THE IMPORTANCE OF BEING PART OF A LOGISTICS NETWORK

THE IMPORTANCE OF BEING PART OF A LOGISTICS NETWORK B

Perhaps we have often wondered. What is the importance or benefit of being part of an international logistics network?

Here are some points that will be of great importance when making the decision to join a logistics network and especially to see the benefits they bring to the community of international freight forwarders.Mainly these partnerships bring great value more to small and medium-sized companies than to large ones. Since the latter have generated their own network by the very fact of being big; and, small and medium companies are threatened when competing with them.

Small and medium-sized companies in the international logistics industry are unaware of the benefits of belonging to an international network of freight forwarders. This analysis explores in detail the functioning of the networks and the characteristics of freight forwarders as members of these associations.

In the international logistics industry, small and medium-sized companies have had to respond to great challenges over time. Mainly, the competition they have to face with multinational companies represents a great challenge.

Advances in process, product, and information technology are one of the most relevant factors in achieving market globalization.

What is a freight forwarder network and what benefits does it bring to the freight forwarding community?

A freight forwarder network, known as a Logistics Network, is a group of independent international freight forwarders that come together as an association to be represented as a block in the logistics industry.

This association or network allows freight forwarders to seek a secure environment based on financial protection and long-term business relationships that allow them to generate more business opportunities.

A logistics network contributes mainly to small and medium-sized companies around the world to facilitate the international business of their importer and exporter customers through a validated representation. This allows them to perform all logistical and foreign trade operations in a safe and efficient manner.

In this way, by being part of a network, the members together achieve better cargo volumes and therefore better benefits to face the competition.

Having the tools to develop a safe, profitable, and risk-free business facilitates the sustainable growth of freight forwarders. Freight forwarders should be part of a network that represents them in order to obtain higher returns in their commercial management and internationalization of their brand.

Socialization, connections, and contacts are vital for the internationalization of these companies. In international business, interculturality, human, commercial, and even personal relationships allow the generation of trust to achieve greater business opportunities.

Choosing to be part of a network, as an internationalization strategy, is of vital importance to achieving an increase in the volume of business.

Freight forwarders around the world seek to internationalize in a safe way while minimizing risks, mainly financial and operational. Therefore, international logistics networks have a significant role to play in achieving this objective.

SMEs that face this industry without being represented by an association or network has limitations for their growth and disadvantages in the international market. For example, a freight forwarder that is represented under the umbrella of a network can leverage through the benefit of credit that is granted among members of the same grouping. This advantage provided by the network of agents allows SMEs to have indirect financial leverage within the association and gives them the opportunity to carry out more operations among members.

Human relationships help to develop the connections of groups with similar experiences, which allows them to see their contacts as a network of interdependent relationships (Hakansson & Snehota, 1995). The characteristic of networks of The characteristic of networks of maintaining an organized affinity group contributes to the competitiveness and efficiency of its members (Romano, P. and Vinelli, 2001).

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Benefits:

- Obtain higher returns in your commercial management and internationalization of your brand.

- Seek a secure environment based on financial protection and the long-term commercial relationship that allows them to generate more business opportunities.

- Perform all logistic and foreign trade operations in a safe and efficient manner.

- Achieve better cargo volumes that benefit when facing competition.

- Opportunity to generate greater economic returns through the internationalization of the companies that allow them to achieve their objective.

- Credit support among members to keep these companies in the market in the medium and long term.

- Improve their competitiveness through the effective use of resources.

- Maintain balanced and fair competitiveness that allows members to internationalize effectively.

- Obtain a ranking of members according to the strength of their expertise.

- Imaginary disappearance of borders, which allows for smoother trade and facilitates integrated logistics.

- Contribute to the competitiveness and efficiency of its members.

- Increasing the relationship with increasingly distant markets, adding value to its activities, and gaining access to markets.

- To count on easy-to-use tools and support from the administration based on strategies of socialization, commercialization, and generation of trust among members.

Networking

The importance for international freight forwarders in networking is to develop links between companies, allowing them to access their resources and stay connected with their activities. In addition, networks provide opportunities to improve efficiency and effectiveness in companies through cooperation among members.

Networking allows for collaboration among members and creates favorable conditions for strategic partnerships, allowing the network and its members to strengthen themselves through the exchange of capabilities that one or another member may have.

Competition within a network is important because it allows to obtain learning advantages from the other members and to complement each other, especially when they are located in different geographical regions. As members of the same network they will contribute to the strengthening of the group, due to the interconnected nature of the international freight forwarding industry, making it difficult for small companies to compete without a global network association to represent them.

Conclusion

For SMEs, having the opportunity to belong to a network represents an advantage, especially for companies in developing countries, because it allows them to expand and reach markets that had not been previously explored by their companies for commercial, operational or even economic reasons.

Without sufficient resources and the experience of agents from the same grouping, it would not be so easy for SMEs to achieve internationalization. Considering that, multinational companies have the market very monopolized and it is difficult to compete independently against these corporations.

Belonging to an association of this type allows not only to achieve internationalization but also to complement the experience of the members in order to transmit this improvement to national and international clients.

These results allow demonstrating to the SMEs in the industry that the networks allow having a wider international coverage to offer international freight, warehousing and internal transportation services, depending on the type of company. Not only to stay with a regional development but through international networks receive the support and mechanisms necessary to make the most of the advantages that a global network can offer.

August 02, 2022

Credits:

Roberto Rueda - CEO Bling Logistics Network

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