Tips to solve logistics problems quickly

What action do you take if you do international business and encounter logistical problems? 2 experienced entrepreneurs tell you how to avoid major problems.

1. Respond to changes immediately

When doing international business, your product sometimes travels long distances. So, the logistics chain is longer than when you only do business in the Netherlands. Multiple transfer points for your goods, or delays at Customs Administration due to the required paperwork can disrupt delivery to your customer. So, react immediately if you notice a change in the logistics chain. This way, you can prevent further problems and keep a good relationship with your customer.

At the moment, many Dutch importers are affected by the unrest in the Red Sea. Cargo ships there are being attacked by rebels. Many shipping companies are opting for a different route. Around Africa. This causes delays, more expensive transport, and higher prices.

Erik de Jong and Feyzi Tan faced logistical challenges a few years ago. In this article, they tell how they handled the situation. De Jong imports and sells timber with his business BouwFactor. In 2021, there was a sudden question of whether he could keep supplying. Timber was becoming scarce and that was felt on all sides.

Restless market

De Jong noticed the shortage as early as January 2020. "Due to the high demand, we needed more timber from our German supplier than planned. We could get the wood in November, but we wanted it right before the summer." From a conversation with his supplier, it became clear that there was serious turmoil in the timber market: felling and processing are slower due to corona measures, demand is rising, and a shortage of containers is developing.

2. Ensure adequate supplies

Apart from a lack of containers, the Americans were causing some unrest. "Trump had introduced an import duty on Canadian lumber. As a result, Americans turned to Europe. They were quite willing to pay more. Once I knew that, I made arrangements with my German supplier for a higher price."

Not much later, De Jong gets another signal. On Surabaya, his cargo of timber is ready for shipment. "With the request if I wanted to pay another $8,000 for the transport. Normally those costs are included in the total price. The wood was a lot more expensive and on top of that came the transport." Although De Jong felt literally put on the spot, he agreed. ‘Because of the craziness, we wanted stock,’ he says.

"Call it old-fashioned, keeping a big stock. But we were so happy afterwards that we accepted the price increase and bought timber on time. Around me, I see that competitors ran out of wood." Storage costs money, De Jong also knows. So, he is not the cheapest. ‘And yet, for us, there it is better to have stock than to have to take stock later’.

3. Find new partners

BouwFactor does not bet on one horse when it comes to suppliers. Their timber comes from all over the world. De Jong hoarded as much wood as possible from his regular suppliers during the shortage, but he also looked for new partners. "Sometimes I approached parties knowing that it would not get me anything directly. At least that way I let them know that we were looking as buyers. That also resulted in lucky breaks."

4. Place an extra order

Feyzi Tan is supply chain manager at Go-Tan, supplier of Asian food products. He, too, encounters logistical bumps. ‘One of our containers was on the Ever Given,’ he says. That cargo ship was stuck in the Suez Canal in March 2021 and did not arrive in Rotterdam until months later. Tan acted on that delay immediately so that the flow of goods at the business remained on track. He placed an extra order when his container was stuck.

‘We took precaution and immediately ordered an extra container,’ he says. Tan is happy that there were no perishable goods in the container and, afterwards, looks back with satisfaction at the solution chosen. "The cargo ship with the extra container caught up with the Ever Given and even arrived earlier. We had our stock back to normal quickly."

5. Look at other forms of transport

On rare occasions, Tan has already opted for an even faster solution: air freight. ‘We tried that once when we launched a new product,’ he says. The project was running neatly on schedule in the Netherlands, but production in Asia was lagging behind. The first deliveries had already been agreed. "We eliminated that delay by using a plane. That was expensive, but the alternative was to sell ‘no’."

6. Establish clear product specifications

Food and consumer products must comply with regulations. If a shipment of herbs, spices or other food products is rejected, it may not be imported. Products are destroyed or go back to the supplier. Then the question is who pays for the costs; you or your supplier.

The Netherlands Food and Consumer Product Safety Authority (NVWA, in Dutch) checks cargo at points of entry, such as ports and airports, in cooperation with the Dutch Customs Administration.

Go-Tan makes every effort to prevent rejections even before a shipment leaves. ‘Within Europe, strict product requirements apply. So, our producers in Indonesia and Thailand work with very clear product specifications. Everything has to fit within the rules."

7. Have the shipment inspected beforehand

You prevent shipment from being rejected with an inspection in your supplier's country. From the Netherlands, Go-Tan keeps control. They receive the results of analyses. For high-risk products, it goes even further. ‘Then we do pre-shipment checks. We first get a sample delivered for our own analysis. This happens, for example, with crackers. This way, we check whether it does not contain incorrect ingredients connected to allergens. Only after an approval from us, the delivery may be shipped."

8. Check your opportunities for growth in advance

When demand for a product increases unexpectedly, you want to scale up quickly. This works better if you know in advance that your suppliers have sufficient capacity. Tan experienced this with coconut milk. When restaurants closed during lockdowns, demand exploded. ‘People may have started cooking more creatively at home,’ he thinks aloud. Scaling up supply was not that easy. ‘In the end, we had to sell “no” to our customers,’ he says. The business continued to supply, but not in the desired quantities. "We communicated directly with our customers about that. They knew they had to make do with less."

Capacity per supplier

More stock ultimately proved not to be the solution, as demand kept rising. "That is why we mapped the production planning together with our suppliers. Now we know per supplier how much room there is for growth. As soon as we want to scale up, we already know what is possible." Go-Tan looked for a second supplier where necessary.

9. Be open and honest

Go-Tan, like BouwFactor, is facing price increases. Raw materials are more expensive, various costs are rising. In recent years, containers and transport were also much pricier. "Looking for alternatives in Europe is not really an option for us. We want to stick to authenticity and taste as it is. That is best done in Asia. As a result, our products have gone up in price. We are open and honest about this to our customers. They know the reason and understand this." If you substantiate a price increase well, chances are your customer will accept the increase.