3 Tips for Small and Mid-sized Businesses to Take Advantage of Rebounding Supply Chain
(NewsUSA) - Operating from the epicenter of commerce, small and medium-sized businesses (SMBs) form the core of the global economy—and while fears of recession continue to loom, many of these enterprises remain optimistic. In fact, 57% of SMBs expect revenue to grow and 58% plan to expand their workforce in the next 12 months according to recent WSJ/Vistage Small Business CEO Confidence Index reporting. However, despite this rise in confidence and rebounding economic circumstances, some businesses continue to remain operationally paralyzed into a state of “do no harm” rather than focusing on new avenues for growth. This is particularly true for SMBs hesitant to make changes within global imports and exports given the turmoil supply chains experienced in recent years.
According to the U.S. Census Bureau, Department of Commerce, SMBs accounted for $413 billion of the known U.S. export value and $651 billion of the known U.S. import value. Unfortunately, these SMBs are too often relegated to a secondary priority amidst larger, well-established entities that enjoy high-touch services by multinational shipping companies.
The reality is shipping and logistics are the lifeblood of international trade, but it is fraught with challenges ranging from price fluctuations, language barriers, customs, regulations, and more that even the most seasoned and sophisticated stewards of global shipping within companies find complex, confusing, and cumbersome. Fortunately, resources like digital-first freight forwarders are forging a new frontier for SMBs by changing the landscape and democratizing international shipping.
“With expanding markets, tightening margins, and many supply chain restrictions and regulations, freight forwarding can make or break a dynamic enterprise in today’s world,” said Carmit Glik, CEO and Co-founding Member of Ship4wd, a leading global digital freight forwarding solution for SMBs. “No matter how large or small, every single international shipment deserves an advocate, and a user-friendly platform can help SMBs take all the guesswork out of door-to-door, and port-to-port journeys.”
As recent supply chain challenges rebound to favor businesses once again, Glik shares three ways companies can leverage freight forwarding to reenact growth mode strategies that have otherwise been paused by many enterprises out of an abundance of caution.
Protect Operational Cash Flow through the Right Partnership in Shipping & Logistics Processes
Recent reports indicate only 26% of Main Street businesses have access to enough funding to stay open for more than 60 days in the event of a cash flow shortfall, and 17% have no access to funding at all, according to a “Main Street Health Q1 2023” study from PYMNTS and Enigma. Given these cash flow risks, it’s critical for small and medium-sized businesses to employ tactics to protect their financial position, especially as they work to capitalize on the current global trade environment. This is where a strategic freight forwarding partnership can help by assessing various factors to strengthen a business’ financial position such as flexible payment structure, inventory financing, guaranteed shipping allocation, and much more.
Consider What International Shipping Options Are Right for Your Business
While air freight is frequently considered faster and more reliable than ocean freight, it typically transports smaller volumes and high-cost goods, coming with exponentially higher costs. For larger shipments, ocean freight may be the most financially responsible avenue. Recognizing this, there are two primary ways businesses can ship across international waters—LCL (Less-than-Container Load) and FCL (Full-Container-Load). LCL shipping can be a more affordable option for SMBs shipping lower volumes, but getting the cargo from point A to point B may take longer due to additional handling and documentation, as well as increased loading and unloading times, since there are multiple shippers and touchpoints involved in a shared shipment. Inversely, FCL is an efficient and cost-effective option for businesses with enough cargo to fill an entire container. However, while more merchandise can be shipped with FCL for less, this cost benefit must be weighed against how fast product sell-through is, as shipping savings have to be balanced against warehousing and storage costs. Similar to deciding between LCL and FCL, SMBs also should examine whether they need door-to-door or port-to-port shipping support based on different business needs. For example, experienced shippers may only need help securing goods from a port of origin to a point of destination, while those newer to international shipping may benefit from ensuring merchandise is picked up at the door of a manufacturer and delivered directly to a SMB’s door.
Diversify Your Supply Chains
According to the New York Federal Reserve, The Global Supply Chain Pressure Index (GSCPI) continues to drop month-over-month, establishing favorable market conditions for companies seeking to take advantage of decreased global freight and container rates, lessened port congestion, and shortened shipment delivery times. However, there is a key lesson learned by the world’s largest corporations that small and medium-sized businesses should model against. That lesson is reliance on single supply streams limit business resiliency. Exemplifying this risk are issues like the factory shutdowns and labor challenges China has continued experiencing, sending shockwaves through the supply chain for companies relying on inventory manufactured there. One tactic for SMBs to consider is investing in the diversification of their supply chain by securing additional or alternate suppliers that can serve as secondary sources for goods, providing more redundancy to minimize risk and increase flexibility and agility.
Recognizing global shipping and logistics misunderstandings continue to persist, and a resurgence of international issues could impact the supply chain at any point, shifting away from a “business as usual mentality” will mandate exploring new approaches. Making changes within global import and exports with the help of a reliable freight forwarder may just be the path to resilience SMBs need today. After all, as Glik puts it, while shipping and logistics may not be an SMB’s core business, it is core to their business.