GOING GLOBAL

WH ITE PAPE R

BUILDING LOGISTICS SUCCESS IN A GLOBAL ENVIRONMENT

IN BRIEF

Globalisation offers tremendous opportunities to companies of any

size or industry that can successfully provide or source products

and services in dynamic markets. This white paper reviews what

companies must master in transportation and logistics to capitalise

on these global opportunities and enhance global operations.

CONTENTS

Understanding globalisation and the changing world 4

Global businesses require a global TMS 6

Global transportation essentials 8

Risk management 9

Final considerations for building a sustainable, global logistics plan 12

5 characteristics of a truly global TMS 13

3C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

Globalisation creates staggering opportunities in growing markets like Southeast Asia, Mexico, India, and Brazil for companies around the world. It has also ushered in a more competitive business environment. Today, whether or not a company produces or sources outside its home country, it is often competing against global organisations.

The rise of megacities1

Cities with 10 million inhabitants or more—a.k.a. megacities—support highly urbanised middle classes. By 2030, the United Nations says that large cities and megacities will produce as much as 80 percent of global GDP. Consumer populations in these burgeoning megacities create opportunities for both consumer marketers and B2B brands that are able to market and sell globally.

As organisations develop efficient and effective global supply

chains, they can ensure a smooth supply of goods anywhere in the

world and survive and thrive. Many enterprises expect their own

internal transportation and logistics executives to determine how to

move products freely and successfully across oceans and borders.

While it is valuable to develop a knowledge resource regarding the

population, infrastructure, languages, politics, economy, customs,

currencies, tax laws and tariffs for each country that shipping routes

touch, it is not enough. The variables of global transportation

change faster than the knowledge can be compiled.

Taking advantage of global opportunities requires a strategy that

transcends continually changing markets. This white paper offers

key considerations to enterprises of any size that are looking to

initiate or expand their international logistics capabilities while

developing global business.2 megacities

14 megacities

29 megacities

41 megacities (projected)

1950

1995

2015

2030

Year

4C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

City Population10 million–20 million

20 million–30 million

30 million +

Tokyo37.8

Jakarta30.2

Delhi26.5

Karachi27.5

Osaka19.3

Tianjin15.5

Chengdu14.4

Chongquin18.4

New York23.7

São Paulo21.2

Mexico City20.4 Manila

22.7Ho Chi Minh City

10.1

Seoul25.6

Beijing24.9

Shanghai34.0

Suzhou10.6

Guangzhou14.0

Moscow17.9

Dhaka18.9

Shiziahuag10.7

Xian13.6Cairo

20.4

Los Angeles13.1

Bangkok14.6

Kolkata14.7

Shenzhen12.0

Wuhan10.6

Buenos Aires12.7

Lima10.9

Mumbai27.8

Lahore10.4

Tehran15.2

Istanbul14.8

Paris12.4

London13.9

Lagos16.1

Kinshasa21.3

Rio de Janeiro12.3

FIGURE 1: The world's megacities 20182 (in millions)

UNDERSTANDING GLOBALISATION AND THE CHANGING WORLD

To succeed in global markets, enterprises and logistics professionals

must be mindful of the factors that drive change in the international

movement of goods:

Infrastructure developmentWhile some countries currently have insufficient markets and

transportation infrastructures to handle fast growth, government

agencies in many countries are placing greater resources toward

that development.

From a logistics perspective, this can include the creation and/

or expansion of intermodal terminals, roads, airports, railways and

ports. Monitoring private and government investment in these

initiatives is critical to the development of an effective global

transportation plan.

5C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

The global gridOur world is highly connected by digital and physical networks.

These networks transcend physical, social, cultural and technological

borders. They help streamline international logistics, but periodic

instability and volatility can still cause hindrances. Global logistics

plans should prepare alternate strategies to cope with these

conditions.

