.

The most effective way that companies have overcome local challenges is to buy up a partner with local market expertise to fulfil the final steps of the chain. In some circumstances a joint partnership with a local firm is a legal requirement, and local regulations form a significant factor in foreign investment. Domestic markets are increasingly up for grabs, so this is set to grow in popularity, especially with increased privatisation in numerous countries.

Overseas success is not limited to the top logistical giants, and smaller companies are finding more and more opportunities to branch out abroad. The market is competitive, but in many places, increasingly promising, making expansion a realistic and potentially lucrative possibility right now.

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