How will the shifting economic balance affect Transportation?
If you walked around the city of Leipzig, Germany last week you would have seen Uber cars, bicycle riders in business attire, BMW i3 test riders in town. This is the 2014 annual summit of the International Transport Forum in action.This event brought together policy makers, scientists, as well as practitioners to provide a platform for a think tank for the global transportation community.
More than 1.100 participants came together over 3 days to meet and discuss questions of Transport in a Changing World. And the factors of change with an impact on transport are plenty:
- Climate change calls for actions to reduce emissions
- Information and communication technologies modify the way users make their mobility choices
- Growing trade flows necessitate a reorganization of global transports.
At this summit, I had the opportunity to participate in a panel discussion on Constructing Supply Chains of the Future: How Shifts in Global Economic Balance Affect Transport. The topic of the discussion expanded across many dimensions:
- Analyzing the shift of economic mass to emerging economies and supply chain designs becoming increasingly volatile
- The shift in the global economic center of gravity to emerging regions may see reduced growth on traditional trade routes, such as the North Atlantic.
- New business models are emerging with shift to customer-driven supply chains. Reconfiguring supply chains around customers has led to an emergence of small distribution centers located closer to customers.
The participants of the panel were of high caliber – with representatives from the United Arab Emirates, Indonesia, and Germany, some of the leading country in the Logistics performance index of the World Bank. Participants from the corporate businesses included:
- Nestlé – Representing the manufacturing value chain
- DHL Freight – With a freight forwarder and carrier perspective
- SAP – Representing IT solutions and infrastructure
What all participants were in agreement with was that we are seeing massive changes in Supply Chains driven by new business realities and several global questions were discussed:
- There is a clear shift in the balance of the markets and at the same time, the logistics complexity is increasing. As Jeroen Eijsink, CEO of DHL Freight Germany stated, “Global logistics is not about ports and airplanes anymore. While in the past, the question was how to get products out of the emerging markets, we now see a lot of private consumption there“.
- Speed and agility is now expected to enable same-day delivery service levels, in an environment of growing urbanization and congestion.
- We still have to reduce the inefficiencies of empty trailers and containers.
What can help solve the issues?
It was agreed by all that this can only be achieved through a systematic approach to ensure transparency, visibility and reliability. Governments, regulators and corporations need to collaborate and cooperate, and IT can orchestrate that process. This was showcased in the example of the Smart Port Logistics project at the Hamburg Port Authority, where the scheduling of hinterland transports via truck is synchronized with loading and unloading container vessels and steering traffic flows into the city of Hamburg can be controlled, e.g. by early advice to stop at a parking lot 100 km before Hamburg.
The conclusion was that the expectations are high for an integrated solution. Supply Chains of the future need:
- Standardization of processes
- Collaboration and cooperation are inevitable
- Decision support based on big data is the resource of the future
In other words it is critical to first understand the business challenges before you can take the appropriate action. And information is key to evolve supply chains into demand networks for speed and customer centricity.