Are extreme volatility and constant uncertainty the new normal? In a world where disruptions are constantly multiplying and colliding, how can transport and logistics companies secure their operations and grow their businesses? Our risk and Smart Data experts share their advice on how to strengthen your business resilience and turn risks into opportunities.
From the pandemic to trade wars: a new paradigm
The Covid-19 pandemic has radically reshaped the environment in which transport and logistics companies operate. They are facing significant headwinds: rising interest rates on investments, renegotiation of loans by companies (with rates two to three times higher!), which has led to increased costs (particularly labour, energy and fuel). To deal with these disruptions, decision-makers in these sectors have changed their practices and how they work.
Transport and logistics companies have become way more agile and efficient in their operations because of the costs they're facing, and many are adapting well to this situation!
says Andrew Share, Group Solution Engineering at Coface.
Another critical issue that directly or indirectly influences this sector is the trade war between major economic blocs and US tariff measures. In response to successive announcements by the US administration, consumers in the US and the rest of the world are now tending to bring forward purchases that they currently consider advantageous in order to build up stocks of raw materials and resources.
We also anticipate a very likely change in traditional shipping routes. Companies will reroute their goods to countries that have negotiated the best trade terms with the US, as we are already seeing with Vietnam and other connecting countries in the trade war between major economic blocs.
says Andrew Share.
Inform yourself (properly) about your counterparties to anticipate risks
The key to staying ahead of the curve is to assess risks at source: get to know your counterparties and all the players in the supply chain better.
- Follow the example:
Hellmann, a major international transport company and client of Coface Business Information, was able to anticipate disruptions linked to geopolitical tensions in the Middle East by using early warnings and predictive analysis provided by Coface experts. As a result, the company was able to use new combinations of logistics such as sea-air (e.g. goods moved from China to Dubai by Seafreight and then onwards to Europe by Air) and avoid costly delays, thereby preserving its reputation and reliability with its customers. - Adopt the solution:
Quickly moving from optional to essential for companies, Business Information is an effective tool for managing commercial risks. This is precisely where Coface Business Information and its ~80 years of global trade credit data on 240 million companies come into play.
Leveraging Smart Data as a competitive advantage
As a leading global player in trade credit risk management, one of the main added values that Coface brings to its clients is its ability to transform data into smart, easily actionable information solutions. Thanks to the 12,000 credit decisions we take every day for 100,000 clients worldwide, we collect and analyse real-time information and insights on cross-border payment defaults. This approach enables companies to make smarter decisions, even in a complex and uncertain environment.
- Follow the example:
An international freight company used Coface Business Information's monitoring solutions to map its entire value chain, including its suppliers' suppliers. This approach enabled it to identify an insolvency risk at a key indirect player, three levels below its direct supply chain, giving it time to develop alternatives and avoid a critical supply disruption. - Adopt the solution:
Urba360, Coface Business Information's platform, works alongside you like a continuously deployed radar. It provides continuous monitoring of your risks, covering not only your direct partners, but also their own suppliers and customers who may indirectly impact your business. The comprehensive view offered by Urba360 allows you to identify hidden risks in your extended supply chain.
Convert Smart Data into strategic decisions
Integrate advanced customer risk indicators into your management dashboard, such as credit score deterioration alerts provided by Coface. These early warning signals can give you a crucial head start in adjusting your commercial terms or diversifying your customer portfolio.
- Follow the example:
Using Coface's sector analyses, a logistics operator identified signs of deterioration in the retail distribution sector. It was able to proactively adjust its credit policy for this segment, reducing its exposure and avoiding significant unpaid debts when the sector subsequently encountered difficulties. - Adopt the solution:
‘We monitor our cost structure, prices, customer turnover and retention rates. We also monitor the conversion ratio, i.e. the number of quotes converted into actual sales. This data-driven approach allows us to quickly identify emerging opportunities and threats,’ emphasises Junaid Mohammad, CFO of Hellmann inSaudi Arabia.
Build your resilience strategy with Coface
Beyond the smart data and solutions that new technologies can offer today, it is the evolution of the overall risk culture within companies that determines their resilience to economic shocks, particularly for those in the transport and logistics sector.
Companies need to be able to lift their heads up from their day-to-day operations and gain a deeper understanding of their business environment. This increased vigilance, supported by Coface Business Information solutions, enables uncertainty to be transformed into strategic opportunity.
explains Sivajith Sreenivasan, Business Information Manager at Coface.
How can you strengthen your company's resilience with Coface's global data and intelligent solutions?
Catch-up our webinar to get all the insights from our experts or contact us today to turn your risks into opportunities.