Government attitudesViews regarding the balance of strong economic growth,

environmental policy, community and social responsibility, product

safety and social services vary by country and culture. These

considerations often dictate the development of tariffs, duties,

taxes, customs declaration processes and general import/export

compliance. What is important to one country may not be a high

priority in a neighboring region. Knowing the difference can

streamline border crossings around the world.

Regulatory materials and energy pricingFuel costs will be a determining factor in the decision to approach

global markets, source raw materials from abroad or outsource

manufacturing to low-cost jurisdictions. Companies also need to

consider the costs associated with sourcing scarce materials.

Logistics must be part of any global business strategy to source

products and grow market share. Whether a company handles

global logistics internally or outsources some or all of its

transportation management, they must understand the crucial role

logistics will play in their ultimate success.

Benefits of Outsourcing Global Transportation to a 3PL or 4PL

□ Instantly acquire knowledge of taxes, cultures, currencies, regulations and more

□ Gain access to their technology and worldwide relationships

□ Obtain information about Incoterms® and negotiating contracts

□ Delegate routine tasks that have less impact on the global strategy

□ Allow internal transportation staff to focus on strategic issues

6C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

GLOBAL BUSINESSES REQUIRE A GLOBAL TMSToday, global transportation operations require truly robust,

internet-based management and reporting tools. A company’s

technology must be able to track the potential 30 handoffs and

interactions that can comprise a global move—without appropriate

technology, they could sacrifice visibility, efficiency and profits.

Transportation management systems (TMS) automate day to day

processes, providing organisations with greater efficiencies in their

supply chains, as well as new levels of optimisation not previously

possible.

TMS solutions are offered through licensing agreements, cloud

computing models, managed services or some combination

thereof. Many can integrate on some level with an enterprise

resource planning (ERP) system. A global TMS solution can provide

shippers with global visibility into the details of every shipment.

Such solutions help manage bids for any method of transportation,

anywhere in the world, and coordinate contracts, procurement,

rates, tenders and schedules. Globalised versions of TMS solutions

can also accommodate various language, currency, tax and tariff

considerations.

Organisations should select providers based on a combination of

technology capabilities and knowledge because the consequences

of missing or delaying information can prove disastrous. Third party

providers around the world offer varying degrees of sophistication,

reliability, and robustness when it comes to TMS solutions.

Reporting and analyticsOrganisations that use TMS solutions to optimise their worldwide

supply chain can also compile data and create customised reports.

Developing reports, from carrier and client scorecards to carbon

emissions performance and calculation of total landed costs, gives

enterprises and their executive leaders more strategic intelligence

regarding sourcing, manufacturing, marketing, pricing and

distribution. With powerful business analytics, companies can define

their differentiators in the market, positively impact and use their

supply chains, and improve customer satisfaction.

A company’s

technology must be

able to track the

potential 30 handoffs

and interactions

that can comprise

a global move—

without appropriate

technology, they could

sacrifice visibility,

efficiency and profits.

7C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

Supply chain visibilityGlobal logistics will greatly magnify the inefficiencies of spending

too much time on tactical or low-value tasks. It’s not uncommon for

global shipments to touch many intermediaries, each of whom has a

distinct set of regulations, cultural beliefs and IT capabilities.

Technology alone is not the answer; too many shippers have

deployed TMS software, only to have it fail and drive users back to

their old, laborious duties. The most successful global companies

use strategies that allow for “acceptable tolerances” in their

transportation networks.

They rely on event management features of technology to alert

operators when out-of-the-ordinary situations require attention. In

addition, effective TMS solutions and services should allow users to

generate a real time view of their global networks, and to drill down

into the specifics of each shipment, such as POs, freight bills, SKUs

etc.

International portalsThe ability to communicate with offshore customers or providers

is a critical part of supply chain visibility. Global supply chains

demand access to current information, from advance ship notices

and inventory planning to purchase orders and production status

updates. While there are often significant hurdles to overcome in

terms of language, customs processes, time zones and currencies,

an effective TMS platform—supported by a strong strategic plan—

can greatly reduce delays and other costly problems posed by

international borders.

