Logistics for business: When to outsource it and when to develop your own?

According to Ukrzaliznytsia, 63% of container transportation in 2024 was for export. This is not surprising - more and more Ukrainian companies are entering international markets or expanding the geography of supplies, writes censor.net.

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But at such moments, each of them faces the question: should they develop their own logistics department or outsource it? Let's look at specific examples to understand which is better for your business.

Big or small company? Size matters

The first thing to consider when choosing a logistics model is the scale of your business and available assets. If your company has its own fleet of vehicles, warehouses, forklifts or port facilities, it is better to have your own logistics team. In order to operate more efficiently, develop and increase the capitalization of assets.

If you have a small or medium-sized business and own a small number of assets, you can outsource logistics or use a hybrid solution: rely on an internal team for certain issues, and on an outsourcing company for others.

What industry does your business operate in?

The development of in-house logistics is most relevant for enterprises in the agro-industrial sector, metallurgy, and mining industries. After all, such companies usually have their own logistics infrastructure due to the specifics of cargo and the regularity of deliveries.

The situation is similar in large retail, where without its own distribution centers and fleet, it is difficult to ensure uninterrupted supplies.

Domestic or international transportation?

However, even large companies that handle internal logistics issues on their own often choose to outsource international transportation. After all, each country has its own rules and requirements for transportation. What is allowed in Ukraine may be prohibited in the EU, and vice versa.

For example, since July 2024, the EU has reinstated duties on eggs and sugar after Ukraine exceeded its annual quotas. And since December 2024, a system of minimum export prices has been in place for agricultural products in Ukraine. If you do not have a large team of logistics specialists, it will be very difficult to track all these changes on your own. So in the long run, you may lose not only time but also money by not knowing such nuances.

Case in point: For example, a manufacturer receives a permit to ship products to Poland. The cargo travels to Germany for transshipment, but it turns out that the existing permit is not valid for that country. As a result, the cargo is trapped - it can neither be returned nor sent further due to the lack of necessary documents. Such situations lead to significant costs, the risk of product damage, and penalties.

What type of transportation?

It is worth understanding that each type of transportation has its own specifics. Therefore, in some cases, it is also better to contact a specialized company.

For example, maritime transportation requires established connections with global shipping lines and an understanding of port infrastructure. Therefore, even large companies with their own fleet often charter additional vessels or turn to freight forwarding companies and carriers to optimize and diversify international and domestic supply shipments.

Aviation logistics in the context of a full-scale war requires special expertise. After all, it is important to know the specifics of the operation of airports in neighboring countries, optimal routes and tariffs.

Rail transportation abroad often involves interaction with monopolists in different countries, each of which has its own requirements.

What are the features of the product?

The logistics model decision can also be significantly influenced by the characteristics of the cargo. Therefore, for small and medium-sized businesses, the most important thing here is to have expertise in your own product. This includes knowledge of storage rules, loading, transportation, packaging requirements and labeling. It is also important to know the customs codes, declaration rules and necessary licenses for your type of product.

Everything related to general logistics, especially international logistics, is better to outsource, so as not to waste resources on developing a non-core area of ​​your business.

Hybrid as the optimal solution

By answering all the questions above, it will be easier for you to choose a logistics solution for your business. But often the most effective is a hybrid model. When a company uses its own logistics where it has a strong position (usually the domestic market), and attracts partners for specific tasks.

For example, if you need to deliver goods from Kharkiv to the UAE, then in most situations the best solution would be to organize logistics in Ukraine yourself, and outsource the issue of transit through several countries and sea transportation to the final destination to a third-party company. This way you will optimize your own time and money, and protect yourself from risks.

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