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International logistics and risk management: how not to lose money
International logistics is not just about delivering goods across borders. It is a whole labyrinth of risks, where every wrong step can result in losses. Mistakes in the choice of partners, unrecorded currency fluctuations or incorrectly executed documents can cost you business. In order not to lose money, it is important to understand all the nuances and prepare for possible problems in advance. We will talk about this today in the blog of LLC «FabriQuanta».
1. Commercial risks
In the logistics business, as in any other business, there is always the possibility of loss. For example, if goods are damaged on the road, spoilt or lost through the fault of an unreliable partner, this will hit your budget.
What should you do to avoid this?
2. Currency risks
When there are fluctuations in the currency market, it can be either favourable or unfavourable for your business
If the exchange rate falls
Currency exchange rate fluctuations are always a risk that you need to consider and use wisely to avoid losses.
What to do.
In the logistics business, as in any other business, there is always the possibility of loss. For example, if goods are damaged on the road, spoilt or lost through the fault of an unreliable partner, this will hit your budget.
What should you do to avoid this?
- Choose reliable partners. Check their reputation and financial status in advance. It is better to spend time checking than to lose money later.
2. Currency risks
When there are fluctuations in the currency market, it can be either favourable or unfavourable for your business
If the exchange rate falls
- Good: when exporting, your goods become cheaper and more attractive to foreign buyers.
- Bad: When you import, the cost of purchases in terms of your currency goes up.
- Good: Importing makes your goods cheaper in terms of your currency.
- Bad: exporting makes your goods more expensive, which can reduce demand.
Currency exchange rate fluctuations are always a risk that you need to consider and use wisely to avoid losses.
What to do.
- Hedge your risks. This is like an insurance policy against exchange rate changes. For example, you fix the price in the contract, so that you do not depend on fluctuations.
- Consult experts. Financial experts can predict rate changes and help you prepare.
3. Political risks
Laws, sanctions or duties in other countries can change, and not always for the better.
What to do?
Laws, sanctions or duties in other countries can change, and not always for the better.
What to do?
- Keep an eye on politics. Use analytics and special services to understand where problems may start.
- Work with multiple partners. Split the supply between several countries or companies. This way you are protected if one of them fails.
4. Legal risks
If contracts are incorrectly drawn up or your rights are violated, you will have to go to court. This is time-consuming and expensive.
What to do?
5. Cargo insurance
Your cargo can be damaged by accidents, theft or natural disasters. If it is not insured, you will lose money.
What to do.
If you are involved in international logistics and want your business to thrive, control the risks at every stage. Planning, reliable partners and co-operation with lawyers are your key to success. Remember: being prepared for the worst is about minimising losses and having confidence in the future.
If contracts are incorrectly drawn up or your rights are violated, you will have to go to court. This is time-consuming and expensive.
What to do?
- Involve lawyers. Have contracts and documents checked by professionals. This will keep you out of trouble.
- Get cargo insurance. If something happens to the goods, the insurance company will compensate for the losses.
5. Cargo insurance
Your cargo can be damaged by accidents, theft or natural disasters. If it is not insured, you will lose money.
What to do.
- Work with a good insurance company. They will help you consider all the risks associated with international logistics.
- Think through the risks in advance. Be sure to insure your cargo against all possible situations that could happen.
If you are involved in international logistics and want your business to thrive, control the risks at every stage. Planning, reliable partners and co-operation with lawyers are your key to success. Remember: being prepared for the worst is about minimising losses and having confidence in the future.
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