Total landed costs analysisTrue supply chain visibility goes beyond tracking shipment locations.

It also includes understanding the actual cost of transportation.

Accurately calculating total landed cost—especially as it fluctuates

from a variety of global forces—moves transportation to the center

of the pricing and profitability discussion, since it is crucial to

helping senior leaders avoid surprises. The reason total landed costs

can be difficult to determine is because of the number of factors

involved—from transportation and product classification to tariffs,

taxes and returns, along with quality assurance and IT infrastructure.

4 things you must have to calculate total landed costs.

SKU-LEVEL DATAGet data—down to volume and dimensions—for every product you ship.

YOUR BEST MINDSHave your best people uncover gaps in data, processes and technology.

EXECUTIVE BUY-INTotal landed costs have to be a major enterprise commitment that starts at the top.

TMS TECHNOLOGYCapture company-wide supply chain data, measure against a baseline and initiate improvements.

8C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

A Closer Look at Dynamic RoutingAn established dynamic routing process brings speed and clarity to making the best decision for both the organisation and its customer.

ChallengeA manufacturing facility requires components for a product to meet customer demand. Each of the company’s three suppliers can provide the required components, but at first glance, it’s not clear which supplier makes the most sense.

SUPPLIER ONEA primary component supplier is delayed by severe weather. They can provide the components, but will require 72 hours to deliver.

SUPPLIER TWOA second supplier in Taiwan can deliver in 48 hours, but is charging a premium price for each component shipped.

SUPPLIER THREEA third supplier in Eastern Europe can also deliver in 48 hours, and offers the components at the same price as Supplier One. However, they will charge more for shipping than Supplier Two.

GLOBAL TRANSPORTATION ESSENTIALS

Global opportunities often bring logistics and transportation to the

forefront of the discussion. To capitalise on sourcing and sales in

global markets—and to price goods and services successfully—an

enterprise needs a supply chain solution that can connect, report,

give insight and communicate across the globe.

Supply chain financeOrganisations can maintain the timely flow of goods across

borders by understanding international trade agreements and

requirements—letters of credit, tariffs, terms of sale and other

financial considerations. All financial documentation must be in

order to avoid profit-killing delays in buying, selling and sourcing.

Integrated workflowAn integrated workflow approach can help reach global profitability.

While some TMS solutions offer software platforms to integrate

global inbound and outbound transportation, strategic silos can

still remain in many enterprises. The information and technology

are available to bridge the gaps, but the strategic intent is missing.

Logistics and transportation groups should lead this unification

process to create a truly global infrastructure.

Security complianceBorder controls and customs procedures pose significant and

costly barriers for shipments of all kinds. Automation can overcome

manual data entry errors that are often the cause of significant

delays and fines. Organisations must also develop processes around

security, safety and compliance in various jurisdictions to prevent

unnecessary difficulties and delays, and ensure that suppliers

understand and follow those procedures.

An effective dynamic routing process uses global TMS technology to compare the suppliers and helps the company realise that Supplier Two is the best option. The parts will arrive on time and the premium on the components is still less than the shipping increase from Supplier Three.

SOLUTION

9C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

Real time, dynamic routingGlobal instability and rapidly changing infrastructures in countries

around the world call for dynamic routing approaches. The most

efficient route in December may not be in January, since bad

weather, political instability, fuel prices, capacity or any number of

other factors can influence that determination. To account for all the

variables, effective global transportation strategies will likely employ

TMS technology, processes and expertise, which allow for real time

agility and risk mitigation.

RISK MANAGEMENT

Even the most perfectly planned global shipment can be ruined

by theft, counterfeiting, hurricanes, floods, political unrest,

labor disputes, documentation errors or mechanical problems.

Overcoming these hurdles requires a strategic view of supply chain

risks.

