Your transport alternatives
We have said that one of the key distribution decisions you will need to make is how you will physically move your goods from your factory to the foreign customer (i.e. your choice of transportation method), and who will help with this (the transportation intermediary). In this regard, there are essentially four transportation alternatives available to you. They are:
- Air transportation – One of the major ways of transporting goods overseas and especially well suited for small, light-weight and high-value goods.
- Sea (or marine) transportation – the most common transportation method for the majority of goods moving overseas from South Africa and especially so for bulky and heavy goods.
- Rail transportation – Clearly not appropriate for overseas transportation, but is common for moving goods into Southern Africa, as well as from the inland cities such as Johannesburg and Pretoria to the ports in South Africa. The differences in railway guages means that our railways cannot reach deep into Africa.
- Road transportation – Road is the major competitor to rail transportation within South Africa and Southern Africa. Road transportation is also not appropriate for overseas transportation, but is the main means of transporting goods deeper into Africa.
There are other transportation alternatives used elsewhere in the world
In other parts of the world, you may come across alternative transportation methods. Barges are common in Europe and the US; camels, horses, donkeys and other pack-animals are often used to reach far-away places in the Sahara desert, places in South America and in Asia; bicycles are often the ‘last mile’ means of transportation in Asia; while human-power is sometimes used in third-world countries.
In recent years, courier companies have begun to play an increasingly important role in distribution. In the past, courier companies were seen as ‘parcel’ companies. The collected a small parcel or package from your office and delivered it to some distant address (either in the same country or in some other country). The major players such as DHL, FedEx and UPS have become so good at their business and have built up such a massive logistical infrastructure that they can now deliver pretty much anything, anywhere. Today courier companies are striving to become the logistics arm or partners of companies who don’t want to get bogged down with logistical issues. Through outsourcing, companies can reduce the cost and risk associated with the task of distribution. This is especially so in the case of exporting, and you may want to discuss with one or more courier firms how they might be able to help you with your export distribution. Although a courier company could be seen as another transportation alternative, they, in turn, make use of air, sea, road and rail services to deliver the goods.
Transportation intermediaries – transport representatives
Once you have decided on how to transport your goods to the end user, you also need to decide on who will handle or facilitate the transportation for you. Obviously, you could do it yourself and many medium-to-large export firms do have managers who look after their respective international logistics. They generally liaise and interact with the representatives of airlines, shipping companies, the railways (i.e. Spoornet), or individual road hauling firms. After all, these representatives of the transportation companies are there to help you choose the best transportation alternative to meet your export needs and will gladly advise you on how to overcome many of the problems you are likely to face.
Transportation intermediaries – freight forwarders
Notwithstanding their help, you may still want to turn to a freight forwarding company to look after these transportation matters for you. This may be a wise decision if you are not a regular or experienced exporter. Freight forwarders make their livilihood from faciliating the logisitics surrounding the movement of goods domestically and internationally. They usually have international partners that will handle the overseas component of the logistics on their (and your) behalf, and they normally offer and door to door services, thus taking a lot of the stress and problems associated with international logistics off your hands. The use of freight forwarders is perhaps is the most common way of facilitating international trasnportation.
Transportation intermediaries – customs clearing agents
Your freight forwarder (or your firm) may also make use of a customs clearing firm on the ‘other side’ to ensure that your goods are cleared through customs quickly and effortlessly. Customs clearing is can become a nightmare and there are firms that specialise in this service. They normally have a good working relationship with the customs authorties in the target country and they know the laws and rules intimately. They may even have an account with the customs authority and may be able to offer you payment terms that will help your cash-flow problems (although you should not expect this facility for the start – they will usually only offer you this facility after years of trading with you).
Transportation intermediaries versus distribution intermediaries
In the case of market-entry and in-market distribution, you will also make use of intermediaries such as import agents, distributors, wholesalers, or even retailers. These intermediaries clearly have an impact on not only your overall distribution strategy, but also impact on the physical distribution of your goods. However, they are different from the transport intermediaries mentioned above, as these distribution intermediaries also have a marketing function to fulfil and have more direct and greater impact on your distribution activities. The transportation intermediaries (transport representatives, freight forwarders, clearing agents, etc.) are more faciliators of the distribution proces have less of a direct impact on your marketing strategy.