The Merits of Sharing Information in the Used Car Export Business
Hello, I’m Ichiki of Sync Logistics.
In this post, I’d like to share my thoughts on the merits of sharing information in the used car export business from my perspective as a logistics provider.
■Chaos in the Red Sea Route cause ocean freight rates to skyrocket
Since November 2023, Yemen’s Houthi rebels have been attacking commercial ships in the Red Sea, including a Japanese cargo ship (a car carrier of NYK Line) which has been captured. The shortest route between Asia and Europe, the Red Sea route can no longer be used, and many cargo ships have been forced to take a roundabout route passing the African continent.
Choosing this roundabout route requires additional transport days and fuel costs, causing ocean freight rates to skyrocket 2 to 3 times more than normal. If the term of trade is “free on board,” (FOB), the importer shoulders the ocean freight rate. If the importer cannot tack on the cost of the increased rate to the local sales price, the importer has no choice but to reduce its own profits. If the term of trade is “cost and freight” (CFR) wherein the exporter shoulders the ocean freight rate, there is a possibility that exporting cars may not be as profitable.
I believe each company is taking measures to be able to continue their business under such circumstances.
■How we deal with emergencies
To deal with such an emergency, our company is taking the following measures:
- Gathering as much information as possible.
- Clarifying possible situations that may arise at this point in time, then brainstorming.
- Asking shipping companies about their opinions and policies.
- Asking exporters about the information that they have.
- Formulating hypotheses based on the information gathered and deciding on measures as a logistics provider.
There are various measures that can be taken such as continuing shipping, adjusting shipping volumes, and temporarily suspending shipping. We try to gather and share information from various sources to assess the constantly changing situation and make proposals that are in our clients’ best interests.
■The meaning and merits of information management borne by logistics providers
In addition to transport, storage, cargo handling, packaging, and distribution processing, logistics providers also conduct information management. I believe the important thing about information management in the used car export business where there are many stakeholders is not only to properly manage shipping information and data but also to share these with all parties in real time.
Because sharing information prevents misunderstandings and makes it easier for operations to respond immediately (such as knowing when to stop shipping arrangements, or advancing them all at once), I believe it will be easier to achieve the following:
- minimizing losses by making quick and optimized decisions and responses to emergencies
- generating huge profits by responding to business opportunities in a timely manner
Because our industry is particularly susceptible to macro factors such as global developments, we must take measures to ensure that we are able to push our businesses forward in any given situation. As an advantageous way to achieve this, I would like to emphasize the importance of offering and sharing whatever information we may have with each other.
Thank you for your time.
