Beyond the basics: Advanced strategies for optimizing international logistics

Boost your company’s efficiency with advanced international logistics optimization strategies. 

An effective supply chain largely relies on a robust and optimized international logistics network. International trade is more interconnected now than ever before due to rapid technological innovations and globalization. 

A supply chain company encounters various challenges in efficiently moving commodities across borders while aiming to reduce risks, costs, and delays. Supply chain optimization plays a key role in maintaining competitiveness and guaranteeing seamless operations, considering the rising complexity of world trade. 

The global logistics market was USD 8.96 trillion in 2023 and is projected to reach USD 21.91 trillion by 2033 at a CAGR of 9.35%. This indicates a surge in international trade despite economic uncertainties. 

Considering the lucrative export market, local manufacturers and retailers are striving to expand their business beyond domestic borders. Businesses are also increasingly exploring new market opportunities by offering affordable products of acceptable quality to cater to price-sensitive consumers in the import sector. They also need to adopt contemporary logistics technology solutions and think beyond conventional approaches to maximize their operational efficiency. 

This article highlights advanced supply chain optimization strategies that can help you save costs, increase efficiency, enhance customer satisfaction, and guarantee a sustainable future.

7 key strategies to optimize international logistics

Businesses need to adopt advanced strategies to mitigate the dynamic challenges in logistics, especially in international shipping. Here are 7 top strategies to manage international logistics:

1. Infrastructure and network design

The success of international logistics relies largely on a strong logistics network. Well-organized infrastructure and effective network architecture guarantee flawless operation of your supply chain. Here's how you can maximize your logistics technology and network:

• Global footprint: Strategic placement of warehouses and distribution hubs close to important trade centers across the globe will help you significantly lower lead times and shipping costs. 

• Hub-and-spoke architecture: This model will enable you to centralize major warehousing operations while preserving satellite hubs for last-mile delivery. This, in turn, would help improve transportation efficiency.

• Multimodal transportation: Companies that use multimodal carrier bases usually experience 15% cost savings through efficient resource usage. You can decrease the dependence on any one mode of transportation through multimodal transportation systems that include a mix of road, rail, sea, and air. Furthermore, this significantly reduces logistics costs and transportation lead time.

2. Integration of technology 

Incorporation of advanced logistics technology into your processes is no longer optional; it's a necessity to thrive in the highly competitive market. 

The global AI in supply chain market was valued at USD 5.05 billion in 2023 and is anticipated to expand at a CAGR of 38.9% from 2024 to 2030. The emergence of blockchain, IoT, and AI-powered platforms such as Pando.ai has revolutionized the logistics tracking and controlling system. According to Marico, a leading global FMCG company, "Pando aids in the automation of supply chain and logistics." 

The adoption of advanced logistics technology plays an important role in the following:

• Supply chain visibility: Modern technologies offer insights about supplier and carrier performance. You can predict trends based on historical data with generative AI solutions, leveraging its capacity to evaluate vast datasets and simulate scenarios. This makes it a strong tool for anticipating future disruptions. You can also identify roadblocks in real time and take immediate action to eliminate the disruption.

• Predictive analytics: AI-driven predictive analysis allows you to accurately forecast demand, foresee delays, and reroute shipments, thereby minimizing downtime and optimizing transport paths.

• AI-powered freight audit and payment (FAP): Freight audits and payments have reached new levels with the help of AI and ML. AI-driven OCR technology improves invoice accuracy and reduces invoice processing time. These advanced tools are capable of identifying anomalies in invoices. 

3. Inventory optimization 

• Managing inventory levels effectively over several sites is one of the major challenges in international logistics. Inadequate inventory control may result in understocking or overstocking and a rise in holding costs.
• Just-in-time (JIT): Implementation of JIT inventory techniques guarantees that you have just enough supply to meet demand without overstocking warehouses. This helps avoid excess inventory carrying costs (almost 15%-30% of the total inventory cost), insurance costs, and chances of obsolescence.
• Safety stock: Maintaining safety stock at strategic locations facilitates mitigation of unanticipated demand spikes, geopolitical concerns, or transit delays. 
  

4. Risk mitigation and contingency planning

International logistics can be vulnerable to external risks such as political unrest and natural disasters. Businesses need strong risk mitigation plans to effectively manage the following potential disruptions and ensure continuity in their operations: 

• Political and geopolitical risks:

  Unrest in one region may wreak havoc on your entire logistics system. You can implement Pando's Transport Management System (TMS) to enhance risk mitigation, alongside diversifying your suppliers and travel routes, as it provides real-time visibility and optimizes logistics efficiency. 

• Natural disasters: Weather-related disruptions such as floods, earthquakes, and hurricanes can disrupt your logistics network. Using predictive analytics will enable you to alter strategies and proactively address potential issues.

• Currency fluctuation: Currency fluctuations often impact prices. Risk mitigation measures may include hedging tactics to secure exchange rates or diversification of currency assets across different locations.

5. Build strong partner relationships 

Businesses need to collaborate with trustworthy vendors and build strong relationships with their logistics partners, customs handling agents, freight forwarders, and suppliers to tide over constant fluctuations in market conditions. They need to: 

• Evaluate carriers based on their past performance, commitments, carbon emissions, etc.
• Collaborate with experienced freight forwarders, who provide insightful analysis of customs procedures, compliance, and rules. This would minimize delays and guarantee better transit. You can also get real-time updates on milestones reached.
• Approach carrier negotiations with a focus on long-term benefits. Consider not only negotiating on cost but also other terms and conditions such as payment terms and incoterms. 
   Partnering with reliable vendors, customs handling agents, and logistics firms helps businesses ensure compliance with international laws, uphold ethical sourcing practices, and increase supply chain effectiveness. 

6. Order consolidation 

Order consolidation plays a key role in maximizing cost efficiency in freight transportation. Through an advanced transportation management system (TMS), businesses can combine smaller orders into larger shipments to take advantage of lower bulk rates given by carriers. 

This significantly cuts down the per-item cost, reduces fuel consumption, and decreases environmental impact. Additionally, order consolidation results in fewer stops and quicker deliveries for customers. 

7. Carrier performance evaluation and freight spend analytics 

Your freight audit and payment (FAP) process can be a great support to analyze freight spend and carrier performance. Modern TMS platforms capture critical data, analyze them, and provide insights on freight spend. 

Data-driven analytics let you know which carrier partner is performing well and which one is not. Based on data, you can make strategic decisions to segment your customer base, consolidate shipments, optimize inventory, and select better routes. It is essential to analyze carrier performance to identify areas for improvement, reliable partners, and reasons for potential delays. 

Implement advanced international logistics strategies with Pando.ai 

Advanced products of Pando.ai can help you maximize global logistics with intelligent freight procurement, optimize container booking, and seamless ocean shipment operations, and ultimately, enhance customer satisfaction. The company's end-to-end logistics technology platform can help you better predict analytics, achieve supply chain optimization, and enable easy partner collaboration. Pando.ai also facilitates the integration of sustainable logistics practices, enabling you to match your logistics plan with ethical sourcing and environmental objectives. 

Leveraging Pando.ai's cutting-edge system can empower your business to excel in supply chain optimization and risk mitigation while ensuring strong, effective, and sustainable logistics operations. 

Book a demo for more information on Pando's products.