Why corporate intelligence is increasingly key to success in the global transport & logistics sector

05 May 2015

Some industries depend critically on world-class corporate intelligence to run their operations and manage risks. Historically, the transport & logistics (T&L) sector hasn’t been widely regarded as one of them. But today, a collision between geopolitical trends and industry business models has taken T&L companies’ need for corporate intelligence to a new level.

To understand why, look at the radical changes under way in the global trade landscape, with reports virtually every week of sanctions being lifted in a different territory. Whether it’s Cuba, Iran or Myanmar, the effect is to open up an entire new market to international trade. Meanwhile, irrespective of changes in sanctions, the burgeoning middle classes in emerging markets are creating new commercial opportunities.  What’s more, the risk of a market closing quickly - such as the recent example in Russia - creates a risk of stranded assets and obligations which can cause financial and reputational issues.

All of this adds up to rapidly escalating potential for T&L companies to enter new markets. However, expanding a T&L operation across the world brings its own challenges, partly due to the agency business model that most industry players use in each country.

What challenges? Well, when someone outside the industry sees a van branded by a global T&L company, they commonly assume the business owns the van itself. But that’s hardly ever the case. Global T&L companies are business-to-business operators that lift cargo between destinations. But once the cargo arrives at – say – Dar es Salaam airport, then the company’s local supply chain kicks in. This invariably consists of local providers that use the company’s brand and website, but are actually separate independent contractors. 

So a T&L provider acts as a ‘virtual’ company in each market, operating through third-party suppliers that typically include handling agents, sales agents, freight forwarders and legal representatives. Each of these separate providers plays a vital role for the T&L business. But, if something goes wrong, they each represent a risk to its global brand and reputation. To the outside world, the T&L company’s contractors look like part of its business, so any misdemeanours or ethical breaches they commit – bribery, environmental impacts, even poor service – will rebound on the T&L operator’s brand.

This risk explains why we’re seeing growing interest among our T&L clients in our market-leading corporate intelligent services, including detailed due diligence at a local level on existing and potential suppliers. And a solution that’s seeing especially strong demand is our ‘Pioneer’ offering, which provides clients with a comprehensive, in-depth view of the risks around areas including security, politics, the environment and tax in a new market – helping them decide whether and when to enter it.

What’s more, even when a country is still subject to sanctions, some categories of trade are still permissible. Examples include selling pulses – such as lentils – in Myanmar. We can help companies identify and seize such opportunities now, meaning, they’re in pole position to lead the race into the country once sanctions are lifted. 

The message is clear. In the past, corporate intelligence wasn’t thought of as a key requirement for T&L companies. Well, it’s time to think again.

Robert Mitchell | Director, Corporate Intelligence
Email |Tel: +44 20 7804 4109

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