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The Hidden “Lane” of Logistics: Communication in the Modern Global Market
When a company wants to move a good or series of goods for a client from its warehouse in country X to country Y, when does the shipment start? Is it when the order is placed by the client? Is it when the material is handed over to logistics via a system or email? Is it when the shipment leaves country X entirely, or just the warehouse? The modern market sees more movement of goods from all sizes of companies and nations across the world than has ever existed in history. Enormous focus and development is placed on the methods of transportation (such as airplane, truck, or ocean liner), or software for tracking the movement (like Transportation Management Systems, or TMS). But what about all the correspondence about moving a shipment? How does one effectively communicate about logistics?
This is a short, introductory article into the basics of communication. First, some topics need to be explored in order to properly contextualize what it meant. There will be more articles to further follow up on, and go into more detail on the ‘hows’ and ‘whys’ of international communication in the global market for the purposes of moving goods later. For now, we must instead start with the basics to then process effectiveness in this ever-shifting market.
What constitutes communication?
The transfer of ideas, concepts, and information from one party to another. Communication in logistics can be as simple as a date for when cargo is due to depart or arrive. The problems of communication in today’s world arise once the topic becomes more complex. When specific documents or software is needed to export/import cargo through customs (such as Cargo X requirements for importing in Egypt; chamber-attested invoices for imports to Kuwait; license approvals for numerous countries, etc.), then the transfer of information is no longer as simple. Complex software, documentation, customs processes, or handovers of material cause misunderstandings. Every misunderstanding costs time, and quite often, money.
The daily misunderstandings are where many logistics operations face their hardest strain when competing in numerous countries across the world. The most difficult part of communication is that it is nearly impossible to qualify what “effective communication” entails. These requirements may change depending on the region, culture, language, laws, as well as the specific circumstances of an individual shipment. The lack of qualifying how communication affects shipments, especially compared to definite dates like departures, arrivals, receiving documents, sending requests, etc., makes global communication at least partially “hidden.”
Communication in global logistics operations is hidden not because it is secret or difficult to trace. Communication in the present is not hidden from view, but rather ubiquitous throughout the current business world. Because there are so many inputs and outputs for moving a good (and that these movements frequently involve so many separate parties often interlinking and separating like a map of feudal relations in Medieval Europe) there is often too much communication. And whether it is due to too many words or too little; these emails, instant messages, phone calls, and automated messages often delay or adversely affect the transport of material. With so much communication though a myriad of channels and services it is necessary to delineate communication that is good and bad in the global market.
What is the modern global market for logistics?
An answer to that question would not be one answer, nor would it be succinct enough to fit in an essay. At best, the answer may be a studied and elucidated response in the form of a series of one hundred scholarly monographs, each several thousand pages, just for the current year. In the face of such work and demands of time, allow me to offer a much shorter and simpler answer: the global market for logistics is one that occurs across the globe. The simplicity of the answer hides the difficulties that arise in a “global market.” There is no single currency, language, government, legal system, or method for moving through the global market. There are suggestions made by the International Chamber of Commerce and other organizations. But there is no single, legally binding system. One element is present in all of these tribulations for global movement and logistics operations: communication.
The biggest change to the global logistics market occurred as a result of government reactions to COVID-19. Although the current market has largely recovered after COVID, it is no longer the same as before and it will likely never return to the status quo ante. Bookings, carriers, and methods of transportation are all still impacted by the stresses and strains of the past. Logistics operations gained more public and political attention after numerous products disappeared from market shelves, or when orders for birthdays and Christmases missed their needed dates due to market conditions. These factors may be lessened for now, but logistics is forever fighting against delays that occur from the spheres of man, equipment, and the environment.
What is the hidden “lane” of logistics?
A lane in international logistics is a route across borders (such as the United States of America to Mexico) or two ports (like Long Beach to Shenzhen for ocean). The hidden lane of logistics acts the same – there is an origin and a destination. But the focus is too often on just the material movement, the physical movement, that the movement of ideas and concepts is forgotten. Here’s a simplified example:
A client and buyer in Germany states that they need their product in country by X date.
Is this effective communication?
What if they state instead that they “need it as soon as possible in country with no restrictions on expenses”? What is better? One provides a solid date, the other gives a malleable date but unlimited resources. Both of these are terrible ways of communicating to logistics operations, about logistics operations, or from logistics operations. The core of what needs to be communicated from the beginning is: what, when, where, how much, why. In the explanation below I will avoid using Incoterms (EXW, FCA, DAP, CPT, etc.) and including topics like legal responsibility, transfer of ownership for taxes and duties, etc. as that will very quickly muddy the waters and is beyond the scope of this essay.
What is being moved?
What is the weight and dimensions? What are the contents? When does this need to reach its destination? Not when is it preferable. Not when is the best time. But when is it necessary? Where does this need to go? Depending on the contract, this could be a warehouse, building, or port. Not where should this go, but where is it necessary to move the material? How much can be spent to accommodate this necessary date and necessary location? It may be good to have two limits here: one that is a preferred cost and one that is the absolute limit on what works for the shipment. Finally, why are these needed as such?
Here's another simplified example:
Client, on 5 January: I need eight boxes of merchandise, each packed in wooden boxes 5’x2’x1’, weighing 800 lbs, to arrive in the Netherlands by 5 May. Anytime after is unacceptable. The preferred expense is up to $5,000, but special accommodations can be made, if needed, up to $12,000. These crates are a customer demand of unique and rare merchandise. Any arrival after is too late to maintain the established contract.
How is this as a request? It states that what, when, where, how much, and why. It is not as brief as the previous example, but it would result in a much shorter phone call, or far fewer emails and instant messages. To use logistics terminology, this request is the origin of the hidden lane. A request for movement has been made from the client, and fulfilment of the movement is the destination for logistics. In this example, there would be further clarifications about customs document, if the material was hazardous (does it contain lithium batteries or require a material safety data sheet?). But these are clarifications that help push a shipment along towards a defined point: it’s destination. Logistics is provided with a destination, a budget, a description of the material to either start getting quotes or adjusting the provided budget based on established contracts, and a definite time that it is needed, and finally a reason.
The reason is crucial as material that is “unique and rare merchandise” denotes that a proper logistics agent would not move with a Less than Container-Load (LCL) where goods are more likely to be damaged or delayed. All of these elements create an origin of a shipment as an idea. And all of these are needed to start the process of moving a good across the planet, political borders, and economic zones. It is also crucial to be knowing of necessity. Preferences for arrivals or methods of transport may change depending on availability. Necessities, by nature, do not. Logistics is an ever-changing market where too often preference is made necessary. But rejection of good by airlines, delays due to improper documentation, weather events, closing of political boundaries or transport system, and limits of equipment like containers, vessels, trucks, or airplanes too often showcase that necessity is immovable for preference.
The most important movement in logistics is not the material around the planet, but rather the understanding of necessity among at least two parties of different cultures, priorities, and systems across the world.
Contributor: Trevor Brettmann
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.