Working capital important for logistics in current economic climate

3rd February 2017

By: Victor Moolman

Creamer Media Writer

     

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W ith the high costs of logistics services, imports and working capital specialist Investec Import Solutions believes that it is important to release working capital by reducing the capital that is tied up in a company’s import transactions.

“With continued volatility in the global fuel markets, the volatility of the rand and the combined trickle-down influence that it has on the price of fuel, the logistics industry is taking a hard knock. High fuel prices can eat into company profit margins because the logistics industries rely heavily on fuel to carry out services,” says Investec Import Solutions head Adam Orlin.

Simplifying administrative processes with a tracking system ensures better visibility of imported goods, he notes, adding that this enables businesses to plan ahead, to be notified upfront of any delays and to put processes in place to mitigate risks, streamline processes and ensure that productivity is not halted.

Further, Orlin says logistics company productivity can also be measured using shipment tracking, which promotes transparent pricing models, allowing businesses to forecast profits and the viability of new ventures ahead of the placement of orders.

Companies partnering with Investec Import Solutions get access to a single point of contact throughout this import process, which ensures that risks are miti-gated and processes are streamlined. For many organisations, this can mean the difference between maintaining effective business growth or stagnating, he points out.

A high-value import specialist can finance the cost of goods, as well as all the forwarding and clearing costs, which, “for a business limited by cash flow, . . . is a game changer”, Orlin states.

He highlights that existing importers can benefit from using companies like Investec Import Solutions, with the medical and pharmaceuticals, automotive, chemicals, technology and even the steel industries showing improved growth when using the service offerings of import and working capital specialists.

Coupled with the requirement to plan imports, finance is a must in managing the logistics of a company, Orlin adds, adding that working with a reputable finance partner will help facilitate the import transactions of a business that has identified this as a way to manage the costs of financing imports.

“Using a reputable partner means a business can focus on the day-to-day running of the company. If you consider that a significant amount of money from the business is often used for imports, then working with a finance partner also ensures that working capital is available, when required, to help grow the business,” Orlin stresses.

Moreover, he notes that trade agreements have a significant impact on trade deals globally. Businesses wanting to succeed in the international environment need to be aware of the impacts of trade agreements and new technology and adapt accordingly.

Orlin points out that technology will drive positive change and innovation in supply chain management and in the import sector. “We live in an era where time is a precious commodity and technology will offer businesses the ability to accept and process orders in a timely manner.”

Technology also enables Investec Import Solutions to track the progress that logistics solutions have made and provide partnering customers with updates quicker than when these functions had to be carried out manually.

Meanwhile, Orlin mentions that there is also a need for logistics infrastructure to be improved to foster the growth of the industry.

An amount of R813-billion has been pledged by the South African government to improve infrastructure, focusing on the conditions of the roads, ports and airports. The improvements are expected to take place over the next few years.

Cargo and logistics account for 42% of all infrastructure spending in South Africa, which Orlin says is positive, as solid transport infrastructure is a key component of a good overall logistics process.

“After all, good infrastructure and technology promote efficient business operations, which can then lead to the growth of the economy as the country becomes more attractive for international investors,” he concludes.

Edited by Zandile Mavuso
Creamer Media Senior Deputy Editor: Features

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