Logistics Firms
Student’s Name
Institutional Affiliation
Third-Party Logistics
Third-party logistics are services that enhance the outsourcing of logistic solutions. Equally, the services allow the logistic companies to focus on other organizational departments. The third enterprises provide numerous logistic services to the clients. Similarly, the services provided by the organizations include; transportation, warehousing, distribution, and freight management. Third-party logistics offer integrated services to specific companies (Jazairy, 2017). Additionally, third-party logistics enhances the control of the supply and distribution functions of shipping companies. As such, a significant number of modern shipping companies utilize the services of third party logistics.
The companies may outsource for the third party logistics to perform a single or several services. Additionally, the companies aid the shipping companies in the management of the supply chain (Giri & Sarker, 2017). Ultimately, enterprises enhance the operational efficiency of shipping countries. Since the third-party logistics companies perform a significant portion of the transportation and supply management operations, the incorporation aids in saving time. Further, the third logistics companies have well-established networks within the freight and supply chain industry. Outsourcing for the services minimizes the transportation and distribution costs. Hence, the incorporation of third-party logistics facilitates the operational capacity of shipping companies.
Motivational Factors for going international
The existing global market differences have led to the adjustment of the logistics processes to meet market needs. As a result of the competitive nature of the local market as well as quality issues, global companies have to reduce their domestic production. Equally, the need for internalization is fostered by the supply logistics. For instance, the executive must consider factors like the cost of land and labor. Another driver of globalization is the need to expand the consumer base. The existing market conditions mean that clients are located in different regions. As a result, the need to acquire new clients enhances internationalization.
Additionally, the global distribution of consumers also means that the organization can improve its production capabilities. Moreover, market performance varies according to geographical regions. Equally, the motivational factors behind an organization going global may be due to favorable market factors in another location. Internationalization also provides companies with opportunities for interactions. As such, organizational executives get exposed to new marketing as well as production strategies.
Developing Countries for Offshoring
Technological advancements have facilitated offshoring in developing countries. The opportunities available in the nations provide globalization. The investments made by developed countries towards relocation in the states promote a competitive advantage. The nations provide opportunities for logistic development as well as research concerning the expansion of the lines.
Similarly, offshoring is becoming common in developing nations due to the availability of labor. In developing countries like India, the high population provides adequate labor for logistics companies. As such, the numerous tasks involved in offshoring activities can be accomplished promptly.
Accordingly, the improvements made within the global telecommunication industry facilitate communication concerning logistics tasks. As such, the advancements facilitate communication. Further, in the past logistics transaction, the communication charges were significantly high. Thus, the obstacles hinder the process of information conveyance. For example, communication between two logistics companies located in Saudi Arabia and India was costly in the past (Takamol Advisory Unit, 2017). However, today, the digitization of the communication processes has enhanced the process. The effective communication process reduces operational costs. Thus, modern technologies facilitate offshoring in developing countries due to the ease of communication.
Offshoring also creates excellent job opportunities in developing countries. For instance, in the logistics industry, outsourcing results in the creation of jobs like accountancy. In comparison to the current employment terms, the remuneration packages of offshoring jobs are friendly. Reports indicate that offshoring job openings in nations like India are well paying due to the implementation of modern technology service providers like Wipro (Takamol Advisory Unit, 2017). Similarly, the salary structure of the assignments is lower than that in the developed nations. As such, outsourcing in developed countries is viable within the logistics industry. On the other hand, since the wages are relatively higher compared to those of different sectors in the developing nations like the Philippines, the industry provides the citizens with favorable income. Ultimately, the friendly wages act as a motivation for outsourcing for logistic services.
Reason for third party logistics in Saudi Arabia
The third-party logistics industry in Saudi Arabia is growing at a fast rate. The implementation of favorable policies regarding land ownership has facilitated the establishment of third logistics firms by both local and foreign businesspeople. Through the readjustment of regulations and liberalization of the logistics market, international organizations have been established that have consequently created job opportunities for the locals (Giri & Sarker, 2017). Equally, the presence of favorable trade conditions in the nation has resulted in a reduction in operation costs. As a result, the move has created competition in the industry. The current nature of the third-party logistics industry thus provides quality services.
Ultimately, due to the positive economic impact created by the firms, the national government has established measures to promote the sector. Likewise, the recent modernization of the infrastructural network concerning the domestic ports has fostered efficiency in the third party logistic processes. Equally, the move has minimized congestion at the ports, thus, facilitating the logistics operations. Additionally, the adjustments of the fees at the ports has also promoted foreign third party firms as it facilities distribution as well as the cargo volume. As a result of the positive economic impact of the firms, the measures established by the stakeholders have promoted the growth of the third-party logistics sector.
References
Giri, B. C., & Sarker, B. R. (2017). Improving performance by coordinating a supply chain with third-party logistics outsourcing under production disruption. Computers & Industrial Engineering, 103, 168-177.
Jazairy, A., Lenhardt, J., & von Haartman, R. (2017). Improving logistics performance in cross-border 3PL relationships. International Journal of Logistics Research and Applications, 20(5), 491-513.
Takamol Advisory Unit, (2017). Enabling Third Party Logistics in the Kingdom of Saudi Arabia. Takamol.