The risk management role is essential for global supply chains

because preventing and managing risk associated with disruptions

is more difficult on a global level than it would be regionally or

locally. Even in organisations with dedicated risk management

staff, questions can arise about who is responsible—headquarters,

regional offices or third party transportation providers—

for predicting, tracking, and resolving disruptions, and for

understanding International Commercial Terms (Incoterms®)3 and

associated risks around contracts, liability, and insurance.

Companies must decide how much time, money and effort

should be allocated to prevention vs. response. While strategic

responsibility should reside at the top of the supply chain, it is

critical to ensure that relationships are strong enough with suppliers,

and that all parties understand the risk priorities, prevention

strategies and response plans.

Fastest Rising Supply Chain Risks4

Increasingly, managing supply chain risk means not only developing deeper supply chain relationships and collaborative planning, but also preparing for widespread, systemic disruption.

Some 44 percent of the 1,193 respondents to an SCM World survey reported being “very concerned” about data security and IT incidents like cyberattacks, compared with 26 percent for natural disasters affecting supplier facilities and 19 percent for war, terrorism or other geopolitical issues.

10C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

A risk management plan should include:

AwarenessMany providers in the supply chain may have little or no risk

management capabilities, so identifying the relative strength of core

suppliers is important. Keep senior management aware of potential

risks, since these vulnerabilities can have an impact on decisions

regarding where to source, manufacture and market products.

Awareness and understanding of Incoterms® can help minimise

confusion and misunderstanding of trade contract responsibilities

and avoid the associated, costly risks.

AccountabilityDeveloping a risk management plan that clearly spells out the

responsibilities of regional offices and third party providers and

establishes accountability. Developing and promoting a plan

will contribute to vendor selection criteria—and help all parties

understand the expectations for communication and response.

Rather than wonder whether they need authorisation from the

home office, they can take responsibility for resolving issues and

communicate updates accordingly.

ScorecardsA risk management plan should include detailed scorecards for

evaluating both in-house and contracted supply chain providers.

The scorecards will help everyone understand which capabilities

and responsibilities are most critical. They can also provide the

data needed to make decisions regarding sourcing, manufacturing,

distribution, internal preparedness and vendor selection. Scorecards

should balance risk mitigation, contract and response capabilities.

Quarterly reviewsSuppliers and in-house operations should be reviewed quarterly for

their handling of incidents to promote proactive risk monitoring.

Data collected before and during these reviews will likely contribute

to the strengthening of future risk management planning.

11C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

Visual mappingA visual map of all transportation routes, with identified risks

called out as “hot spots,” promotes a greater understanding and

assessment of risk. By monitoring weather events, political unrest,

and other elements of risk and visually displaying them on a global

map, shippers can develop highly effective prevention and response

plans. In addition, a global sales team can use a consolidated

visual map of Incoterms® during contract negotiations and trade

operations, giving them crucial insight as they navigate the

conditions of each transportation transaction.

Logistics Outsource Provider

Regional Authority

Home Office

□ Dynamic routing tactics

□ Customer communication/

updates

□ Carrier reassignment

□ Insurance claims

□ Incoterms®

□ Dynamic routing strategy

□ Scorecards and assessments

□ Contingency plans

□ Incoterms®

□ Global transportation

strategy

□ Supply chain integration

□ Contracts

□ Emergency response plans

□ Incoterms®

Determining who has the decision-making authority for different parts of the supply

chain is a critical component to success. All involved parties should understand their

own responsibilities as well as those of others involved—especially when there is overlap.

FIGURE 2: Global risk management model

12C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

FINAL CONSIDERATIONS FOR BUILDING A SUSTAINABLE, GLOBAL LOGISTICS PLAN

Globalisation moves transportation to a more prominent role in any

organisation. Growth-oriented enterprises and organisations that

source from around the world will face a continuing challenge—

the added cost, complexity, and risk that come with moving

raw materials or finished products across multiple borders. With

integrated systems, strategies and processes, organisations can

coordinate the efforts of customs brokers, freight forwarders, air

and ocean carriers, logistics providers and suppliers to create an

effective transportation plan.

