First of all, let's understand what logistics is: "Set of means and methods necessary to carry out the organization of a company or a service, especially distribution", as stated in one of its definitions by the Royal Spanish Academy. On this occasion we will talk about logistics and its importance in the types of free trade zones.
Going deeper into the concept, logistics refers to the process of planning, implementing and controlling the efficient and effective flow of goods, services and information from the point of origin to the point of consumption. It is a fundamental aspect of business management that encompasses a wide range of activities, including procurement, transportation, warehousing, distribution and inventory management, i.e., it is relevant to all types of FTZ users.
The main objective of logistics is to ensure that products or services are available at the right place, at the right time and under the necessary conditions. This involves the coordination and synchronization of various activities, such as supply chain management, transportation of goods, warehousing and inventory management, production planning, packaging and labeling, among others.
It also plays a crucial role in customer satisfaction and the overall success of a company or all types of free zone users (organizations). Efficient logistics management reduces costs, improves service quality, minimizes delivery times and optimizes resource utilization. Likewise, in a globalized context, it involves considerations related to customs, international regulations, risk management and security.
Due to its magnitude, there are different challenges, for example, in the document of the Fourth Integrated Meeting of Logistics, Free Trade Zones and Ports of the National Association of Colombian Businessmen (ANDI), the former Minister of Transportation, Ángela María Orozco, pointed out:
"It is a great challenge that has led, for example, to the fact that moving cargo through the country has a higher price than moving it abroad. According to the 2018 National Logistics Survey, the cost of logistics in the country is 13.5% of the value of sales; a higher value than other countries belonging to the OCED that have similar levels of development to us. Hence, logistics is fundamental to everything we do, and we have worked on different fronts to lower that cost and make it more efficient to move through the country's corridors and geography."
This is in reference to the geographical conditions of the country due to its three mountain ranges that cover a good percentage of the territory, apart from the challenges in the country. Therefore, a well planned and implemented logistics, brings benefits for the types of free zones.
- Agility in the flow of goods: one of the most outstanding aspects of the types of free trade zones is the simplification of customs procedures and the agility in the flow of goods. Logistics, in this sense, is responsible for coordinating and optimizing the transport, storage and distribution of goods. Thanks to efficient logistics management, transit times are reduced and customs processes are streamlined, allowing free zone users to benefit from faster and smoother trade.
- Access to world-class infrastructure: different types of free trade zones typically have world-class infrastructure and are located close to seaports, airports, highways and modern warehouses. Logistics is responsible for making the most of this infrastructure, ensuring an efficient connection between the different modes of transport and facilitating the movement of goods quickly and safely.
In addition, logistics in free trade zones is supported by advanced technology, such as inventory tracking systems, logistics management software and data analysis tools, to ensure a smooth and seamless operation.
- Optimized supply chain management: Along the same lines, logistics contributes to the management of the supply chain and the types of users in the free trade zone (companies established there). From the acquisition of raw materials to the final delivery of finished products, it is responsible for coordinating and synchronizing all the activities involved.
This involves efficient inventory management, production planning, order management, timely transportation and on-time delivery. A well-managed supply chain in FTZs not only enables companies to meet delivery deadlines, but also improves their competitiveness in the global marketplace.
- International trade facilities: modern logistics facilities, simplified customs services and efficient transportation management enable companies to take advantage of the benefits of importing and exporting more efficiently. Logistics ensure that customs procedures are carried out quickly and accurately, avoiding delays and additional costs in the process.
This not only benefits the organizations, but also the countries as a whole, as efficient logistics in free trade zone types boost international trade and strengthen the country's position as an attractive destination for foreign investment.
- Improved competitiveness: by offering logistical facilities and agility in the flow of goods, free trade zone users reduce operating costs and optimize their production and distribution processes, making them more competitive in the global market, while improving service quality and meeting customer demands efficiently. This results in them being more competitive in the global market, while improving service quality and meeting customer demands in an efficient manner. They take the different types of free trade zones to another level!
- Collaboration and synergy among key players: There is no doubt that logistics in all types of free trade zones fosters collaboration and synergy among the different players operating in these areas. This includes transportation companies, logistics service providers, customs authorities, educational institutions and regulatory agencies.
Cooperation between the different types of free zone users allows for the exchange of knowledge, the implementation of best practices and the search for innovative solutions to continuously improve logistics efficiency in free zones.
Logistics is a vital organ for the growth of free trade zones by boosting international trade and providing facilities that streamline the flow of goods. Efficient supply chain management, access to world-class infrastructure and improved competitiveness are some of the benefits it brings to companies established in these special economic areas.
Logistical challenges for free trade zone user types
Overcoming a number of challenges to ensure efficient logistics operation is vital, some of which are:
- Demand fluctuations: Demand for products and services is volatile and undergoes unexpected changes, making logistics planning difficult. Challenges include anticipating and responding to demand fluctuations, managing order peaks, avoiding shortages or excess inventory, and ensuring product availability at the right time.
- Efficient inventory management: it is a costly asset and maintaining the right balance is complex. Inadequate inventory management leads to high storage costs, product obsolescence and liquidity problems. It is essential to have efficient systems and processes to optimize the control and management of inventory, here are lost points for competitiveness for all types of users in the free trade zone.
- Transportation complexity is a critical component of logistics, and managing the delivery of products requires analysis of factors that complicate transportation, such as selection of optimal routes, management of suppliers to move cargo, capacity issues, and coordination of multiple modes of transport in the case of international supply chains. Another task that generates a lot of attention in all types of FTZ users.
- Technology and systems: the implementation and management of technology and efficient logistics systems are barriers that are being overcome by free trade zones and the companies that set up in them, with the integration of warehouse management systems, tracking and tracing systems, logistics planning software and other technological solutions. In addition, there is a need for training and adaptation of employees to new technologies.
- Globalization and regulations: In a globalized environment, organizations face challenges related to customs regulations, compliance requirements and trade barriers. Logistics has to adapt to country-specific requirements and regulations, adding complexity and additional costs to international logistics operations.
Meet Zona Franca de Occidente and we will tell you the process to install your company with us, taking advantage of the facilities offered by our strategic position for excellent logistics. All types of users in free trade zone maximize their productivity!
