How to Manage Risks in International Distribution

When you want to start a pack and ship business, you are likely to start with a simple Google query – how to start a shipping business. Don’t do everything on your own. Sit with experienced people, someone who has years of experience in the pack and ship business. Most importantly, you should be aware of the risks, especially when you want to start shipping internationally. You also need to know how to manage these risks. You get a competitive advantage when you source goods globally. 

However, there are many laws and regulations in place when it comes to shipping products to some other country. The customer must receive the order on time. Goods must be in good condition. You have to work consistently and efficiently. At the same time, you need to control transportation costs. When you have a proper plan in place, you can get and maintain a profit margin. 

Goods you are shipping are vulnerable to threats. The risk increases with the size and value of the shipment. It becomes difficult to implement a solution. First of all, get an idea of the type of risks and threats your pack and ship business may face. After that, you need a plan for strategic risk management. Your goods must be safe in transit. You can manage many risks with the right strategy and due diligence. Some of the common risks include: 

  • Shipment disappeared. 
  • The shipment cracked open after it slipped from the crane.    
  • The container load was pilfered. 
  • Food packages were wet and moldy. 
  • You got no word from the vessel.
  • The destination country refused entry. 

You also need to consider the following threats:

  • Hacking databases, identity theft and break-ins to target distribution centers and warehouses  
  • Thieves may target trailers on the roads or during stops. 
  • Piracy and hacking are other serious threats. 

Piracy 

Clothing, pharmaceuticals, electronics and other high-value items are often targeted for piracy. It is an opportunity for organized thieves. All they need is information. They keep their eyes on shipment. They monitor shipment in key locations such as:

  • Manufacturing facilities 
  • Industrial parks 
  • Distribution facilities 

They are ready to cash in on any opportunity to steal cargo. They are equipped with GPS trackers and electronic surveillance. Organized thieves use GPS jammers. They remove cargo. You can no longer track your own cargo. They resell these products on the black market. They repack, re-label goods and even falsify bills and all other documents to move the stolen shipments to some other country. Insiders are of great help to gangs. Gang members gather information about security measures such as cameras and alarms in facilities and cargo deliveries. The vessel may go through countries with corrupt law enforcement agencies and governments, poverty, or political instability. The movement of cargo must be well-planned and secure. 

The following are the most common risks in international shipment: 

  • Cargo damage or loss 
  • Supply chain disruption and delays 
  • Unexpected costs 
  • High prices 
  • High premiums 
  • Death or personal injury 

Use the following strategies to manage risks: 

  1. Exercise proper due diligence 
  2. No document is less important. Ensure the accuracy of every single document including certificates of origin, import permits, health and safety certificate, customs documents, bills of sales, bills of lading and waybills, title documents         
  3. Make sure that all contracts are clear. 
  4. Ensure clear and timely communication. 
  5. Rely on trained and qualified personnel. 
  6. Ensure proper implementation and maintenance of security practices.
  7. Make the best use of security equipment and technologies such as locks, seals, and trackers and locators. You are investing in pack and ship business for profit. Risks and threats not only lead to financial losses but will be also bad for your reputation. 

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