Why is a reliable logistics partner critical to a cross border business?

Why logistics is a critical step in the successful establishment of a cross border business and strategies that will help pave the way.

As e-commerce business in India gain momentum, it becomes important to understand aspects of trade that are fundamental to conducting successful cross border trading.

For cross-border e-commerce trade, a safe and reliable logistics and transportation system is an important link to ensure smooth progress. But as a business you need to do much more than that. This article elaborated on logistical strategies that your business must implement to ensure successful delivery and movement of products every single time.

We should start with he first step viz. establishing a seamless logistics system. 

Conducing cross border operations is not just sending out goods from your country to another. It is so much more. Your business needs to keep in mind the different aspects of logistics involved in cross border trading. These include third-party logistics, logistical alliances, establishing warehouses overseas goods collection logistics, and finally bonded area logistics.

Logistic solutions that can provide all the above-mentioned solutions can be reliable but also expensive. Depending on the size and nature of your business, you might need to depend upon logistics alliances. In a nutshell, these are third parties that will provide various aspects of logistics in a coordinated process and help you move your consignment. Once again, based upon the nature of your consignment, you might want to consider establishing warehouses overseas. I believe this will help you speed up the delivery process and reach your customers faster. It is important to consider all factors including credibility of the third party, whether or not they are listed under denied party services, expenses over time and your business potential in the area overseas etc. before zeroing in on a logistical partner.

I have noticed that a lot of business conducting cross border operations, especially with the United States, find it very important to work with logistical partners who can give their business an advantage. Partners who have applied for certifications under US Customs and Border Protection will have easier access to the US and that will be an advantage for your business.

Let me give you an instance. One of the layers under US CBP is the Customs Trade Partnership Against Terrorism. Signing up for this voluntary certification allows logistical companies to reach destinations faster with fewer inspections and gives them access to Free Trade and Secure Trade Lanes. With shorter wait time at borders, your business can reach its customers a lot faster, increasing your credibility. Ensure that your logistics partner have the right certifications to give your business a boost. 

While you always have the option to depend upon warehouse provided by your logistics partner, it is better to establish warehouses near borders to provide greater flexibility and reduce inventory congestion.

Let me take you through another example. Obviously, your consignment is not the only one attempting to cross the border. Hundreds and thousands of goods are waiting to cross the border to reach their customers. Congestion at the border can limit the number of trips a truck can make across the border. If your warehouse is situated far away from the borders, there is a great possibility of increased delays. Shorter distances between the warehouse and the border will allow multiple trips and improve overall efficiency. As your business grows, your warehouse and the border will allow multiple trips and improve overall efficiency. As your business grows, your warehouse can also be converted to a distribution hub, giving your business an added advantage.

But let’s not forget, there is also a downside to this strategy. Holding on to inventory can increase your risk of inventory exposure. Not to mention, setting up a warehouse overseas will require a substantial investment.

Growing customer demands means your business needs to work fast. An optimized transportation management system will help your business track its consignment in real time, stay a step ahead of any tax compliance requirements and maintain transparency with the customer. This can be possible if your business or logistical solutions partner make use of tax compliance technology that will keep you ahead of the curve. A transportation management system will not only give your business enhanced visibility, but it also helps reduce risks and save money.

A credible tax compliance technology solution provider can partner with you or your logistics vendor to integrate their cross-border trade solutions and help you keep your compliance requirements in check.

Establishing a successful cross border operation is no less than a Herculean task. But the above-mentioned strategies can help your business stay on the right track to making cross border logistics seamless and efficient.

Author: Sainath Gandewar, Sr. Director Finance, Avalara India

Publication: ETRetail