China Sourcing Management: Logistics and Technology

China sourcing alone is a complex concept even before you get to logistics. Then you realize that there are so many moving parts to the logistics steps alone.

According to an article we recently read in The Economist, giants like Amazon can now offer shipping products within an hour in 50 cities. However, delivering entire containers from afar continues to be time-consuming and costly. But new emerging technology may actually be changing that sooner than you think.

We recently wrote about logistics in our blog, China sourcing: The Future of Logistics and Technology – Part One. In that blog series, we discussed how technology could have a lasting change on logistics. We concluded that the reasons for much of the high cost and slow transit times is the paperwork – legal documents, customs related documents, insurance, and trade related paperwork. The good news is that the digital age is finally catching up and this paperwork is now being digitized.

Banking institutions, insurance brokers and governments are now going digital with most documents with the help of technology.  Companies are creating online platforms that will do all the heavy lifting. One platform already launched is called Batavia and it was created by the tech giant IBM and UBS, a banking institution. According to the IBM Newsroom, this blockchain platform is designed to provide a digital and automated way of arranging, securing and financing international trade transactions. Other such platforms have also been launched by European banks.

The most impactful of these platforms is the Global Trade Connectivity Network that is due to be launched in 2019 by the Hong Kong and Singapore governments. All of these could have a huge impact on reducing transport costs and stimulating trade growth. According to the article mentioned above from the Economist, exports in Asian countries could increase by as much as $257B a year and transport times and costs will decrease by about 44% and 31%, respectively. These savings could also help many importers struggling to offset the cost of new and impending tariffs.

The digitization process, long overdue, could have a massive impact on your China supply chain, helping to negotiate better transit times, lower costs, and may allow you to grow your importing business exponentially.

 

By Jocelyn Trigueros