Logistics the nexus of the value chain integration

Today we live in a globalised world and supply chains are becoming longer and longer, it is not uncommon for a product to be manufactured in China and sold in the Netherlands.

This has allowed world trade to advance, but it has also made it more vulnerable to a shock in one country. This fact can be seen in some events that have taken place that have affected the evolution of world trade. One of them was when a cargo ship ran aground in the Suez Canal, which, according to the BBC, accounts for 12% of world trade and its blockage affected Western countries. On the other hand, the pandemic, which has hit many companies in the sector hard.

The pandemic has impacted the sector heavily, causing imbalance in the whole trade chain. On the one hand, many production factories were temporarily closed as well as many physical shops. This caused the purchasing model to change, with online shopping being of particular importance. This had an impact on prices, for example the average price of a container reached a high of $11,109 on 10 September, while in January 2020 the price was $1,500 (source: https://fbx.freightos.com/), and the price of a barrel of Brent crude oil is also on the rise. These increases are disrupting the sector, which has an impact on the end consumer.

The logistics sector as a major link in the whole supply chain needs to be aware of the different scenarios in order to be prepared for adverse situations. This will be achieved through the collection and analysis of data such as manufacturing lead times, collection point and place of delivery of goods, among others. In addition to this we add other data that can be essential for the sector, such as oil prices, weather conditions or mapping data.

Managing this data allows us to obtain valuable information for the sector, such as oil price forecasts, the fastest route for each journey depending on traffic and weather conditions, the amount of petrol required for each journey and the location of the goods at all times. With these insights we can optimise the process, reduce transport costs and better manage deadlines.

A highly digitised logistics sector together with a data-driven management approach, will impact the rest of the chain. It also brings visibility and transparency to the entire supply process.

In short, an effective and efficient logistics and transport sector is the basis of trade. It has become the nexus in the value chain, and through data management it now plays a fundamental role in the economic development of a country.