At the same time, global transportation is not an in-house

operation. It requires deep cooperation and integration of all

these parties—in terms of both technology platforms and strategic

intent—which is essential for an effective global transportation plan.

By developing systems, strategies, processes and insights that make

efficient use of both time and space, organisations can streamline

communications and increase competitiveness in the global

marketplace.

FIGURE 3: Levels of complexity for global supply chains

Not all supply chains—even global ones—require the same solutions. Tailoring the

level of complexity involved can mean the difference between success and failure.

ADVANCEDGlobal TMS technology and highly strategic outsource model

BASICEntry-level technology and regional relationships

INTERMEDIATETMS technology and more intricate outsource model

13C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment

Single System Architecture Separate TMS systems on individual continents that send data

to other discrete systems on other continents do not allow a true

real time, global view of a transportation network. A truly global

TMS system spans all continents with no discrete data hand-offs

and provides visibility within the same operating environment without

exporting and importing data into standalone systems.

Supply Chain Visibility From a single platform, an organisation should clearly see their entire

supply chain, from procurement to drill-down details on every shipment

worldwide. In a truly global system, leaders can capture relevant data, analyse

it and use the information to make more sustainable business decisions that

achieve both cost and service goals.

Multiple Services and Modes Companies should be able to see details for air, ocean, rail and road

capabilities, and obtain utilisation reports for each. Customs compliance

rigor should also be part of the system to manage import and export customs

activities.

World-Ready A global TMS accommodates specific currency, language, tax and tariff

requirements for each country or region.

Management Reports By providing statistical business intelligence insights, truly global TMS

systems can support more profitable management decisions and greater

customer satisfaction.

5 characteristics of a truly global TMS

14C.H. ROBINSON | Going Global: Building Logistics Success in a Global Environment 14

1. Edith Lederer, “UN Report: By 2030 two-thirds of world will live in cities,” AP news, May 18, 2016, and Simon Torkington, “India will have 7 megacities by 2030, says UN,” weforum.org, October 5, 2016.

2. City Mayors Statistics, “Largest cities in the world in 2018,” March 2018. Population figures used in this map include residents of cities, plus residents of urban areas that are socially, culturally, and economically dependent on the core city.

3. Incoterms® define the responsibility of importers and exporters (buyers and sellers) regarding liability and the transfer of liability between parties during the transportation process. Although they do not cover ownership of the goods, global trade practitioners rely heavily on Incoterms® when negotiating international sales contracts to reduce the risk of trade-terms confusion and outcomes that can affect shipping costs, tariffs, and insurance.

4. Kevin O’Marah, “Supply Chain Risk 2020: New Worries,” Forbes.

com, October 6, 2017.

END NOTES

ABOUT US

At C.H. Robinson, we see things differently. We believe in

accelerating global trade to drive the world’s economy. Using

the strengths of our people, processes and technology, we help

our customers work smarter, not harder. As one of the world’s

largest third party logistics providers (3PL), we provide a broad

portfolio of logistics services, fresh produce sourcing and managed

services through our global network. In addition, the company, our

Foundation and our employees contribute annually to a variety of

organisations.

For more information, resources, and our blogs,

visit www.chrobinson.com.

Teleportboulevard 120, 1043 EJ Amsterdam The Netherlands | info-europe@chrobinson.com | www.chrobinson.comEN-UK © 2018 C.H. Robinson Worldwide, Inc. All rights reserved.

The information in this white paper has been compiled with the greatest possible care, however, no rights whatsoever can be derived from its contents. C.H. Robinson does not guarantee, warrant or represent the accuracy or completeness or fitness for a particular purpose of the information contained herein.